Sales Promotion Column March 2007
Having completed our review of 2006, I am pleased to report healthy increases in the voucher and gift card market in 2006 compared with 2005. The B2B market continues to grow both in terms of staff incentives and sales promotion.
In the UK, just under 50 per cent of all vouchers sold are to the corporate market to fulfil employee or customer motivation schemes. In the USA only 15 per cent of gift cards and vouchers sold are to corporates. So, are UK organisations’ just better at motivation than their US counterparts? Compared on a £ spent per employee basis the figures for the US and the UK are roughly the same. The reason that the percentage of B2B business is smaller in the US is because sales to consumers are significantly bigger than consumer sales in the UK. However, the US market is set to change and it looks like they are taking a leaf out of our book (for a change) and the growth on the B2B application of vouchers and gift cards is set to increase. The biggest area of growth in the US is predicted to be in customer loyalty. Merging gift vouchers and cards with customer loyalty schemes is something that is fairly untapped both in the US and the UK. After all, one is a given gift and one is a way of driving further footfall and future sales. Are the two so different?
Both fulfil the objective of driving future spend and visits to a store or supplier. A gift card or voucher means that, in theory, the customer is going to be loyal to your brand regardless, as the recipient can’t actually spend the gift voucher anywhere else but in the retailer’s store so that will make the person loyal. But are there benefits to rewarding loyalty through a gift voucher or card programme?
Steve McArdle at Tesco thinks so. Just before Christmas 2006, Tesco picked a group of 80,000 customers who they wanted to thank for their loyalty through the year. They did this by mailing them a £5 Tesco Gift Card. It would have been easy for Tesco to have simply sent a £5 tear off voucher at the bottom of their letter of thanks, but they felt a greater impact would be achieved by sending an actual ‘gift’. It wasn’t £5 off your shopping; it was a gift of £5 from Tesco. As loyalty at Tesco is facilitated through Tesco Clubcard, Tesco saw the offer of a £5 gift card as the first interface between the clubcard and gift card.
Tesco is very pleased with the results they are seeing from their gift card sales in store. ‘We have seen an improvement in sales since we introduced gift card which took over from our paper gift voucher offering’, states McArdle. That’s great news for retailers but, outside the store, how are customers reacting to gift cards? At the Va Conference on 29 th March one of the hot topics will be ‘the need to educate’. Many retailers now offer gift cards and we have debated many times the advantages and disadvantages of gift cards versus gift vouchers. The more high street retailers who launch gift cards the better. Long-term this should also be good news for sales promotion and staff incentives. With the general public more akin to seeing and using gift cards the more motivated they’ll be to respond to a scheme or programme with a gift card as a reward.
Tesco also recently ran a promotion where new customers that signed up for its Tesco Insurance were rewarded with a Tesco gift card. This not only increased the profile of Tesco Insurance but also assisted in improving the positioning of the Tesco gift card. The 29th March conference will give the industry a chance to debate the need to educate as well as an opportunity to learn more about the developments in the every growing
market of gift vouchers and gift cards. I look forward to reporting the results in future columns.
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