Great topic Rich, Karel is definitely thinking here!
I was struggling with a very similar issue a few months ago when developing the logistics for SuperGreenBeans®. I have developed some solutions that I think can help here.
GreenBeans Rewards® are earned in a specific store and are only redeemable back in the store they were earned, but SuperGreenBeans Rewards® act like cash, and can be redeemed anywhere GB`s are accepted, and are stored on the same card as GreenBeans Rewards®. More importantly, consumers can add value to these cards, as gift cards, and give them to friends, family, charity, etc.
Here are the 3 most important reasons, as I have learned that merchants choose to issue gift cards:
1. cash-in-hand (money up front for a future sale), with stored value
2. Increased likelihood of the recipient (potentially new customer) visiting their store to spend their card
3. Slippage - percentage of gift cards that are unused, but the merchant has already been paid for (this is one of the BIGGEST perks as it 100% pure profit)
When I first proposed this "universal" currency of SGB’s on the GB`s card to prospective merchants, it was not so well received, as it essentially dissolves many of the benefits associated with gift cards.
Basically, good for the consumer, bad for the merchant. How to fix?
My solutions for the merchant:
Cash-in-hand: customer pays the merchant when they add value ( SGB’s) to the GreenBeans Rewards® card, value is stored, and merchant is not responsible for value until the SGB’s are spent (redeemed). Challenge 1: Done!
Increased likelihood of the recipient (potentially new customer) visiting their store to redeem/spend the gift card: Since the gift card value ( SGB’s) are universal, there is no guarantee that the recipient will return to shop in the store that issued them. So, in order to better secure return business, an equal number of GB’s can issued and/or a store promotion (get 25% off your next order here, etc) to the card when the SGB’s are loaded. In example: When $25 (gift card) in SuperGreenBeans® Rewards is purchased (or value is added), 25 GreenBeans® and or/promotional offer (which can only be redeemed at the store they were issued) are added to the card. Not only does this increase the likelihood of the recipient to return to the store to redeem their GreenBeans, but, when/if the recipient chooses to activate these “points” or GreenBeans, they must register, offering the merchant insight and direct marketing capability, should the customer opt-in. Challenge 2: Viola!
Slippage: As SuperGreenBeans® are not “called-in” until they are spent, the opportunity for slippage still exists, albeit at a lower percentage, as the consumer has more options to spend their SuperGreenBeans®, but now a NEW opportunity exists: having a customer come into your store to spend their SuperGreenBeans® that they received at another location because they can see (BIG SIGN) that you accept GreenBeans Rewards®. Now the sale has cost you nothing, you are reimbursed for the redemption, and you have a brand new customer that has just earned GB’s for shopping in your store and they will be likely to return to spend them. Challenge 3: Tada!
There is another issue in regard to the branding, the gift cards acting as mini billboards for the company, and I am working on creating co-branded cards to address this issue. Having the store that the customer signed up in as their “home store”, with the store branded on the card will provide and extra reminder for the customer.
For the consumer: Get “cash” on the card without actually having to add your own money:
1. SGB`s issued for recycling: when a consumer recycles a phone, battery or inkjet cartridge (puts it in a box at the store), the merchant issues SGB`s (cash value, universally usable) the amount is at their own discretion, then the merchant is reimbursed by GreenBeans® Rewards for the value of the recycled product. In this instance, the value of the SGB’s or “cash value” is sponsored by GreenBeans Rewards®, NOT at the merchant’s expense.
2. SGB’s issued by manufacturers: manufacturer’s sponsor SGB “coupons”, very similar to regular manufacturer’s coupons, which are redeemed at the point of sale for SGB’s. The merchant is then reimbursed by GreenBeans Rewards® for the value of the “coupon”. In this instance, the value of the SGB’s is sponsored by the manufacturer, NOT at the merchant’s expense.
So how does all of this apply to Rich posting? I think it would be easy, as all the systems are in place, to take the SGB’s method and apply it here:
Just as merchants attach GB’s to a SGB’s gift value, they could do the same thing for conversion:
I have 3 gift cards:
$2.34 at Mary’s Fine Clothing à converts to $2.34 in SGB’s (redeemable anywhere GB’s are accepted) , 2 GB’s and/or promotion (redeemable only back in Mary’s)
$23.50 at Baby Grows Up à converts to $23.50 in SGB’s , 24 GB’s and or/promotion
$14.01 at Fix ‘er Up à converts to $14.01 SGB’s, 14 GB’s and/or promotion
So now I have $39.85 that I can spend at any participating store, HOORAY!
So how to simplify the explanation…HELP!
What are you folks thinking?