Starbucks Leading the Way With Their Gift Card Strategy

Starbucks are leading the way with their gift card initiatives, attracting many new customers since their introduction. The Starbucks e Gift cards can be sent for Valentine’s Day, weddings, the Lunar New Years and more. They can be sent via email, text or with a physical card. These gift cards which have a certain amount of credit will encourage people who may not usually be customers to visit a Starbucks store to redeem. From there these customers often just find it convenient to simply top up the cards for easier and quicker future purchases.

Many of these gift card users have then gone on to sign up for Starbucks ‘My Starbucks Reward’ program. The program allows members early access to new products, free drink or food rewards and easy payments with the online app. In Q1 alone there has been 0.9 million new MSR members, bring the total number of members to a staggering 9 million. These numbers show the huge success that the scheme has had due to the customer being able to have a quicker and more efficient experience. The other advantage of having so many people sign up for schemes such as MSR program keeps a loyal base of customers that know they will keep coming back as it is in the customer’s interest to buy from Starbucks as it helps their reward points.

However in a study carried out in January of 2014, only 3% of retailers said that gift card strategies were its main priority in their retail plan. Only 17% of retailers said that gift card purchase or redemption were a priority at all in their future strategies. Most were more focused on their online platform, making sure that was a tool that keeps customers coming back. The Starbucks online app has managed to incorporate their gift card redemption scheme into it as well as being able to order coffee and manage your Rewards Program. There is soon to be a delivery service as well in the second half of 2015.

Understandably many of the smaller retailers do not have the financial power to have such a large all-encompassing online service, however Starbucks can be used as an example that is leading the way in terms of omnichannel retail as they are constantly striving to provide a service that not only makes the customers life easier but gives them rewards for their loyalty.

APEX is where merchants rule. As new companies create new iterations of payments that combine mobile capabilities, loyalty, closed-loop currencies, wallets, acceptance devices and lower transaction costs, it is the retailer that decides what is successful and what is an also-ran. At APEX, retailers can view the latest technology alongside their peers and discuss the challenges and feasibility of implementation that are unique to this industry.

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Sources:
Forbes - http://www.forbes.com/sites/greatspeculations/2015/01/26/starbucks-gift-cards-initiative-and-mobile-commerce-drive-customer-traffic-in-q1-2015/
Accenture - http://www.accenture.com/us-en/landing-pages/Documents/Seamless/Accenture-hybris-Forrester-new_2014.pdf

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Digital Gift Cards to Overtake Plastic 1-2 Years

1-800-Flowers E-Card Expert Says Digital Wallets Herald End to Another Holiday Tradition

By Marc Dresner, Senior Editor, IIR

Like almost every other person I know who is not the parent of a young child, the 2014 holidays concluded with a stack of gift cards in place of a mountain of crumpled wrapping paper.

I’m not complaining, but if you’re the sentimental type like me, you probably get a little wistful looking at a Christmas tree that doesn’t have any presents under it.

My father-in-law still insists on hiding gift cards inside large, ornately wrapped boxes—sometimes it’s a series of boxes like those Russian nesting dolls—but the gag has gone a little stale and it annoys his wife to no end.

Friends of mine keep a pile of phony presents under their tree to achieve that nostalgic effect, which I find a little creepy and depressing.

At my home, we’ve taken to interspersing the cards in colored envelopes among the ornaments. We take turns hunting-and-plucking them from the tree on Christmas Day. 

It's less dramatic than a big box, but at least you get to scavenge for something with your name on it.

Now it looks like I may have to kiss that tradition good-bye, too.

Yes, friends, 2015 may be the beginning of the end for plastic gift cards.

Chris Adamo

According to Chris Adamo, Manager of Partnerships & Gift Cards, B2B, at 1-800-FLOWERS, e-cards will overtake plastic as the gift of choice within the next year, maybe two years.

“We’ve seen digital gift card sales triple in the past year.”

“For our brand as a whole we’ve seen digital gift card sales triple in the past year,” said Adamo, who has been developing e-cards in B2B for the online florist for several years.

Adamo says he expects digital wallet adoption to catalyze the migration to e-cards in the consumer space.

That’s good news for retailers, according to Adamo, who reports that digital gift cards have increased redemptions and purchases at 1-800-FLOWERS.

Digital cards are also perfectly suited to double as loyalty cards, says Adamo, which means a new level of access to customer information.

In this podcast for On Payments—the All Payments Expo (APEX) interview series—Adamo shares his experience and explains why it’s time for retailers to ramp up their e-card initiatives.

Access the podcast and a transcript here!

Editor’s note: Chris Adamo will be a featured speaker at APEX 2015—The All Payments Expo—taking place February 23-25 in Las Vegas.

For information, a brochure or to register for APEX, please visit www.allpaymentsexpo.com.

Ps. SAVE $100 of registration with promo code: XU2848BLOG

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner is IIR USA’s sr. editor and special communication project lead. He is the former executive editor of Research Business Report, a confidential newsletter for the market and consumer research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

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What’s on the Shopping List for Merchants this Holiday Season?

 [Book Meetings with Retail Attendees]  [Special Price for Retailers]

Retailers will be meeting with existing partners and potential vendors to vet the next generation of technologies they are looking to adopt. At APEX, you'll meet retailers and gain a better understanding of the challenges they are facing.

Hear Case Studies, Research and Insights from:

• Darden Restaurants
• The Jones Company/ Flash Foods
• Overstock.com   
• Hudson Bay Co.'s Lord & Taylor
• SeaWorld
• Sears Holdings Corporation
• Macys.com
• Cirque du Soleil    
• 1-800 FLOWERS
• Cabela's Inc.
• Schurman Retail Group (Papyrus)
• Kahala Brands (Cold Stone Creamery)
• Fandango
• Groupon    Domino's
• DineEquity - Applebee's & IHOP
• Cracker Barrel Old Country Store
• Toys R Us
• Hyatt Incentive Rewards
• Landry's
• Home Depot

Download the agenda to see all session details.

Register for All Payments Expo 2015 by Friday 12/19 to save $300! Use the code: XU2848BLOG | Register here.

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Wrapp App Offers Social Gift Cards Platform - Debuts at Gap, Sephora...

Those of you who joined us in London at the 2012 The Gift Card, Gift Voucher and Reloadable Card Summit, will recall Wrapp, a Sweden-based mobile gift card and retail service, backed by Greylock Partners and Atomico, driving innovation in the estimated $100 Billion industry.

The app has launched across the pond and was unveiled at U.S. retailers including Fab.com, Gap, H&M, Sephora, Brooklyn Industries, The Wall Street Journal, Wayfair, and others, yesterday.

The service, billing itself as the anti-Groupon, offers a way to drive customers and activate higher sales in-stores by allowing users to give and share $5-$15 gift cards to friends (the app utilizes the Facebook social graph), which recipients can redeem in store. Some of the cards are available for free and once posted to a friend's wall, others can also add money to the card. "Participating merchants report that each sale averages four to six times the value of the free gift card they let Wrapp users give to their friends."

"Wrapp launched in Sweden in November, and more recently opened its service in the U.K. and Norway. Since then, it has amassed about 165,000 active users that have gifted more than 1.4 million cards."

The debut is receiving a lot buzz because the service sits on the very intersection of the savvy consumer trend of using smartphones to save money in brick and mortar stores, with the collective discount phenomena of services like Groupon, to help retailers bring in in-store shoppers through the influence of their friends and family and because of the synthesis with Facebook's social graph, it can also be leveraged to target certain social and demographics shopper segments as well as gather insights on the market and campaigns.

It will be interesting to see how Wrapp transforms the Gift Card space and its traction, especially during peak holiday shopping season.

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Gift Cards Are Going Digital

By David Stone, Founder and CEO, CashStar
The Digital Age has arrived. Consumers by the tens of millions are now interacting, transacting and experiencing digitally unlike ever before.

Facebook now has well over 500 million users; eBooks are more popular than printed ones; 80% of U.S. adults regularly use the Internet for more than four hours a day; and smartphone penetration is at nearly 40% of the U.S. population.

What does this mean for gift cards?

• Consumers want and will be able to buy their cards anywhere, anytime, from the most convenient and cost-effective channel.
• Personalization is moving to a whole new level, which will enable more gifting opportunities. In the digital world, the ability for consumers to express themselves increases dramatically.

Retailers are quickly realizing this opportunity.

At CashStar, we have seen such retail clients as The Home Depot, The Gap, CVS/pharmacy, Starbucks, Chili’s, Williams-Sonoma and others embrace these new channels; they have rolled out some of the most innovative gift card programs in the market and we’re proud to have been part of that.

Here are a few predictions for how the Digital Age will affect gifting:

1. Instant Communication: The email channel will grow and become a primary means of sending and distributing gift cards. Speed, convenience and cost will drive the transition from plastic to digital.
2. Social Gifting: We have all heard the buzz about “Facebook Commerce.” As consumers become more comfortable socializing and communicating through social networks, this channel will continue to grow in importance for retailers: first as an engagement tool, primarily, and then as a commerce channel as well. Retailers who have active, engaged Facebook fans will witness the most growth for their digital gift cards. Smart retailers will also utilize the social channel as a means of acquiring customers and deepening relationships. “Social gifts” and incentives are valuable tools in this milieu.
3. Mobile Gifting: Mobile is an emerging channel that will develop as smartphone penetration increases and retailers begin the process of enabling point-of-sale redemption. Retailers will want to make sure their customers’ mobile purchases – and the recipients’ experiences, especially – are as friction free as possible. So retailers: build or partner wisely.
4. A richer gifting experience: In the digital world the customer experience becomes king. Simply offering a “plastic-like” alternative or a message with a “code” will not impress the savvy, discerning digital consumer. They will want digital personalization options and a friendlier, easier user experience.

I welcome your thoughts, and I hope to have further discussions with each of you next month in Orlando.

Thanks, David

Editor’s note: David Stone will chair a session focused on innovations in prepaid with executives from The Home Depot, The Gap, Nokia Mobile Financial Services and Rev Worldwide at IIR’s Prepaid Expo USA March 6-9 in Orlando, FL – the world’s largest gathering of prepaid industry professionals in both closed- and open-loop markets.
For more information or to register, please visit www.iirusa.com/prepaid.

ABOUT THE AUTHOR
David Douglas Stone is co-founder and CEO of CashStar, the digital gifting and incentives company. He has more than 20 years of executive management experience in Fortune 500 and emerging growth technology companies with a strong emphasis on innovative payment systems and loyalty solutions.

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New Jersey Senator looks to regulate prepaid cards

According to NJ.com, the Senate President Richard Codey is calling to regulate prepaid cards to operate with more transparency. While Obama has now imposed certain regulations on credit and gift cards, no new rulings have been made for debit cards.

The Senator looks at the fees associated with prepaid cards attacking the wrong demographic of people, "They turn to these prepaid debit cards as a means to get by," he said. "Instead, they end up sitting around helplessly as they watch their hard-earned money get eaten up by hidden fees."

Read the full article here.

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Expiration Date Rule Change for NJ Gift Cards

According to this article on philly.com, NJ consumers might soon have more protection for their gift cards. Their is a bill that has been approved by The Assembly Consumer Affairs Committee which will ban gift cards and gift certificates from expiring within 24 months of being purchased. The bill will also limit deductions and fees for user inactivity. The bill makes exceptions for certain bank cards that disclose their expiration date and inactivity fees.

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Wolfe.com acquires swapagift.com

Wolfe.com, owner of GiftCards.com, recently acquired Swapagift.com, a marketplace to buy and sell unused gift cards. In addition to Swapagift.com, Giftcards.com owns Omni Prepaid, Mycoupons.com, SteringInvestments and Jambo Media. For more, read this article at The Paypers.

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iTunes Gift Cards Stand Out

This recent post on Philly.com highlights that gift cards were number one on consumers’ wish lists during the 2008 holiday season according to the National Retail Federation. The most sought out gift card this year, which comes as no surprise, is the iTunes gift card. Many believe that gift cards are not personal enough, but consumers seem to disagree. It is estimated that 36 percent of all iTunes purchases come from gift cards, and that number climbs to 61 percent for teen consumers.

It will be interesting to see if other companies can create a similar demand for their prepaid cards as Apple has done with the iTunes gift cards.

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Entertainment and Dining Prepaid cards most popular for work rewards

In a recent article at Manage Smarter, they look at how businesses are rewarding their employees by giving them gift cards, and most popular are dining gift cards. Entertainment gift cards came in fourth. They're a popular gift solution because it isn't something the employee would normally buy for themselves and they're able to include their family in the reward.

Some prepaid card companies have seen the demand for dinner and a movie or coffee and download cards increase.

Prepaid solutions companies like First Data can even arrange to combine the dining and entertainment on the same card. First Data's Landsverk has seen not only seen dinner-and-a-movie cards being embraced, but also coffee-and-a-download cards more recently.

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Prepaid cards provide rewards for customers

Print Pelican is offering prepaid Visa gift cards to their customer who spend over $250 with them before December 14. For more information, click here.

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iPhone App can personalize giftcards

At All Pay News, they reveal a new iPhone/iTouch app that allows users to select, personalize and purchase gift cards without leaving the application.

Gary Krow, Chief Executive Officer of GiftCertificates.com had this to say about the new App:
"GiftCertificates.com is all about the freedom of choice, and delivering superior value and service to our customers, especially during the holiday season. By making it easier for our customers to access the GiftCertificates.com marketplace, the GiftCards application enhances our customers' online shopping experience and positions us to better serve them in the mobile future."

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Gift cards are spreading

On news that gift cards continue to gain popularity as presents, more and more companies are creating systems where their customers can use these gift cards. In the report which we covered yesterday, there was a section that mentioned that some Americans are using prepaid cards as a way to budget. A newspaper in Naples, Florida, Platinum Dry Cleaners announced that one local dry cleaning firm has begun gift card services for their dry cleaning stores. What do you think of the growing popularity of gift cards to practical places will do for the gift card industry?

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Giftcard survey released

Last week, Chase announced the results of a survey that included 850 American adults, and it revealed that gift cards continue to stay popular. Nine out of the ten respondents had either bough tor received a gift card within the past 12 months.

Other interesting findings included:

- Typically, consumers spent more than the amount of the gift card when they are redeemed, with 85 percent adding an average of $17.70 out of their own wallets.
- Gift card buyers who purchased a gift card within the past 12 months bought 4.7 cards for others, in addition to two cards for themselves.
- 82 percent of users said that a discount for the purchaser's use when buying the gift card would make them somewhat or much more likely to purchase gift cards.
- Free specialized gift packaging for cards is a strong purchase motivator as well (61 percent)

Read more here.

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Holiday gift cards get an extra boost

With spending expected to be down this holiday season, some companies are trying to spin prepaid gift cards into a new tool they can sell. The Christian Science Monitor reports on two specific stores specializing their cards with add-ons to reach their target market. Best Buy has a new gift card, where starting at $50, it has speakers built in and can function as a mini boom box. Target also has a new gift card that comes as a digital camera, along with 40 free prints.

Have you considered something like this for your company? What do you think consumers reactions will be?

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States using gift cards to promote better healthcare

In a recent article at ABC News, they examined how different state governments and programs are using gift cards encourage Americans to stay healthy. The article pointed out that the CDC offered gift cards to influential speakers in the gay and lesbian community to increase awareness on HIV and AIDS.

The Illinois State Department offered $50 gas cards to parents who signed their children up for health screenings. In Kansas, the Kansas Health Policy Authority gave $50 gift cards to state employees who filled out an online health assessment. Both the employees and state benefited, as then the Health Policy Authority could better determine what services they could offer to better serve their employees.

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Celebrities leave their marks on gift cards

This holiday season, you can choose to buy a gift card that's image was hand-drawn by a celebrity, some including, Christina Aguilera, Nicole Kidman, Jerry Rice, or Tim Allen. GiftCardLabs.com has issued a line of celebrity-designed holiday gift cards, and with each gift card purchase, they'll donate $1 to Marine Toys for Tots. Find out more here.

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Macerich looks to join the green trend

Macerich recently announced its partnership with American Express to distribute the "Give Green" gift card, and AllPay News took a look. Looking to target the 82% of women who feel better about helping the environment, this American Express gift card will contribute money with every purchase, and donate up to $100,000 with this new program. Gift cards can be redeemed wherever American Express credit cards are taken.

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Community Bank Products to Use Metavante’s Prepaid Card Processing Services

Finextra.com reports that Community Bank Products has aligned with Metavante, which is a leading provider of banking and payments technology, for prepaid card processing.

John Focht, division president, Metavante Issuing Solutions mentions:

"With Metavante, virtually nothing changed for Community Bank Products and its resellers. The cards already distributed are still valid. The reseller banks can continue selling existing cards. They use the same logon screens, the same IDs, the same basic procedures. Minimizing impact on the reseller banks supported by Community Bank Products - that's what Metavante's conversion expertise and relationship team delivered throughout the process."

Community Bank Products will roll out with two new prepaid products in 2010: payroll cards and general purpose re-loadable cards. Both of these cards will have the Visa brand and will complement existing Visa TravelMoney cards and gift cards offered through Community Bank Products. Metavante will also provide customer service and fraud prevention solutions in addition to prepaid card processing, card production and delivery, and account management.

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Gift Card Sales are Expected to Drop During the Holiday Season

This post on the ePaymentsnews Network mentions that because of the current economic situation across the US, consumers will spend less money (about USD 25 billion) on gift cards.

Instead, consumers will spend money on necessities such as gas, dining, and groceries. Restaurants and fast food chains are expected to sell the most gift cards this holiday season. Teenagers and post-college consumers are expected to give gift card purchases a boost since many gift card retailers offer coupons and discounts for the purchaser.

The study information is provided Archstone Consulting.

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