Matthew Kennedy will leverage customer data to better help credit card issuers get their customers use their backlog of credit card rewards packages.
Matthew Kennedy is applying his extensive background in banking and retailing to his start-up company, Skick'd.
By Daniel Moore / Pittsburgh Post-Gazette
Created as a way to recognize achievement, rewards have become an expectation.
At least that’s the case in consumer culture, where rewards programs have pervaded a wide range of sectors, created partnerships as unusual as electricity and television, and spurred cottage industries to help consumers choose the most rewarding packages.
The explosion of rewards programs — and the push to get customers to actually use them -— has evolved into the need to tailor offers to meet specific customers’ desires and to deliver them in a format that customers prefer.
Banks, in particular, needed help targeting rewards directly to customers in the view of Matthew Kennedy, a former investment banker who had a stint at Best Buy’s corporate headquarters.
Mr. Kennedy, working with two contractors in office space provided by East Liberty tech accelerator AlphaLab, has developed an analytical tool called Skick’d that aggregates a consumer’s credit card purchase history to gather wide-ranging details about shopping habits. From there, the company works with rewards providers and retailers to direct individual rewards through traditional mail and digital offers.
Skick’d is similar to how retailers use a customer’s purchase history to target coupons and advertising. But rather looking at individual products and sales within one store — what he called a “vertical” slice of consumer behavior — Mr. Kennedy is interested in a “horizontal” view, or where a consumer shops and how much that individual spends.
He may not have access to the individual products and services purchased, but he can gather insight about what rewards offers a consumer would want to receive. A frequent flier, for example, would likely use airline rewards. Someone who has shopped at Steelers merchandise store would love free tickets to a home game.
“It’s really about being able to put those rewards front-of-mind for that consumer,” Mr. Kennedy said. “There’s no reason why you should have a thousand dollars’ worth of points sitting on your bank account you haven’t used.”
Bank customers typically earn rewards “points” with each purchase made with a credit card. After accumulating points, customers can redeem those for a range of perks, including airline tickets, hotel stays, and merchandise like phones and gadgets.
Billions of dollars in liabilities
Mr. Kennedy said the idea for Skick’d initially stemmed from his realization that rewards amounted to a roughly $25 billion liability for the big banks. He’s framed his service to banks as having the potential to bring in millions of dollars of profit as customers are encouraged to sign up for and use their existing credit cards more, all while reducing those reward liabilities.
The data itself would also be valuable as retailers and rewards providers seek to better know what customers want.
“We can basically find the exact consumer that retailers want to target for any particular campaign — that is something retailers can’t readily do today,” Mr. Kennedy said, stressing that retailers wouldn’t be able to see the data but would partner with Skick’d to target the rewards campaign.
It’s a twist on analytics that is still nascent, said Michael Amar, co-founder and CEO for Ifeelgoods, a Palo Alto, Calif.-based rewards provider that focuses on digital gifts. Rewards programs, as they’ve existed since the late-1980s, have always had a one-size-fits-all approach, he said.
“Until very recently, it was always the same offer, not targeted, and hard to reach most consumers,” Mr. Amar said. “And sometimes, they don’t want a coupon for a retailer.”
Ifeelgoods, which boasts a 100,000-item rewards catalog, receives customer data from global brands like Walmart, Gap and L’Oréal to deliver the best rewards to those customers through more than 40 digital apps. Mr. Amar believes digital data and targeted rewards is the way of the future but foresees a slow adoption.
“We think the market is going there, but because we’ve been using coupons the same way for 20 years, it’s very, very hard to make a change,” he said.
From a consumer’s point of view, redeeming rewards can be onerous, particularly for some 25 percent of Americans who, according to a 2015 survey from the Federal Reserve, do not have online banking accounts or mobile banking applications.
Rewards are redeemed most quickly through mobile and online platforms, where the points and possible rewards are often displayed in an easy format, Mr. Kennedy said. Redemption for traditional banking customers involves a protracted process over the phone or a physical trip to a branch location.
“You’re going to see more consumers than not say, ‘It’s not even worth it, I’m not going to redeem these things,’” he said. “That’s why you see liabilities creep up.”
Using direct mail
Offers from Skick’d will come through direct mail instead of only through digital services, a move Mr. Kennedy said was questioned by some of his peers.
“There’s large swath of consumers that don’t use this technology,” he said. “That’s who we’re going after, that’s our primary customer.”
Mr. Kennedy showed a mock-up of the mailing. It’s a thick plastic flier with no packaging that explains the reward and why the customer is receiving it. Gift cards are embedded in the flier, and recipients can simply pop out along a perforated edge.
“If there’s three people in the room, all three people would get a different offer, depending on their spending,” he said.
He plans to test the rewards offers with four merchants, each under a different industry: electronics, sporting goods, department stores and food chains. Skick’d, which has been entirely self-funded thus far, is currently finalizing partners.
Mr. Kennedy, who said he doesn’t call any one place home because he’s traveled so much, decided to start Skick’d in Pittsburgh because of the city’s prominent banking and retail sectors.
“We’re only a small cog in the total machine of the credit card business,” he said. But “once you’re actually able to get to that level of analytics, it’s just how much are you going to pay for it?”
To report inappropriate comments, abuse and/or repeat offenders, please send an email to
firstname.lastname@example.org and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner.