A Gift Card Good For 100 Competing Retailers?

Written by Evan Schuman - storefrontbacktalk.com
November 30th, 2009

A group of about 100 competing restaurants in Connecticut is trying an experiment: Each is putting out a joint gift card, one that would theoretically be much more attractive because it would give consumers far more choices. Could this idea possibly have value beyond food?

Restaurants are, by their nature, very different from most other retailers (to the extent that they are considered retailers at all). They tend to attract a strongly local customer base, so if another restaurant is just a few ZIP codes away, it’s not likely to be too competitive. That could make the downside of such a program—giving dollars away to rivals—less of a problem.

But the radical idea of such a joint gift card does address the fear of bankruptcy, which is what the Connecticut Attorney General stressed when his office announced the Connecticut card.

“A rash of restaurant and retail closings last season turned expensive gift cards into worthless plastic. Consumers rightly need reassurance that gift cards are as reliable as cash,” said Connecticut Attorney General Richard Blumenthal. “This gift certificate program should be a model beyond the holidays, for all retailers.”

In a sense, this program is sort of a cross between a traditional gift card and a Visa gift card. Even a gift card with 100 retailers participating—especially if many are smaller merchants—is a lot more restrictive than a credit card brand’s card.

Such a card also raises the issues of “Who carries the administrative burdens?” and “Who holds the cash until it’s used?” But in days of economic uncertainty, joint gift cards may not be such a ludicrous concept.

Making Your Loyalty Program More Valuable to Your Most Valuable Customers

I have 8 loyalty cards on my keychain right now. Of those 8 I regularly use 3-the remaining 5 just stay on there in case I happen to go back to any of those stores or restaurants which I happened into at one point and signed up for the card to get the immediate discount—well, that and pure laziness. After seeing some recent statistics it seems like I am part of the norm. Families belong to about 14 different loyalty programs at any given time—of those 14, they actually use about 6 of them. So, how do you become one of the 6 that are actually used, and not one of the 8 that get all but forgotten about? That’s easy. Give your customers something they actually want. Be valuable.

Ok, so how can you make your company and loyalty program more valuable to your customers? In this economy the obvious answer is money. Instant gratification is pretty great, so why not give your customer something for free when they sign up for the program—say, a free dessert—and then, give them a coupon for $5 off their next visit. So, they tried the dessert for free today and then they are going to come back next week spend way more than $5 and maybe, just maybe splurge on dessert because it was so good last time and what the heck, they got $5 off anyway. Plus they are earning points for both meals and working their way towards their next reward. So, you just got an extra visit and an increased check average out of that customer. They got a deal that’s a lot better than, say, the loyalty card in the back of their wallet that is good for a free t-shirt after five visits, and at $50 a visit that’s one expensive t-shirt.

One of the simplest loyalty programs is the idea of a rebate, spend ‘X’ amount of dollars get ‘Y’ dollars back. Now, show your customers that it’s free money—it’s all in how your employees talk it up. I had a regular customer once that used her Loyalty card every time she came in (even when it required me going and looking up the card number in the middle of Happy Hour because she left it in her other purse—but that’s neither here nor there), and every time she earned her $25 reward she saved it to put towards her sister’s bachelorette party. By the time it rolled around she had $150 in “free” money to party with—but I had a bar full of 20 women spending way more than $150 and all signing up for the program because “Wow, isn’t it amazing that she got so much for free?”

Restaurants aren’t the only ones that can make their loyalty programs more valuable either. Retail stores and service-oriented stores can do it as well. What about hosting VIP parties for your highest spending regulars? Track the spending, then plan a VIP event—let your VIPs shop a sale a day early, or see a collection before it’s available to anyone else, a free manicure at the spa when you buy a haircut—make sure your staff is telling people about these events and perks and a few things will be bound to happen. One, your regular customers are going to feel appreciated and two, some elitism will kick in and those customers that are close to the next threshold in the program will want to be a VIP too and might just increase their spending.

So, train your staff, they should know the program backward and forward and be willing to talk it up at every single transaction, market it wisely (it’s not a 10% savings, it’s a free $25 or whichever way gets your customers excited) and give your customers something they really want….because who needs another tacky t-shirt?