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Re: Digital offers / loyalty discussion in vision task force

From: Ian Jacobs <ij@w3.org>
Date: Thu, 2 Feb 2017 08:03:15 -0600
Cc: Jeffrey Jaffe <jeff@w3.org>, Ted Guild <ted@w3.org>, Kenneth Mealey <Kenneth.Mealey@aexp.com>, Natasha Rooney <nrooney@gsma.com>, Ben Smith <Ben.Smith@aexp.com>, Amy Zirkle <azirkle@electran.org>, Bazin Pascal <Pascal.Bazin@gemalto.com>, David Ezell <David_E3@VERIFONE.com>, "刘大鹏(鹏成)" <max.ldp@alibaba-inc.com>, Web Payments IG <public-webpayments-ig@w3.org>, Maria Auday <maria@w3.org>
Message-Id: <21B19E1F-D4C0-47E1-B461-1AF58748A777@w3.org>
To: Manu Sporny <msporny@digitalbazaar.com>
Hi Manu,

Thank you for the additional remarks; I look forward to the update. Some more
comments inline.

> On Feb 1, 2017, at 10:59 PM, Manu Sporny <msporny@digitalbazaar.com> wrote:
> 
> 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.
> 
> https://www.w3.org/Payments/IG/wiki/Vision2017#W3C-powered_Digital_Wallets
> 
>> 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. 

[snip]

Thanks for that feedback! I’ve updated the questions to add a bit of
structure and, based on your comments, reduce some of the redundancy.

> 
>> - 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:
> 
> https://www.flashfoods.com/news/3-ways-the-flash-foods-mobile-app-can-save-you-money/
> 
>> 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.

That seems to be an interoperability point you’d like to explore. As far
as incentives go, while merchants may wish to be able to
switch loyalty service providers, the service providers may not (initially)
want to make that easy to do.  It seems quite important that we have
loyalty service providers at the table for this discussion if we are to
get their support for a new standard.

> 
>> 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.

It seems to me that your problem statement could be more explicit that
you seek to make it easier to change loyalty service providers. 

> 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).

I don’t quite agree with the analogy. In the case of Web Payments,
we are connecting merchants to consumers by making it easier
for consumers to make payments. In the case of loyalty programs,
the relationship you are speaking about here is between merchant
and loyalty service provider, which is experienced directly by
the user. 

> 
>> - 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).

Are you thinking of emphasizing the POS use case, or the E-Commerce site
use case?

> 
>> 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.

(You = the merchant)

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

I can understand merchant incentives for choice. Current providers may
not have incentives to decouple, so we need to have them at the table 
to discuss.

> 
>> - 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 http://www.gsma.com/digitalco...ES-Minus.pdf
>> 
>> 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.

Thanks, Manu.

It also occurs to me that we might want to continue the bulk of this discussion
in the CG since it is about digital offers. We can discuss that at the 3 Feb call.

Ian

--
Ian Jacobs <ij@w3.org>
https://www.w3.org/People/Jacobs/
Tel: +1 718 260 9447
Received on Thursday, 2 February 2017 14:03:33 UTC

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