A Conversation with Scott Grimes, CEO & Co-Founder, Cardlytics

Navigator Edition: August 2016

Scott-Grimes_web-We recently spoke with Scott Grimes, CEO & Co-Founder, Cardlytics. In this Q&A format we discuss the evolution of Cardlytics, advancements in purchase-based intelligence, and other developments looking forward.

Scott Grimes is an experienced entrepreneur and strategist. Prior to founding Cardlytics, Scott was a Senior Vice President and General Manager at Capital One where his team developed ground-breaking payments products. Scott has worked on both sides of the emerging technology world – as a Principal at Canaan Partners and as an Executive at the leading e-Sourcing company, FreeMarkets. He led key strategy and M&A initiatives for technology companies during his eight years as a Principal at McKinsey & Company. Scott began his career with a 10 year stint at Schlumberger as an electrical engineer. Scott holds a BSEE from Union College and an MBA from Stanford’s Graduate School of Business.

Cardlytics uses purchase-based intelligence to make marketing more relevant and measurable. The company partners with more than 1,500 financial institutions – including Bank of America, PNC, & BB&T– to run their banking rewards programs that promote customer loyalty and deepen banking relationships. In turn, they have a secure view into where and when consumers are spending their money. They use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Cardlytics has raised more than $195 million in venture funding and was ranked #88 on the 2015 Inc. 5000 and #25 on the Deloitte 2015 Technology Fast 500. Headquartered in Atlanta, Cardlytics has offices in London, New York, Chicago, and San Francisco.

1. What is new with Cardlytics? How different is your current model from the original startup concept?

When Lynne Laube and I founded Cardlytics, we saw a significant opportunity to use banks’ purchase data to solve marketing’s most difficult challenges while generating new bank revenue streams. That value proposition has not changed. What has changed is that we’ve expanded our focus to use this purchase intelligence to create value for advertisers outside of our native bank channel. Making marketing more relevant across all forms of advertising opens up significant market opportunity which we’re aggressively pursuing.

We’ve been very successful with our core offers business, helping more than 1500 banks drive significant improvements in customer loyalty and engagement. These benefits are real. Our bank partners see up to 26% less attrition, 7% more spend on consumer cards, and digital engagement increases upwards of 30%. One bank partner saw its net promoter score increase by 19 points after implementing our program. That means that customers have moved beyond simple loyalty to become brand advocates.

To capture the opportunity beyond our native bank channel, we launched Platform Solutions earlier this year. This offering helps marketers identify, reach and influence likely buyers at scale, and measures the sales impact of marketing campaigns using insights from purchase data. Advertisers can apply this purchase intelligence across all media including display, mobile, video, social, email, and TV. There is a huge opportunity here that will fuel our growth while delivering value and revenue to our bank partners and advertiser clients.

2. Provide some color on Cardlytics purchase intelligence and how it’s different from what others offer.

Our purchase intelligence is deterministic, based on actual purchases, versus the probabilistic, model-based “insights” that marketers have worked with previously. We offer audiences, measurement, and insights based on $1.5 trillion in consumer spending annually, representing over 20 billion transactions across more than 120 million bank accounts. We see one in four U.S. card swipes. That’s real scale and it continues to grow. We get this purchase data directly from bank partners in a consumer-friendly, privacy-protected way that doesn’t compromise consumers’ PII.

We use this purchase intelligence to help big brands target and measure campaigns within banks’ online and mobile banking experiences – a native advertising channel not unlike Facebook or Pinterest. Earlier this year, we introduced Platform Solutions to extend the impact of our intelligence platform to marketing campaigns across connected media, including display, mobile, video, social, email, and TV.

We work with some of the world’s most recognized brands – 23 of the top 25 restaurant chains, 30 of the top 60 U.S. retailers, four of the top five U.S. cable & satellite providers, and all of the top four U.S. wireless carriers – to make their marketing more relevant and measurable.

For example, we helped a DIY auto store client gain a holistic view of their customers and their market share. By activating those insights through Cardlytics Direct campaigns the client now generates a consistent incremental million dollars in revenue per month.

Another sports retailer client remodeled a number of stores and worked with us to understand how those improvements impacted their market share. They then used Cardlytics Direct to drive traffic in underperforming markets.

These deterministic insights are unique in the industry and answer a long-standing need for marketers.

3. There are different schools of thought on the value of card-linked offers as the industry has evolved. What is your perspective on the effectiveness of CLOs to the different stakeholder groups?

We see Cardlytics Direct, our core loyalty and rewards platform, as a win-win-win proposition for banks, merchants, and consumers.

Our bank partners experience the loyalty and engagement benefits that I mentioned before and they also receive material revenue from us. For our largest bank partners, we’re sharing tens of millions of dollars a year that goes straight to the bottom line without any capital requirements.

Merchants use our purchase intelligence to attract new customers, nurture loyal customers, and re-engage lapsed customers with precisely tailored campaigns. Our advertising clients love the results they see with us and we now have numerous brands investing more than $10 million a year with Cardlytics Direct.

And, we’re saving consumers a lot of money. We’ve paid out more than $150 million in consumer rewards, and that number is growing each year.

4. Clearly, the move to mobile (banking and commerce in general) has accelerated. How is Cardlytics responding and taking advantage of this macro trend?

FIs face a real challenge in the threat from Silicon Valley. These emerging tech companies – and a few behemoths – are trying to turn banks into a “box of money” by unseating banks’ position within consumers’ lives.

Mobile provides an opportunity for banks to re-engage their most valuable customers and protect and grow market share. Most of the big banks are investing in mobile apps and wallets, but it takes more than building an app to drive adoption. Consumers want a simple, frictionless experience. They need to be convinced that using a mobile wallet is more valuable and secure than a physical wallet. Our loyalty program helps add that value.

We find that customers who participate in our loyalty program engage more frequently with their bank’s digital channels. These customers log into their mobile banking apps nearly as often as they check Facebook – that’s a sticky customer relationship. With capabilities like geolocation and push notifications, our mobile loyalty program helps banks become an integral part of their customers’ day-to-day lives.

Mobile is particularly important in helping banks capture valuable millennial customers. These HENRYs have a lot of disposable income and are looking for guidance on how to start building real wealth. Loyalty programs can help banks draw these customers away from competitors. A study from AlixPartners found that 49% of millennials are interested in switching banks to one with a rewards program. This is a big opportunity for banks with customers who need more than simple deposit accounts.

5. Cardlytics’ primary identity is being a scale card-linked marketing platform. Where does the company go from here?

We are the clear leader in card-linked marketing, but it no longer defines who we are. We started the industry, we have the most scale amongst others doing similar work, and it is still the biggest part of what Cardlytics offers, but we have expanded to become a purchase-driven data intelligence platform because we are doing much more now than card-linked marketing.

We’ve consolidated the market with mature, stable scale, and we’re growing at more than 30% year over year with a clear path to profitability. This makes us one of the fastest growing, private tech companies in the U.S.

Moving forward, we will continue to invest heavily in Platform Solutions to help make all marketing more relevant and measurable. Longer term, we want to transform commerce with purchase intelligence. This means increasingly applying our intelligence and analytics in new ways, such as real estate development or life event prediction. And, our bank partners – and their customers – will continue to benefit as our business expands because we’ll reinvest some of that revenue into our core bank loyalty program.

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