Vouchers flex retail muscle in two sectors

Experts from six high street brands answer questions posed by Marketing Week about their use of the ever-popular gift voucher and any possible future developments.

Robert Froome (RF): New Look Business Solutions supplies the New Look gift voucher and card to our corporate clients. The vouchers and cards are used for sales incentives, employee rewards, customer loyalty, promotions and flexible benefits. Gift cards are sold to consumers through our 600-plus stores nationwide and we have an internal staff incentive scheme. We also award our gift card to a select number of customers at new store openings.

Andrew Sellers (AS): John Lewis gift vouchers are established in the consumer market and they’re also used extensively in the business-to-business, reward and incentive sectors. The vouchers can be redeemed in John Lewis and Waitrose stores, as well as online at JohnLewis.com, which has ensured that they remain popular even as people’s shopping habits have changed over time.

Graham Sellors (GS): Asda gift vouchers and gift cards are used extensively by our B2B customers for rewards including staff recognition and incentives, flexible and voluntary benefits, customer loyalty and channel motivation. Gift cards are sold in-store to consumers. We also run the Asda thank you scheme, where staff receive a gift card as a reward for their hard work.

Robert Andrews (RA): Cineworld outsources its outbound B2B sales to Filmology (part of P&MM), which sells Admit One vouchers to business customers. These paper vouchers give people access to one cinema ticket, rather than having a specific cash value, and can be used as motivational tools for staff. Cineworld also sells traditional cash vouchers and the bulk of the revenue for these is generated directly through our cinema sites, the website and high-street retailers.

Robert Froome
Robert Froome Head of New Look Business Solutions

Pankaj Patel (PP): Vouchers play a role at Marks & Spencer in four areas – sales to business customers; sales to consumers through our retail channels; rewarding M&S customers through loyalty schemes; and rewarding M&S employees.

Gennaro Castaldo (GC): We have tried to make gift cards desirable and collectible. Along with our standard card, there are limited-edition releases that tie in with music and film. The B2B side is growing quickly for us. Here the focus is more voucher-based because they are more versatile for businesses to use for staff engagement.
MW: How can you use vouchers effectively with other types of marketing activity?

RF: In retail, we use gift cards for store openings and for customer database prize draws. They feature prominently in our peak season customer newsletters. In the B2B market, we use vouchers to drive brand awareness through events that aim to bring “theatre and fun” to the workplace, such as an activity where participants are invited to grab vouchers from a swirling mass in a plastic vortex.

PP: Our vouchers are used by business clients for their own marketing activities, including consumer acquisition, customer retention, staff motivation and savings clubs.

Andrew Sellers
Andrew Sellers Commercial development manager, John Lewis

AS: The John Lewis gift voucher is widely used as an incentive in external marketing campaigns. For example, last autumn Virgin Atlantic used our gift vouchers as an incentive for frequent flyers when booking flights.

RA: Cineworld has long used vouchers for fixed-fee promotions because these have a track record of gaining media coverage and exposure. For instance, a two-for-one promotion was run with McDonald’s last year, which generated a large number of admissions at the box office.

The largest promotion that we have run to date has been with Tesco Clubcard. Card users can spend their points on a Cineworld voucher. That voucher is then sent to the customer and can be processed at the box office in the normal way. Working with such a large retailer can make a real difference to our market share – Cineworld has also featured in national press and two runs of TV advertising as a result.

GS: The Asda gift card lends itself to consumer marketing incentives. Giuseppe Pizza ran an on-pack promotion through agency Hive offering a free £10 Asda gift card with free bingo.

Robert Andrews
Robert Andrews Marketing manager, Cineworld

MW: Have plastic cards overtaken paper gift vouchers for both business clients and consumers?

PP: Since we launched them in October 2007, M&;S gift cards have outsold paper vouchers in stores. For business customers, however, our paper vouchers are still dominant, although demand for gift cards is growing. The benefits of cards include multichannel use, added security through registration, top-up facilities, balance enquiries and flexibility in their load value.

RA: Cineworld has completely replaced paper vouchers for consumers using our digital and in-foyer channels. Part of this is because gift cards have no intrinsic value until they are activated by a member of staff, and we are able to display them at our point of sale. They are also easier to audit and track financially.

Gift cards are cheaper than paper to produce and we can also run targeted promotions in terms of films. For example, we had an Avatar gift card at the turn of the year. These collector character cards can be an exciting addition to the promotion of a movie and encourage repeat use as customers tend to hold on to them.

However, we do still use paper vouchers for corporate customers. This is due to differing ticket prices in cases where businesses want to provide a single cinema ticket as a staff incentive or reward.

Gennaro Castaldo
Gennaro Castaldo Head of press and PR, HMV

RF: We also find that our business customers still prefer paper vouchers – historically, sales have been 90:10 in favour of paper. But in New Look stores, we now only sell our gift card. In May this year, we introduced a gift card management system for B2B clients, which we expect to drive card sales. We anticipate that plastic gift cards will represent 50% of our sales within six months.

The new system means we can send out gift cards with no value attached, therefore drastically reducing distribution costs for customers. They can hold a stock of our cards without the security risks associated with live currency. The cards can be activated and loaded with value remotely.

GC: Cards have also overtaken paper for customer purchases in HMV stores. Gift cards have more of an added-value feel to them, especially if they feature a limited edition design. They are also easier than vouchers to keep in a wallet, and you can top up the value of a gift card, which means they can take on a more permanent quality.

We recently produced a Twilight: New Moon gift card based on the popular film franchise. Such limited editions are not that cheap to produce, but are worth it for the right tie-in where there is a strong loyalty or cult factor. We’re looking to discuss the production of a Sex and the City card with the film studio when the DVD and Blu-ray versions of the new movie come out.

Pankaj Patel
Pankaj Patel Head of Marks Spencer for business

But in the B2B market, vouchers are generally preferred for the practical benefits and versatility they can offer businesses.

GS: Asda only offers plastic gift cards in store but does provide paper vouchers to B2B customers. Growth in the past year has been driven by gift cards. Our figures show that card sales in the B2B sector are now equal to paper, compared to this time last year when paper represented some 70%.

With our gift card management system, business customers can distribute cards in the post or they could be cover-mounted on materials as they hold no value – activation and value are loaded remotely. Plastic has come into its own when there is a requirement for the card to be loaded repeatedly with value.

AS: John Lewis does not currently issue a gift card. Gift vouchers have a tangible advantage over cards in that for larger denomination awards, the recipient can easily see the value of what they have been given. This is not always the case with a gift card.

MW: What innovations are you aware of in the gift card category?

Graham Sellors
Graham Sellors Director, Asda Business Rewards

GS: For us, it’s allowing the B2B market to use plastic as easily as paper. Our gift card management system was developed to afford greater security and flexibility. It allows gift cards to be activated, loaded, suspended or cancelled remotely. All cards have a number that allows individual cards to be topped up at any time. The system also offers full management information and a complete audit against every card.

We also try to innovate through design in retail – Asda’s latest card range includes 3D images that appeal to the younger generation, including a card for the FIFA World Cup. We also have gift card centres, which sell third-party retailer cards and increase the visibility of the cards to consumers. We worked with Nickelodeon and Nintendo to launch Spongebob Squarepants and Mario Kart gift cards in 2009 and will extend our range of licensed cards this year.

GC: It would be fun to introduce more limited edition designs to tie in with music, film and games releases – or perhaps which connect to music artists such as Lady Gaga or The Beatles. It’s not that cost-effective printing relatively short runs, but it can be worthwhile for certain products. We also want to see if we can tie in cards more effectively with our purehmv rewards scheme and with our online platform.

RA: Cineworld plans to work with a major restaurant chain to provide a meal and movie pack containing a cinema gift card and one for the restaurant. These would then be made available to customers via the gift card malls [providers of multiple gift card offers].

We have seen proposals where the mechanism of the gift card can help create part of the proposition behind a loyalty scheme, but we understand this has not really been trialled in the UK as yet. However, we are eager to see how this could work in a practical application. This may be as simple as adding a bonus whenever the card is topped up.

RF: Since the end of last year, our gift cards have been redeemable online. We also aim to differentiate through our gift card designs. For example, we have launched a Union Jack card in the run-up to the World Cup.

Gift cards have more of an added-value feel to them, especially if they feature a limited edition design

Gennaro Castaldo, HMV

We have been using unique production techniques to innovate, including foils, layering, clear cards and a shoe design. Gift card design in retail is critical – we introduce fun add-ons every time we bring a new design to market. They have to both encompass our brand values and reflect what is fashionable.

MW: Would you consider using mobile gift vouchers?

GS: We intend to research demand for mobile gift vouchers among our customers. Mobile vouchers would allow us to deliver more instant rewards. We expect that SMS and evouchers will become popular in the longer-term.

GC: If mobile vouchers were practical, cost-effective and there was demand for them, then we’d certainly consider them. Ultimately, we’re here to cater to our customers’ needs and to allow them to have choice across different channels.

RA: We have investigated the use of both online and mobile based virtual gift cards, as this would further reduce production costs and material waste. We’re now exploring the logistics of installing barcode scanners at our box office till points to allow this.

PP: We’re looking at mobile gift vouchers, but we have no firm plans to introduce them at the moment. Mobile handsets are an important lifestyle tool and this method could offer simplicity, speed and convenience. The technology is still evolving, however, and there are a number of challenges including systems development.

MW: Which brands do you think use gift vouchers particularly effectively?

RA: B&Q in the UK and Target in the US are both very innovative in their designs. Both brands invest a great deal of effort and money to ensure they are at the forefront of the market.

RF: Lovefilm immediately springs to mind as it ensures relevance of the gift card brand to its audience. We worked with Lovefilm last year when it ran a 30-day free trial offering a £10 New Look gift card to our store cardholders.

AS: The Times newspaper recently used John Lewis gift vouchers to drive subscriptions. The key is to use a voucher that resonates with the target audience and has sufficient choice and redemption opportunities.

GS: I like Sky. New customers taking the Sky+HD package receive £25 worth of gift vouchers. Its TV campaign is well supported by other marketing activities, including promotional stands in shopping centres.

PP: Big brands in banking and investment, insurance and utilities use vouchers particularly well. For example, BSkyB, Scottish & Southern Energy, BT, NatWest and Direct Line are all good examples.

GC: Fashion retailers such as Topshop can make highly effective use of cards and vouchers. Upmarket offers, including the likes of Liberty and Selfridges, can also be pretty appealing, although those are limited outside London. Apple/iTunes gift cards, which we sell, are now taking on a fairly universal appeal.

Multichannel redemption will be seen as an essential part of the success of any gift card or voucher

Andrew Sellers, John Lewis

MW: What trends do you think we’ll see in the vouchers market over the next year?

AS: We’ll see the increased use of gift vouchers in all markets as they have a track record of success. Multichannel redemption will be seen as an essential part of the success of any gift card or voucher.

GC: Companies may try to give their vouchers and cards more added value, either via design or additional rewards content. The key at all times is to make any vouchers and cards as desirable as possible, tying in with any aspiration that may already exist around a brand.

GS: We fully expect to see a continuing shift toward the use of plastic. In our case, this will be driven by the increased functionality we can deliver with our card management system. Technology will enable gift cards to be linked together as part of larger gifts. Paper vouchers will continue to be requested by business customers, so security innovations such as special inks and magnetic stripes will probably be introduced.

Formats of gifting will extend beyond plastic to include evouchers and mobile but until this becomes the recognised norm, the way cards are designed and merchandised will become more innovative.

RF: In retail, we will see everyone moving to cards and I’d expect more innovation when it comes to card design.

In the longer term, we could potentially see the use of materials other than plastic. After all, the single use of vouchers is prevalent in retail, so it would be good to see the introduction of materials that are more environmentally friendly than plastic.