Shrinking the redemption loop is a key goal for any brand offering social shopping deals online. Two recent initiatives from American Express bring us one step closer.

We are devoted to advancing consumer goods brands’ cause in their pack-out strategies (consideration phases before a purchase, in-store and at the point of purchase), and believe that new technology developments are re-inventing the practice. We follow new consumer brand developments closely and in this, and another upcoming post, we’ll share two striking efforts to unite brands’ marketing efforts with what happens in-store.

Tracking the effect of deals

Coupons, deals, offers – it’s all come a long way in a short time, with the meteoric rise of daily deals services like Groupon and LivingSocial. But so far, neither of these social shopping behemoths has really enabled participating merchants to track how effective their deals are.

That’s important, because the future of social shopping depends on merchants understanding how their deals perform, and refining them accordingly – a process known as the “redemption loop”.

As the former editor in chief of Techcrunch, Erick Schonfeld, wrote last year:

The redemption loop starts when a consumer sees an ad or an offer for a local merchant, and is completed when the consumer makes a purchase and that purchase can be tracked back to the offer. If you know who is actually redeeming offers and how much they are spending, you can be much smarter about tweaking and targeting those offers.

American Express, Go Social and Link, Like, Love

Last year saw American Express (AmEx) launch two services that promise to shrink the redemption loop considerably. Both are designed to connect shoppers’ social networking personas with their in-store activity.

Go Social is a local deals platform that allows merchants to manage deals across several social networks. AmEx cardholders who link their Facebook or Foursquare accounts with their AmEx card will see offers from Go Social participating merchants when they search for offers via their smartphone apps for Facebook or Foursquare. The deals can also be found through the web browser versions of both social platforms.

Cardholders can then choose to add those offers to their AmEx card – either via a web browser or smartphone app. When they buy something in the physical store of a merchant that's using Go Social, and they have a deal from that business linked to their account, as long as they meet the conditions of that deal, the deal will be applied to that sale.

With Link, Like, Love, AmEx card holders who link their card to the app will be offered deals from merchants participating in Go Social based on the cardholder’s Likes on Facebook. Again, the cardholder adds deals they are interested in to their card account. These deals are then redeemed in the same manner as if they had discovered the offers through Facebook or Foursquare themselves.

Both services help merchants to shrink the redemption loop, as AmEx gives them information about, for example, how much was spent on a transaction and whether that same customer came back later to shop in the store. This kind of data allows merchants to adjust their offerings on an ad-hoc basis to keep customers returning.

But are customers engaging?

Of course, the success of initiatives like Go Social and Link, Like, Love will ultimately come down to how many shoppers sign up for them. AmEx has yet to release usage figures for either service, but later this month it will start charging merchants to join, suggesting it may have amassed enough participating cardholders to make it an attractive proposition.

The future of social shopping?

In the meantime, AmEx is working to remove credit cards from the shopping process entirely. It plans to use near field communication (NFC) technology to allow account holders to pay for purchases with their phone, including deal-based items set up with Go Social.

With mobile contactless transactions expected to top 2.2 billion in 2012, smart phone applications like Google Wallet will enhance functionality (virtual coupons, receipts, tickets, and more) leaving the wallet, much like the filofax, consigned to history.

With the possibility to seamlessly follow shopper behaviour from the ZMOT all the way to payment, the race to close the redemption loop is on.

Let us know your brand’s experiences with social shopping and the redemption loop in the comments.