An Open Letter to Merchants: Don’t Say Card on File

We need to wean ourselves off of using terms like "card-on-file." Why? The problem with "card-on-file" is that it is inherently an eCommerce term related to electronic payment cards. The changing needs and expectations of the modern consumer, however, are going to make it exceedingly difficult to rely on only one channel. How does the term "card-on-file" translate to mobile - should we call it device-on-file? How does it translate to in-store experiences? With the increasing complexity of payments and commerce data across customer interactions, and the increasing relevance of that data to the customer's experience, merchants can easily develop a competitive advantage by effectively leveraging their online/offline sets of customer data.

In payments and commerce, too often strategies are built around channel-specific tools, technologies, and terminology. For instance, the term "card-on-file" refers to an eCommerce business' storage of its customer's payment card information, to avoid requiring the customer to re-type their credentials when placing subsequent orders. Similarly, a laundromat might have a "phone-on-file" that is used to bring up the customer's prior orders and starch preferences. Why stop with just the card or phone number?

In order to build a customer-focused payments strategy, it is increasingly important to blur the lines between traditional channel approaches, to build deliberately when supporting growth, and to partner holistically when choosing to rely on providers.

The proof is in the pudding here. All the incumbent powerhouses of retail and food service are recognizing that the only way to grow is to allow your customers to reach you whenever they want. It used to be that commerce was a customer interacting with a merchant by walking into a store, perusing, purchasing, and leaving. "In-store" was the only channel available to a customer. Add in the advent of online shopping and mobile devices bringing that experience out into the wireless great outdoors, and now "channels" are no more than a litany of touchpoints a customer can have with a merchant. That progression over time of options available to a consumer has led to disjointed parallel ecosystems of technology, providers, and middleware - we are fast approaching a point at which the expectations of a customer are such that the walls between these ecosystems need to be broken down. The problem being that all of these parallel ecosystems often interact with your customer in separate, inconsistent ways. While it is great to be a consumer in this brave new world, it is getting more and more challenging to sell to them.

What Is Customer on File?

An ideal payments and commerce system would have the customer at the center of it - think of a customer-on-file database. There are mobile systems, eCommerce systems, and point-of-sale systems, all of which have inherent differences. All three, however, should share the same construct of a customer. All three should be able to identify an existing customer with the minimum effort possible - or obviously create a new customer. Finally, after identifying or creating the customer, all three should be able to read existing or write new interaction events with that customer. These interaction events should have a wealth of attributes - what type of interaction was it? What technology did your customer use during the interaction? Was a purchase made? Was advice on future purchases given? These events, all indexed to that customer construct, can enable a business to interact in a more informed and efficient fashion, and have a positive, consistent experience across all technologies and mediums.

To review: step one is a customer database that stores all of the different attributes that customer could have. This could be their contact info, their payment credentials (secured, of course!), their device info; anything related to that customer that identifies them and how they interact with your available touchpoints. Step two is a log of interactions with those customers. Provided you've created ways to easily identify your customers when they interact with you, this should be straightforward.

How Does Customer on File Help?

Let's break down the relationship between a customer and a merchant into its components:

The acquisition phase is where you need to build out your customer database. All of a merchant's channels should be able to quickly access the customer database to 1) identify if a customer is new or existing, and 2) append a customer's record with as many attributes as possible. If a customer is in a retail shop, they could be incented to sign up for an email list by providing their email address, or providing their phone number and first/last name. If a customer phones into a customer service center, they could provide their mailing address or phone number when asking questions. If that customer browses your website, store device and browser information to try and determine a unique device ID. The more information that can be appended to this customer object, the better. At this point, a customer database that can join in store, online, and in-print advertising and interactions will at least help in consistent messaging and avoid duplication of efforts in multi-channel advertising. Software and partners in the acquisition phase tend to primarily operate in the advertising and CRM space. The reality is that application of a customer-on-file strategy in the acquisition phase will require constant and consistent collection of data on customer interactions, but also on constant and consistent cleanup and management of that data to ensure duplication and accuracy of your efforts will carry into the next stage: conversion.

The conversion phase is where the advantage of a centralized customer strategy starts rearing its head. Your customer is ready to buy, and you can demonstrate how attentive you've been during the acquisition stage, but also how interconnected your payment and fulfillment systems are. Buy-online-pick-up-in-store is a powerful tool for retail and food service merchants, but requires online/offline systems to be able to quickly access specific customer details for successful and efficient identification and fulfillment. Similar scenarios - buy-online-ship-fromstore, buy-in-store-ship-from-warehouse, split shipments - all help to ensure successful conversion, but all depend on quick and easy access to a customer-centric system.

Savvy merchants use the conversion phase to seed the table for the next interaction, but do so without introducing friction into the conversion process. As part of the checkout process, you can request some minimal information - a phone number or email address, perhaps - to identifytheir customer record, and now you can append this record with payment credentials (securely, of course!). Once you have a credit card number (or a secure token) and an email address, you should be able to uniquely identify that customer at any location going forward. Better yet, you have a completed sale to indicate their product preferences, as well as a payment method that can be used again to reduce friction in subsequent checkout experiences. A fraud service provider like Accertify or Threatmetrix could pass device specifics from an online checkout, as well, allowing you to quickly identify that unique device if it enters your ecosystem in the future.

The retention and upsell phase is the point at which a customer-centric data strategy can separate the wheat from the chaff. Effective identification of an existing customer, and informed service based on their prior interactions with you, will increase their lifetime value to your brand. Returning a website purchase to a retail location? Your store can grab the payment credentials to process the refund, and the email address for a return credit confirmation. Buying a pair of shorts at an outlet store? Your system can grab the order information from your last website visit, and recommend a belt to accompany them. Just downloaded the new iOS app? Your system can welcome the user with their abandoned shopping cart from a few weeks ago. Furthermore, you can leverage external data sources like Axiom, Experian, or even your payment processor to append your customer-on-file with preference and spending data to better inform future interactions.

Small merchants processing through Square get a benefit of an email address returned to them whenever a card is dipped orswiped at their location. First timers at a Square shop will be asked to input their email address for a receipt. I bought a cup of coffee at a small shop in Charleston, and received an email a few weeks later notifying me of upcoming events and sales at that same shop. In a completely frictionless way, a partnership between that shop and Square had allowed them to have a customer-on-file record for me that they could use to induce me to return.

Netflix has mastered the art of customer-centric channel agnosticism in its retention strategy. I can start an episode of 30 Rock on my smartphone while running on the treadmill, and pause halfway through. When I pull up the application on my Apple TV hours later, I’m offered the opportunity to pick up where I left off - my customer-on-file record had noted an interaction, inclusive of how far into a 30 Rock episode I had made it.

Amazon, in a similar fashion, can identify its customer across devices, email, and websites. I can order a phone charger using my Amazon Echo, check shipping on my iPhone, and log on to the website to see similar phone accessories I might like. They’ve been able to effectively and quickly identify me across numerous touchpoints, all without inconveniencing me.

How Do I Get There?

Build deliberately - assume that there will always be new technologies that your customers will use to reach you. There will be specific idiosyncrasies to adapt to with each new channel, but deliberate technology roadmaps and consistent normalization will ensure that a customer-on-file database remains at the center of them.

Partner holistically - buying a solution that is focused on one channel runs the risk of creating a patchwork quilt of services that is difficult to maintain, and difficult to normalize to a customercentric strategy. Your customers will inevitably notice, and they will expect better.

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