Re: Digital offers / loyalty discussion in vision task force

On 02/01/2017 04:09 PM, Ian Jacobs wrote:
> [Adding the digital offers CG in bcc

Continuing to bcc, as I hope the experts there can help add to this
proposal as I'm far from an expert in this area.

> Thank you for writing up W3C-powered Digital Wallets [1] for 
> discussion in the vision task force. Was the list of questions 
> useful?

Yes, almost all of the questions were useful. My first pass was to
answer the questions directly, but then I found the text repeating
itself. The second pass condensed some information, and I stopped there
as I ran out of time. Some thoughts on the questions posed...

These questions seemed to imply just listing the stakeholders and the
benefits to those stakeholders:

A1. What are the incentives to address this problem?
A2. How will users benefit from addressing this problem?
A3. How will these ecosystem stakeholders benefit?
A4. In what way would improved interoperability help address this

B1. What other ecosystem stakeholders does this affect and how?
B2. Which types of orgs or specific orgs need to be involved in the
B3. Which parties are critical for implementation?

These questions felt vague or too broad (but may be useful for other
items under discussion):

D1. How big is the problem?
D2. What work is happening elsewhere?

> - Under Problem, you wrote: "It is currently difficult for small 
> business owners to set up and run individualized digital loyalty 
> programs."
> I assume small business owners do not run these programs themselves.

By and large, that is correct. There are examples like Flash Foods,
though, that are important to keep in mind:

> Insteada they get loyalty program service providers to do so. A quick
> search turns up names such as Aimia, Brierley+Partners, Connexions
> Loyalty, Epsilon, Kobie Marketing, Bond Brand Loyalty, Olson 1to1,
> and Tibco Loyalty Lab. Is your point that it is difficult for loyalty
> program service providers to set up and run programs? If so, what are
> the obstacles they face?

While it is true that loyalty program service providers have a hard time
getting started, I expect the current loyalty service provider market
enjoys some degree of lock-in, at the expense of the retailer/merchant.
There are some providers among us that are looking at opening up the
market more, but I won't speak for them.

The intent, however, was to focus on the retailer more and to help them
slot into a larger ecosystem and NOT get locked in (like the Web
Payments work is attempting to do). For example, ensuring that they can
port their issued digital loyalty cards from one service provider to
another, so switching costs are drastically lowered, should be a
requirement for future work.

> If you do mean that small businesses would set up their own loyalty 
> programs if it were easier, I'd like to learn more about the scope of
> that market demand.

At present, it is difficult for a small business to use /any/ digital
loyalty program that doesn't lock them into a particular set of vendors
and apps. There are almost direct parallels to the payment apps work in
the WPWG. A fairly rough way to go at the problem is to say we would
like to provide choice via loyalty apps (or enable payment apps to also
store and transmit digital offer information).

> - Under Problem, you wrote it is difficuilt to "integrate these 
> digital loyalty programs into their payment systems." Could you 
> provide a bit more detail about where the pain points are?

The problem with integration is roughly this:

When a customer presents a digital offer for $1 off a bottle of wine,
how does the store process that digital offer? How do they track and
report loyalty usage?

I think the answer is fairly straightforward in the case of physical
cards, but not so with digital loyalty cards UNLESS they are just a bar
code image shown on the phone that must be scanned. We are talking about
going far beyond barcodes wrt. digital offers, though.

POS systems are a pain to upgrade and may retailers avoid doing so for
things like loyalty systems. So, there is this technological integration
gap wrt. digital loyalty and point of sale systems (and payment systems
in general).

> Futher down you indicate that interop could help decouple loyalty 
> platforms from payment platforms. I assume however from the 
> integration point that they are already decoupled and the challenge 
> is integrating them.

I meant decouple in the following sense: You have the choice of mixing
and matching different loyalty providers and payment providers.

At present, one could argue that non-trivial digital loyalty platforms
and digital payment platforms tend to be more tightly integrated than

> - Something that might be helpful here is a diagram or some other 
> explanation of the flow, and where the loyalty programs fit in. I 
> have a pretty good sense of the user experience improvement we might
>  be able to achieve if we were to add a layer above payment request 
> API for streamlined display and redemption of coupons during a 
> transaction. But where else in the coupon flow do you see W3C adding
>  value?

Around Issuing, Storage, and Settlement. I agree that a set of diagrams
would help and I'll try to mock up some ecosystem diagrams next.

> There are some diagrams in the GSMA/GS1 document:
> Digital Commerce in Retail: Mass Distribution and Acceptance of 
> Mobile Couponing
> Maybe we could take inspiration from those.

Will do.

> - Under Problem, you wrote "Extend digital offers directly with
> their customers in a way that is impactful and can be directly
> measured." Can you say more about metrics in use today, and why they
> are inadequate? Is some party (the merchant, the coupon issuer) not 
> getting information that the coupon has been redeemed?

For the physical coupon case, there is a non-trivial amount of fraud in
the space where coupons are copied on high-resolution printers and used
to defraud convenience stores. Cigarette coupons for >$20 off a carton
of cigarettes, for example, are prime candidates for fraud.

There is weeks-long lag in coupon settlement today, which also aids
fraud and delays metrics.

Individualized coupons are also not easy to do with paper coupons.

While digital systems help mitigate some of the above, their
non-interoperability hampers their deployment.

Ultimately, it would be better for a retailer to be able to send a
highly individualized digital offer to an individual (reach) that is
compelling to that individual (resonance) and that results in a
mobile-based sale (reaction). This is the ideal because the entire
life-cycle is digital, can be directly measured at each stage, and can
be tied to revenue.

I'll try to incorporate a good chunk of these responses into a revision
of the proposal.

-- manu

Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
Founder/CEO - Digital Bazaar, Inc.
blog: Rebalancing How the Web is Built

Received on Thursday, 2 February 2017 05:00:41 UTC