Using Payment Card Data, Index Brings Personalized Shopping to In-Store Customers

By Kevin Woodward

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E-commerce retailers have a unique advantage over their brick-and-mortar counterparts. They typically know quite a bit about a shopper’s purchasing habits, and that helps them create personalized offers that bring back customers to spend more. Index, a San Francisco-based company, hopes to give large brick-and-mortar retailers a tool to enable their own personalized shopping experiences.

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Two former Google Inc. executives who worked on Google Wallet, Jonathan Wall, Index chief technology officer, and Marc Freed-Finnegan, chief executive, founded Index. Its pitch for retailers hinges on capturing a consumer’s payment card data. The company is focusing on the top 100 retailers. The service is available now.

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“Payments, that moment of conversion, is really what informs what works,” Freed-Finnegan tells Digital Transactions News. “With payments, you can measure and optimize.” The service is opt-in only, meaning consumers have to consent to receive the offers, he says.

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For example, a brick-and-mortar retailer that reports an increase in same-store quarterly sales likely doesn’t know if that came from existing customers spending more or new customers, Freed-Finnegan says. “Without the understanding of the customer, it’s hard to provide a really great experience. We think delivering something personalized is where the opportunity is.”

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With Index, payment card data are captured at the transaction and turned into a token that Index uses to associate subsequent purchases to generate personalized product recommendations. These recommendations then can appear in a variety of locations, such as on receipts, email, social-media accounts, or in online display ads. The consumer also can save offers for redemption in stores. Offers also can be applied before checkout is complete, Freed-Finnegan says.

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Index works in the background, unseen by the consumer, except for the offers it generates, says Freed-Finnegan. Index integrates directly into a retailer’s point-of-sale system. “The first thing we do is a foundation,” he says. “We take an existing credit or debit card. We create a card token. And we can build an anonymous history with that card.” All card data are secured, he says, and Index is PCI- compliant. Token decryption occurs only at Index’s data center.

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Index is governed by a contract separate from the retailer’s merchant-processing agreement, Freed-Finnegan says. “We do not impact the processing rate.” Index makes its money from service fees and when consumers make purchases based on recommendations supplied by Index, he says. “We are a performance-based marketing company.”

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What Index is attempting is of paramount importance for many retailers, says Paula Rosenblum, an analyst at Retail Systems Research LLC, a Miami-based research and advisory firm. “There’s no doubt that the entire industry is working to find ways to deliver more relevant offers to shoppers,” Rosenblum says. “Customer segmentation is definitely a hot topic right now.”

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Along with that emphasis comes recognition that digital sales channels are more about providing information than just selling products, Rosenblum says. When retailers were asked in a Retail Systems Research report released last year to rank the primary role of digital selling channels, 25% said it was to provide the consumer “everything you need to know to buy” products and services. In 2012, the figure was 14%.

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Providing personalized offers, however, is not worry-free, she says. Retailers need to ensure that Index provides a clear indication about how its service works, with explicit opt-in rules and a description of the data being stored.