Power in Plastic

Out to activate ties to the 1999 Chick-fil-A Ladies Professional Golf Association charity tournament in Atlanta, wireless telecom Nextel Communications hooked up with the title sponsor for an in-store sweeps giving one winner in each participating store a free phone and six months of service. Consumers gave the promotion a thumbs-up, but the program gave Nextel marketers a headache.

Turns out that fulfilling phones and service to 100-plus winners was more difficult than anticipated, since recipients lived in different areas, had disparate service preferences, or in some cases already owned a wireless phone and wanted cash instead.

Nextel brand managers renewed the tourney sponsorship for spring 2000, but opted for a more manageable program to tie into the QSR. Last year’s incarnation had a similar structure — store-specific sweeps supported by print ads and P-O-P — but an adjusted prize pool: Winners in each Chick-fil-A store received a Nextel-branded $100 American Express card. The change “helped make the promotion extremely easy to manage,” says Mark Harrison, president of Atlanta-based Harrison Media Sales & Services, which handled.

The program makes yet another return this month in all of Chick-fil-A’s 100-plus Atlanta locations, with sweeps winners again scoring branded $100 AmEx cards and collectively qualifying for a grand-prize phone and $10,000 worth of service. Print media and P-O-P support.

“The cards have a universal appeal, added-value, and a broad reach,” says Chick-fil-A spokesperson Don Perry. “The program has been very successful.”

High-tech, convenient, and flexible for both brands and consumers, plastic stored-value cards are finding their way into virtually all marketing channels. “The promotion segment is the fastest-growing piece of our business,” says Wayne Chatham, senior vp at Louisville, KY-based Stored Value Systems, which handles card programs for 51 clients including Pier 1 Imports, Mobil Oil, and Kmart. “Stored-value cards can make for very efficient promotions.”

Brand marketers apparently agree, since they’re using electronic cards as everything from consumer incentives (test-drive a Chevy and receive a $50 card) and employee motivators (hit your quota and score $500) to sweepstakes prizes (win $25,000 in purchases) and loyalty rewards (earn points to redeem for merchandise). “Massive amounts of dollars are being channeled down this promotional path,” says Gary Palmer, chief operating officer at Sunrise, FL-based Wildcard Systems, which offers Visa and MasterCard-branded plastic. “These cards are producing results that are sometimes three times higher than the typical incentive.”

Reeling Them in

Consumers have always liked cash, and the freedom of spending it wherever they want. That makes stored-value cards ideal premium incentives. Philadelphia-based cable giant Comcast, for example, just wrapped a two-month program rewarding new subscribers to its At Home Internet access service with $25 GiftCertificates.com, New York City, cards redeemable at any of the online service operator’s 700 merchant partners. Mass-media buys supported. Sales during the campaign rose 67.5 percent compared with the year-ago period, says Comcast marketing manager Jade Walsh. D4 Creative, Philadelphia, handled.

Although they’re made of plastic, these cards are extremely malleable — especially when compared with paper programs for rewards and rebates. They can be customized to brand needs through an almost endless supply of features and functions dictating usage and convenience. Oh, and another benefit: Some card suppliers send a portion of unused rewards — the “spend” — back to the brand.

Wilmington Trust, the 13th largest personal trust manager in the U.S., this month breaks a marketing campaign encouraging new online accounts with a $50 gift card. Print ads support.

The Wilmington, DE-based financial services company ran a similar promotion last winter hyping its online banking service; an eight-week offer for $25 cards helped increase sign-ups 37 percent over a previous non-card campaign executed a year earlier. “The cards successfully answered the ‘What’s in it for me?’ question all [consumers] ask when they see an offer,” says Wilmington marketing specialist Bob Nicholson. “We tracked the data and found that 87 percent of the new customers actively used the service.”

Paper gift-certificate programs are quickly morphing into stored-value offerings. Retailers have been the fastest conversion segment, with Toys “R” Us, Bed, Bath & Beyond, and Musicland Group all switching to plastic over the last year. Minneapolis-based Musicland recently ran a campaign in-house in which shoppers who ordered a copy of the latest Dave Matthews Band release in advance received gift cards. Richmond, VA-based Circuit City has seen its own cards become one of the chain’s more popular rebates: Shoppers are rewarded for buying cell phones, TVs, or computers with $50 or $100 cards. (Customers mail in a rebate slip and the cards arrive a few months later.)

“Sales increased after we switched to a plastic system,” says Jake Guiang, manager of incentive sales at Orlando, FL-based Darden Restaurants. “With paper, consumer would get cash back after their first purchase. Plastic lets us keep the ‘spend.’”

Plastic is also becoming a popular component of sweepstakes, since it allows for an interactive component to what otherwise can be a fairly pedestrian effort. San Francisco-based specialty retailer Old Navy, for instance, last winter executed a sweeps with the help of Stored Value Systems in which subscribers to Time, Inc.’s Entertainment Weekly and People received Old Navy gift cards glued into the magazines. Readers took the plastic into stores, where they were scanned to reveal prize winners. One in five cards turned into active gift cards with values ranging from $5 to $1,000.

Take it to Work

Business-to-business programs are also effectively leveraging the power of stored-value cards. Indianapolis-based Kendall Motor Oil, which in the past had relied on various spiffs to incent distributors, recently added some new twists to a program anchored by a reloadable American Express card. In February, the company refreshed the three-year-old Take Charge with Kendall program, letting distributors turn sales into points loaded onto branded AmEx cards mailed out in January to distributors — who earned $25 just for enrolling. Points are awarded monthly. Direct mail and e-mail support.

“Kendall is not Pennzoil or Quaker State. It’s the No. 6 motor oil brand, so it needs to defend its market share without $20 million in marketing dollars,” says Noble Jones, a partner with ST&P Advertising, Cleveland, which handles. “We already have 60 percent more people signed up in the program than last year at this time.”

Many marketers believe that stored-value cards also create more brand impressions than their paper-based brethren, since they get slipped into wallets for multiple uses. “There’s a memory-retention factor involved here,” says Gina Lorenz, executive vp-sales and marketing with the incentive unit of Irvine, CA-based stored-value provider CardEx.

Cash, some argue, loses its link to the brand almost immediately. “A cash prize goes into a wallet and is lost forever,” says Ron Moss, a director of marketing at incentive giant Carlson Marketing Group, Minneapolis. “Someone can’t differentiate the $10 bill you gave them with the others they already have in their purse.”

“These types of cards act as an interactive gift,” says GiftCertificates.com executive vp-business solutions Mark Hasebroock. “They are as close to cash as you can get without handing out actual cash.”

The Back End

While most stored-value cards have fixed balances that expire at a specified time, others are open-ended and can be reloaded as the brand-customer relationship progresses. Several car companies have given $50 cards to test drivers that increase in value to $500 if a car is later purchased. Dallas-based Blockbuster and telecom MCI, Washington, DC, run an ongoing Free Flix program that rewards customers who cross a monthly long distance threshold with free rental points added electronically to their Blockbuster accounts.

Atlanta-based Delta Airlines is taking a Delta Passenger card test program national this year. The initiative, which has been testing in Atlanta, Boston, Cincinnati, and Salt Lake City airports since last winter, rewards customers who experience a variety of travel problems. The program features a pair of Visa debit cards: The first provides cash rewards in various amounts for passengers whose luggage is lost, letting them charge meals, buy clothes, or get money at ATM machines; the second offers preloaded $10 and $25 cards that flight attendants pass out on planes to delayed passengers.

Obviously, then, brands can tweak cards in a variety of ways. Take the You’ve Got Cash! card offered by Incline Village, CA-based Quantum, which can be “fixed” so consumers can only redeem them at specific merchants and for select types of merchandise (which can come in legally handy for efforts targeted to teens).

Plastic also brings extra security. Much like with credit cards, accounts can be suspended if cards are stolen or lost. And logistics and fulfillment can be controlled from a computer. ST&P gets monthly sales forms from distributors, then e-mails the information to Fenton, MO-based American Express Incentive Services. Points are distributed to Take Charge member accounts electronically. “The administration side of stored-value-based incentive programs is a real benefit,” says ST&P’s Noble. “Brands can take control of programs and make them their own.”

Some card companies even offer full service, handling everything including creative, software, payment systems, customer service, technical support, and statement mailings. Costs are generally in line with face value of the cards, with anywhere from five to 10 percent more added for the support services.

Charging Ahead

Card providers are developing new offerings that should expand the use of stored-value cards in promotions even more. “These cards are still in the embryo stage,” says WildCard Systems’ Palmer.

Some suppliers will introduce cards that can be tied to multiple programs. Troy, MI-based Kmart, for example, now allows consumer and corporate purchasers of their branded gift cards to redeem them either as cash or long-distance minutes (in a deal with AT&T) and to establish a separate balance for use at Big K gas stations. Stored Value Systems handles. Other suppliers are working on global efforts that can be electronically translated into any currency. (Stored Value Systems already has a card that works in Canada and the U.S.)

Brands from non-traditional categories will jump on the bandwagon as well. Portland, OR-based Standard Insurance Co., for example, this month begins handing out Visa-branded stored-value cards instead of claim checks. The move helps the company get funds to people on long-term disability who may not have bank accounts. Other insurance companies distributing debit cards to claimants include Hartford, CT-based Hartford Financial Services Group and Providence, RI-based Amica Mutual Insurance Co.

The Internet will play a role, with the paper-to-plastic evolution going digital and “smart card” technology finally becoming viable. New York City-based Jupiter Communications’ Internet Payments report predicts that nine percent of Internet transactions will be conducted with a stored-value mechanism by the end of 2003.

A little plastic goes a long way.

Paper Thin?

Plastic is hot, but trees aren’t exactly out of the woods yet.

Simple? Sure. Low-tech? Yes. But outdated? “Totally. It’s time to get beyond paper gift certificates,” says Wayne Chatham, senior vp at Louisville, KY-based electronic card supplier Stored Value Systems.

Not yet, it isn’t. Truth is, paper gift certificates are still used in billions of dollars worth of incentive programs for consumer and business-to-business initiatives. Electronic-based stored-value cards may be the talk of the trade these days, but paper certificates are still viable and functional — not to mention less expensive than most technology-enhanced plastic cards. Omaha, NE-based Omaha Steaks, for example, dresses its oversized paper gift certificates in colorful jackets and mailers, delivering a classy look without charging tech-related premium prices.

And while wallet-size incentives may be extremely popular these days, paper certificates can be printed in any shape or form “to fit in any incentive or motivation program. Paper isn’t dead,” says GiftCertificates.com executive vp-business solutions Mark Hasebroock. “There will always be end-users and clients who prefer it.”

Some programs just aren’t conducive for plastic. Bally Total Fitness, Chicago, and Kraft Foods, Northfield, IL, are in the midst of a co-marketing agreement that tacks gift certificates from the health club chain onto millions of cheese packages. Supermarket shoppers can redeem the certificates for a free 14-day trial at Bally gyms or a $75 discount off annual membership fees. “These types of gift certificates are a new avenue for us,” says Kraft senior brand manager Paul Thompson. “We’re always looking for creative ways to excite shoppers.” FSIs and print ads in consumer magazines support. The program runs through July. Communicator Worldwide, Chicago, handles.