Square Is Using Customer Data to Create Targeted Email Campaigns for Brands

Leaping from mobile payments to marketing

Linking up online and offline marketing is the ultimate challenge for bricks-and-mortar retailers these days. And after years of powering credit card transactions and mobile payments for small businesses, Square thinks it has found a solution.

Today, the San Francisco-based payment company launches Square Marketing—a marketing tool that lets small businesses target customers who shop in stores through email promotions. Since launching in 2009, the mobile payment company has helped merchants and businesses electronically accept credit card payments, collecting a trove of data in the process. Now, the goal is to help brands take action on that data.

"The first big step is to empower these small businesses with tools that help them deepen their relationships with their customers," said Kevin Burke, head of customer acquisition at Square. "For the first time, small businesses can now deliver a message to the right person at the right time with the right context, which will increase the likelihood for that customer to value that engagement and also act on it."

Merchants that use Square get monthly reports that break down anonymous payment data. Now, businesses will be able to see which sales came from new customers versus returning shoppers. They'll also find out how often customers visited their stores each month.

With that data, businesses can target shoppers through email marketing. Emails are targeted based on three groups of customers: those that make three, two or fewer than one visit to a store every six months.

Businesses either pay 10 cents per email or $15 a month for unlimited emails. Square has templates brands can use to push out promotions, events and announcements.

After sending out an email blast, Square compares email recipients with credit card swipes to show marketers how it drove actual sales.

During the tool's pilot program, Square claims merchants doubled their email open rates and redemptions, generating $1 million in sales.

Emily Osterberg, president of Baking Betty's in Newport Beach, Calif., said she uses Square Marketing to segment email campaigns. She also uses TV and print ads to retarget customers, but said email is more effective in getting customers to return.

Square's move is the latest example of how businesses are increasingly looking to link offline and online data for better ad targeting. Square hired Burke—who was previously Visa's CMO—in December to head up the payment company's retail, events, Web and paid marketing operations.

Email Challenges

Still, Square has a number of competitors that are all going after small businesses.

"By getting into this space, they are officially becoming a small business platform, similar to where GoDaddy is trying to go," said Abid Chaudhry, a senior analyst at BIA/Kelsey. "It's a really saturated market, so they have to differentiate themselves with data."

Jeanne Jennings, managing director of digital marketing at Digital Prism Advisors, went so far as to say that connecting offline data to email marketing could be a game-changer that puts Square ahead of big-name email service providers like ExactTarget and Silverpop.

"If they're going to tie in data, I would suggest that it's more powerful than a Silverpop," Jennings said of Square. "[The opportunity] is huge and is something not a lot of people are doing successfully."

But Christopher Donald, a strategist at Inbox Group, predicted larger email service providers like Square won't crush Silverpop and ExactTarget because Square primarily works with small brands, like mom-and-pop coffee shops and clothing boutiques.

Small business owners aren't as well versed as big brands in digital marketing, which means Square may need to teach them the ins and outs of email marketing. "They have a chance with small businesses, but most small businesses have little experience with email marketing and even less with targeted messaging based on data collected," Donald noted. "So they'll need to make it really simple, automated and easy, or the small business owner won't take the time to learn anything that has a large learning curve."