For a standard stored value gift card programme, merchants can use different types of promotions to increase the level of excitement. For example, creating a swipe and win sweepstakes when the gift card is redeemed is an excellent way to drive additional sales. Think about it: your customers are purchasing a gift card that has a certain value, and the person they give it to has the opportunity to not only redeem their gift card for your product or service, but also to potentially win a prize. Who wouldn't want to give a gift card that may make the recipient a big winner?
Another opportunity that can benefit both the merchant and the customer is the use of receipt coupons, or custom coupons, as part of your gift card programme. You can use these coupons to drive customers to locations that need an increase in traffic. Or better yet, make your coupons applicable to certain times of the day when traffic isn't as high as you'd like it to be. For example, many restaurants are finding this an effective way to drive traffic to days of the week or times of the day that are not traditionally strong for them. Giving customers a free appetizer or dessert is a great marketing investment for creating a busy restaurant during traditionally slow periods.
If you are using stored value cards as a cash replacement and you want customers to re-load their cards, give them a bonus when they add value to the card. An excellent way of encouraging the re-load is by adding custom messages on the receipt as the value of the card is depleted. An alert like "Your card value is $10 (or £5). Re-load your card with US$50 (or £35) and get a coupon for a free coffee" alerts customers to their card status. Implementing the reward is as simple as printing a coupon for the free item as part of the re-load transaction.
Loyalty programmes have long used the practice of leveraging perceived value to make them more attractive by rewarding customers for the right kind of behaviour (the profitable, coming-back-often kind). Stored value gift card programmes can make use of the same practice. But exactly what is the perceived value, how does it differ from actual value, and how can it be applied?
If you visit the redemption page of your favourite loyalty programme, you may find that some awards seem more attractive than others. For example on a frequent flier programme site you might see that a free flight anywhere in North America "costs" 25,000 points. One night in a hotel also "costs" 25,000 points. Now wait just a minute - that flight is worth US$700 and that hotel night is worth US$150. Is the airline taking advantage of you if you redeem for the hotel night?
Well, if you need both a flight and a hotel night, it is obvious where you should use those points - on the flight, hands down. The key to understanding why the flight seems like such a good deal (and the hotel less of a deal) is to stand in the shoes of the CEO of the airline. To put you in a seat on the airline (that would have otherwise been empty) costs the airline less than US$100. The CEO's best marketing team can't get free hotel nights from the hotels so that hotel night is probably costing the airline about the same as the free flight. You are being treated fairly.
The airline is simply leveraging the difference between the actual cost of the air ticket and the value you associate with it (the perceived value). That's why airline, hotel, retail, restaurant and other loyalty programmes usually offer their own product or service as the base reward in their programmes - it simply is the most cost effective way to provide value.
Restaurateurs are in exactly the same situation - the cost of providing a meal is probably the lowest expense reward they can provide. It makes it a challenge to create meaningful rewards of similar value that aren't based on the core dining service.
Take heart, there are other classic examples of leveraging perceived value. If you can offer something that is difficult to put a price on - priority service, a backstage pass, a ticket on the 50 yard line at the Superbowl - you have an opportunity to create extreme perceived value. There are thousands of marketing programmes that generate excitement, entries into draws, and traffic by using exclusive opportunities as their drawing card. Think of your stored value gift card promotions in the same light and offer similar rewards as part of your gift card swipe and win sweepstakes to increase gift card usage.
Look inside your own business and see what you have to offer - a reservation on a Friday night at your exclusive flagship location, a guided wine tasting by your chief wine steward, tickets to a sports event provided by one of your suppliers, even a gift for children in the dining party. These are all opportunities to create a reward with high perceived value and low cost. Ask your customers and they will tell you what they value highly.
If you can find something your customers prize that you can provide at little or no cost, you will have an effective tool to use inside your loyalty or gift card marketing programme. Look hard - it's worth the effort!
Another opportunity that can benefit both the merchant and the customer is the use of receipt coupons, or custom coupons, as part of your gift card programme. You can use these coupons to drive customers to locations that need an increase in traffic. Or better yet, make your coupons applicable to certain times of the day when traffic isn't as high as you'd like it to be. For example, many restaurants are finding this an effective way to drive traffic to days of the week or times of the day that are not traditionally strong for them. Giving customers a free appetizer or dessert is a great marketing investment for creating a busy restaurant during traditionally slow periods.
If you are using stored value cards as a cash replacement and you want customers to re-load their cards, give them a bonus when they add value to the card. An excellent way of encouraging the re-load is by adding custom messages on the receipt as the value of the card is depleted. An alert like "Your card value is $10 (or £5). Re-load your card with US$50 (or £35) and get a coupon for a free coffee" alerts customers to their card status. Implementing the reward is as simple as printing a coupon for the free item as part of the re-load transaction.
Loyalty programmes have long used the practice of leveraging perceived value to make them more attractive by rewarding customers for the right kind of behaviour (the profitable, coming-back-often kind). Stored value gift card programmes can make use of the same practice. But exactly what is the perceived value, how does it differ from actual value, and how can it be applied?
If you visit the redemption page of your favourite loyalty programme, you may find that some awards seem more attractive than others. For example on a frequent flier programme site you might see that a free flight anywhere in North America "costs" 25,000 points. One night in a hotel also "costs" 25,000 points. Now wait just a minute - that flight is worth US$700 and that hotel night is worth US$150. Is the airline taking advantage of you if you redeem for the hotel night?
Well, if you need both a flight and a hotel night, it is obvious where you should use those points - on the flight, hands down. The key to understanding why the flight seems like such a good deal (and the hotel less of a deal) is to stand in the shoes of the CEO of the airline. To put you in a seat on the airline (that would have otherwise been empty) costs the airline less than US$100. The CEO's best marketing team can't get free hotel nights from the hotels so that hotel night is probably costing the airline about the same as the free flight. You are being treated fairly.
The airline is simply leveraging the difference between the actual cost of the air ticket and the value you associate with it (the perceived value). That's why airline, hotel, retail, restaurant and other loyalty programmes usually offer their own product or service as the base reward in their programmes - it simply is the most cost effective way to provide value.
Restaurateurs are in exactly the same situation - the cost of providing a meal is probably the lowest expense reward they can provide. It makes it a challenge to create meaningful rewards of similar value that aren't based on the core dining service.
Take heart, there are other classic examples of leveraging perceived value. If you can offer something that is difficult to put a price on - priority service, a backstage pass, a ticket on the 50 yard line at the Superbowl - you have an opportunity to create extreme perceived value. There are thousands of marketing programmes that generate excitement, entries into draws, and traffic by using exclusive opportunities as their drawing card. Think of your stored value gift card promotions in the same light and offer similar rewards as part of your gift card swipe and win sweepstakes to increase gift card usage.
Look inside your own business and see what you have to offer - a reservation on a Friday night at your exclusive flagship location, a guided wine tasting by your chief wine steward, tickets to a sports event provided by one of your suppliers, even a gift for children in the dining party. These are all opportunities to create a reward with high perceived value and low cost. Ask your customers and they will tell you what they value highly.
If you can find something your customers prize that you can provide at little or no cost, you will have an effective tool to use inside your loyalty or gift card marketing programme. Look hard - it's worth the effort!
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