Token gesture gets you close to customers

Gift vouchers were once simply a solution to finding a present for a difficult friend or relative. But now they are being used strategically by retailers and brands to create loyalty, enhance reputations and develop “experiences” for customers as well as giving a boost to their own bottom lines.

Harrods: A core part of the luxury retailer’s gift card offering is in the business-to-business sector

High-end retailer Jaeger markets its gift vouchers as part of its fashionable collections. Rather than using a standard design, the company attempts to make the experience of shopping with its vouchers feel as luxurious as every other element of the brand.

Jaeger marketing director Yvonne Kirk says the brand’s gift card is “marketed as part of the collection in-store and online, offering that perfect gift – one where you can choose yourself exactly what you like”.

She adds: “There are several choices of design and the card comes in a gift box with ribbon.”

Luxury retailer Harrods also offers gift cards, but a core part of its voucher business is in the business-to-business sector. It works in partnership with employers to provide their staff with gift vouchers as incentives and rewards. Not only does the retailer provide the companies with gift vouchers but also aims to add value and develop “experiences” for those using them. For example, corporate customers might use the premier suite in its by-appointment shopping area.

The gift cards not only help companies reward staff for good work or achievements but have a substantial effect on Harrods’ bottom line. Typically, Harrods sees an uplift on spend so that if a customer uses a £25 gift card, there is another £6 spent on top of that.

Andrew Johnson, director-general of the UK Gift Card Voucher Association (UKGCVA), says: “High street retailers should have a gift card strategy. It is a market worth £3.8bn annually of which 40% is in the business-to-business market.”

Tracy Finn, head of corporate service at Harrods, adds: “Across the board, we are seeing companies wanting to incentivise staff with vouchers from £25 to £20,000 and the Harrods brand only adds kudos.

In the bag: The gift card market is worth £3.8bn a year
In the bag: The gift card market is worth £3.8bn a year

“It becomes an experience for the person receiving the voucher – not just a case of buying a pair of shoes but the chance to come into London and spend the day there. It can be used on anything from the restaurant to holidays or theatre tickets.”

Supermarket Sainsbury’s also has many business-to-business customers using its gift cards to provide staff with a range of benefits, both as part of a long-term incentive scheme and short-term sales rewards.

It launched its gift card range just last year and Yvonne West, manager of Sainsbury’s gift cards and vouchers, says: “The feedback we get is that our vouchers are well received because they can be used for part of the weekly shop, on fuel in our petrol stations, or for a gift in store from our homeware collections.”

Versatility may be vital for a retailer with as many product lines as Sainsbury’s but other businesses find that a more specific voucher offer and tailored messages can work better. Theatre Tokens, for example, has theatre vouchers that can be exchanged for tickets at more than 230 theatres nationwide.

Launched in 1984 as a way of encouraging theatre-going, the scheme is popular with businesses that want to add a cultural and entertainment experience to staff benefits and reward packages. Rick Ferguson, editorial director at loyalty specialist Colloquy, says that vouchers can “work well” with loyalty schemes as they are a good way of collecting data.

The opportunities for data capture are also important for retailers hoping to use vouchers as a marketing tool. Some retailers use vouchers to attract customers that might otherwise not walk through their doors or visit their website. The best of these are those which are able to capture enough customer data to learn a significant amount about the new customers and what makes them buy.

One recent example of data capture working well as part of a voucher-led marketing scheme is a partnership between magazine Marie Claire’s website and retailer Uniqlo. The affiliate network LinkShare secured editorial exposure on Marie Claire’s website, featuring ten of Uniqlo’s recommended products in return for an exclusive 20% discount voucher offer from Uniqlo.

As a consequence of the promotion, the fashion retailer saw traffic to its website increase and obtained nationwide exposure for the Uniqlo brand to a relevant demographic. Emma Grinter, Uniqlo’s ecommerce manager, says: “The key with successfully using vouchers is to select the right opportunity with the right type of partner to make sure your brand gets maximum exposure.”

She recommends that retailers use voucher deals as a “bargaining chip” for gaining exposure with paid-for magazines.

It is not just retail brands that can exploit vouchers for their needs, however. In 1998, Irwell Valley Housing Association set a trend by using vouchers to incentivise its tenants to pay rent on time and it has recently updated its offering to include a gift card.

Irwell Valley residents can become “gold service” members by paying their rent on time and abiding by the terms of their tenancy agreement. For each week they do this, the association recognises their loyalty by giving them a gold service point worth £1. These are accumulated over a 12-month period and the equivalent amount in cash-back is paid to members in the form of an Irwell Valley-branded “Compliments” debit card, produced and managed by incentive and motivation consultants Capital Incentives & Motivation. The card can be redeemed at high street retailers such as Debenhams, House of Fraser and Argos.

The scheme, much like those of the corporate players, demonstrates the powerful emotional appeal of an incentivised rewards strategy among a variety of customer types, from shoppers to corporate staff. By aligning the right products with the right audience, it is possible for marketers to find ways of benefiting a wide variety of people and companies as well as boosting that bottom line.

Case study: B&Q

After developing a consumer gift card in 1997, B&Q recently launched a corporate gift card operation to capitalise on the business-to-business gift card market, which it estimates to be worth £2.2bn a year.

The DIY brand was aware that a wide range of employers were keen to use vouchers as part of their staff benefits schemes and customer loyalty programmes, so it felt there was potential to generate more market share by appealing to businesses such as call centres attempting to reduce absence or sales focused brands, such as O2 which uses vouchers as part of its commission scheme.

The B&Q gift card is available in a range of denominations including £5, £10, £25 and £50 and incorporates leading-edge technology and security features, such as remote activation. The card has also been future-proofed to allow for online use and B&Q is already in the process of introducing technology that will allow for reloading of value onto it.

B&Q piloted its B2B gift card last year with a deal that encouraged Ford owners to take their vehicle to Ford garages for an MOT. Customers that did this were eligible for a B&Q gift card. The success of the campaign demonstrated to the B&Q board that there was a demand to justify the investment required in the back-end operation.

Arun Glendinning, general manager at B&Q Business Services, explains: “As well as giving something back to the consumer, something more tangible than just knocking money off an inflated price, it is driving people towards your brand who might not be your core customers.”

Paul McRae, business development manager at motivation consultancy P&MM, says that he sees a lot of interest in the DIY retailer’s scheme.

“B&Q is an important brand for us within the home improvement and garden centre market,” he says. “The gift card launch is timely as B&Q is an extremely popular choice within the incentive and reward programmes that we manage.”

B&Q has a dominant position in its sector with 65% market share. This means that the gift card needs to not just bring existing customers in-store but generate incremental sales. “We are being a bit choosy about which markets we will go in because the primary objective of a business-to-business gift card strategy is to access customers in closed markets,” reports Glendinning.

Voucher strategy

Andrew Johnson, director-general of the UK Gift Card Voucher Association, advises retailers…

  • Work with incentive agencies to make use of a business-to-business audience
  • Have a gift card and voucher offer available
  • As corporate customers are often demanding, make sure the way you deliver is up to scratch
  • Capitalise on any third-party sales
  • Invest in a digital offering
  • Make sure gift cards sold in-store can be used on the website
  • Make sure any voucher is “giftable” with innovative packaging so there is a feeling of receiving a present
  • See your gift card as part of a product range to be displayed proudly rather than keeping it stuffed away in the bottom of the till

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