COVER
STORY
Clockwise from left: ITAGroup’s Rob Danna says a silver lining of the last two years is
that companies have had “a control test of using incentives against not using incentives”
and seen the value of their programs; Jim Keenan of Citizen Watch Co.; Michael A. Fina
of Michael C. Fina and Kathleen Lombardo of Stoner Bunting Gift Card Group
You’re going to be far more effective and far
more useful to your client.
FINA: Amazon also, I think somewhat
improperly, conditioned customers to accept
situations that are really unrealistic, for
example, all of their free shipping policies.
Shipping is never free. Whoever the carrier
is charges a price to get the product there.
Just because it’s not an additional line item
when you are buying the product doesn’t
mean there’s not a cost to it. But the free
shipping policy conditioned a lot of buyers to
say, “Okay, if Amazon is going away, what’s
next? And, by the way, how much is the ship-
ping as a cost?”
Amazon raised the bar, but they didn’t have
the secret sauce, which is what we do.
PEER: Amazon ultimately was a glorified
Amazon gift card. Why are you investing in
all of this infrastructure and this point struc-
ture when you can just be handing out Ama-
zon gift cards and get the same thing?
INCENTIVE: What are people redeeming
for in gift card programs?
KATHLEEN LOMBARDO: In an incen-
tive or recognition program, the end-user is
a consumer. They’ll be driven emotionally,
and they’ll want to have a choice. For us,
representing over 20 brands, we have seen
some brands do better than others, especially
in these challenging economic times. We’ve
seen evidence of a shift to more practical
value brands, restaurants are doing well in
some segments, and, surprisingly, luxury
brands are doing well.
PEER: What we’re finding is that our clients
are asking us to re-assort their gift card offer-
ings to make them more cost-effective and yet
still drive behavior. In these economic times
they are looking for every economic benefit
that they can get. Kathleen was right, we’re
seeing a move to more luxury offerings in gift
cards because there is ordinarily more of a
discount. Usually, the greater the utility of the
card, the lower the discount, meaning if you
can take it to a gas station, if you can take it
to a Wal-Mart, you’re not going to get much
discount. Whereas, if you are going to take
it to Macy’s or Bloomingdale’s or a jewelry
store, you are going to get more. It’s kind of
a nice conjunction of what our industry is
about in terms of behavior as well as profit-
ability.
DITTMAN: We also offer a full range
of merchandise and a significant offering
of gift cards, and during the course of the
last, roughly, 18 months, the percentage of
redemptions for gift cards as a percentage of
the total jumped up dramatically, literally by
about 30 percent. To a great extent we think
it was because people were, at that point,
not getting raises. Many have taken pay
cuts, wage freezes, so everything was kind of
focused on what do we need at the moment.
PEER: In our experience, the introduction
of Amazon dramatically reduced the inci-
dence of redemption on gift cards because
Amazon was in itself a glorified gift card.
LOMBARDO: Another channel that
we’ve seen growth in is the charity channel.
We have a specific CharityChoice gift card,
which is actually a donation card on a gift
card platform. We’ve seen a lot of growth in
that area as companies become more socially
conscious and the charities themselves are
alerting their supporters that they can actu-
ally donate their points.
PEER: That’s a great change-maker. If you
redeem for the TV, and you have points left
over, you’re sweeping them into charity.
LOMBARDO: E-certificates are definitely
growing in interest in the B2B space. It is a
way for incentive partners to manage inven-
tory and control costs.
