Vouchers have been one of marketing’s great success stories. Paper vouchers and coupons have been around for as long as anyone can remember, but after several years of impressive growth, the market for pre-paid and non-denominational vouchers has entered an era of invention thanks to the development of new media.
Even before the arrival of US-style gift cards two or three years ago, the speed at which the UK market for pre-paid vouchers was growing reflected a change in the public’s perception of them as gifts, rewards and sales promotions.
Fears of consumer resistance to plastic and electronic vouchers have largely proved unfounded. The sceptics now concede that electronic vouchers in the form of gift cards will probably dominate the paid-for market by the end of the decade.
Andrew Johnson, director-general of the VA (formerly the Voucher Association), says: “Some people said that plastic gift cards would totally replace the paper voucher. Well that hasn’t happened and it probably won’t. It is more likely the two systems will sit side by side for the foreseeable future.”
However, a number of companies are looking at alternatives to plastic and paper vouchers in the form of digital vouchers and mobile formats.
Alexandre Meerson, incentive and motivation director at Sodexho, thinks that virtual vouchers are the next step. He says: “If you look at what’s happening in Japan and South Korea, where people carry more mobile phones than cards, mobile vouchers are already common. The main advantage is their cost and convenience, and this will become increasingly significant as online retailing and other e-commerce activities continue to develop. Up to 20% of the £9bn coupon market could go digital in the next few years.”
Meerson’s views are shared by Robert Thurner, commercial director at Incentivated. However, he identifies some significant technological and commercial obstacles to overcome. “The potential is there, but the big challenge will be how customers redeem them,” he says.
Thurner points out that many of the high street chains have invested huge sums on EPOS systems, including Chip & PIN, and it is unlikely they will willingly spend further millions on new technology, such as the scanning equipment required to read mobile barcodes, until decent returns are proven.
In the meantime, developments in digital and mobile vouchering are likely to focus on applications in the travel and leisure sectors, such as mobile ticketing, or by applying lower-tech solutions using SMS text messaging. Mobile marketing company I-movo, for example, has developed a mobile commerce system that sends vouchers by SMS. These can be redeemed at outlets using payment terminals already available in most high street stores, hence overcoming the need for expensive new equipment.
Managing director David Tymm says: “I-movo’s platform issues a mobile voucher containing an individual identification number, which is delivered to a consumer’s mobile phone using SMS. Each number is checked at point-of-sale using the retailer’s existing payment terminal device. The electronic nature of the transaction means the voucher cannot be used more times than is permitted by the issuer, and is limited to participating retailers for the duration of the promotion.
“The system also offers marketers with reports and analysis in real-time, so campaign managers can keep track of results.”
However, Paul Constantine, board account director at Zed Media, warns the relatively brief history of mobile and e-commerce is already littered with egg-spattered reputations, and that consumers have become wary about the hype.
Constantine says: “Digital vouchers offer real benefits for advertisers and consumers, but current data legislation remains a challenge. To make digital vouchers a success, advertisers and mobile phone operators must work to overcome the issues with data privacy and allow advertisers to extract valuable customer data to inform future campaigns.”
As any marketer will remind you, it is the application that is important not the technology and Mark Brandon, chief operating officer at digital agency Siren, concurs that digital vouchers can help brands develop relationships with their customers. “The potential has always been there, but in some ways we’ve been waiting for the technology to catch up with the promise. That is starting to happen,” says Brandon.
“There are many ways to put vouchers in front of consumers, but only a few offer a serious value proposition. Big brands are not interested in the technology, rather the way digital marketing can change their relationship with consumers – that’s why they will be doing it more for client understanding. Some of the most creative, innovative digital marketing is coming from companies such as Unilever which are pushing ideas and concepts.”