Gift Certificates - Their Demise Is Greatly Exaggerated

Insights Into The Certificate & Incentive Industries

What a time of change! It seems like everyone who is in the gift certificate and incentive industry are looking at the question "so what's next, where do we go from here?" Along with the realization that 'what made you great in the past might be what's hurting you now.' It's hard to realize that not only is the industry changing, so are the clients, the award earners and everything related to the industry.

In 2001, the future of gift certificates and incentive industry seems even brighter than the past. More businesses are realizing they need to do more than give a paycheck, a desk and a Christmas Turkey. Businesses realize they need to spend the effort in re-recruiting their existing employees every day. Thus the birth of the B2E focus.

Companies are realizing that their customers are more educated, more aware and more interested in finding the best solution that is the easiest to use and is a fair price. A business needs to understand their customer and predict what they want before the customer even knows what they want. Thus the birth and growth of loyalty programs and providers and the re-birth of traditional incentives.

Insights

Gift Certificates - Growth continues yearly in the 8% to 12% range. This up-ward demand for gift certificates (both paper and card based) is being driven by sponsor company's appreciation for the flexibility and ease of use with these products. At the same time, award earners and the end users, like the fact that the certificates are an alternative form of currency. This neo-currency allows them the ability to choose what they want and when they want to purchase the award item. It is also perceived as 'theirs' once the certificate or gift card is in their pockets. No one can take it away from them.

Trends The Certificate Industry Should Watch:

Increased demand for global certificate solutions - allowing a sponsor company the ability to issue certificates, to program participants anywhere in the world - whether a store specific or universal gift certificate.

Web based delivery of certificates - allowing a retailer and/or partner to issue certificates directly to sponsor companies and/or award earners via the web. These 'web delivered' certificates could either be used on the retailers' web or in-store.
More intelligent gift cards - today's gift cards are 'Neanderthal smart cards' but over the next few years there will continue to be an increased demand to do more with a more secured card platform. From loyalty programs, to rebates, coupons, rain checks, layaway and gift cards all combined into a single instrument.

Mall gift & loyalty cards - mall operating companies handle millions of dollars in paper 'mall certificates.' In the past, these certificates were looked at as a form of marketing support for the mall tenants/ retailers. They are beginning to realize that there is float, breakage and profit in these mall wide accepted certificates - therefore they are beginning to develop easier and more profitable ways to manage and grow these alternative currencies.

Re-interest in universal certificates - allowing groupings of complementary retailers to work together and issue a jointly managed certificate and/or card product. This would allow a department store, catalogers, travel and others to potentially issue a 'closed system' card or certificate, which operates outside the card association and bank networks. These private gift card networks will greatly reduce costs associated with gift cards accepted by groupings of complementary partners (creating a competitive advantage to privately processed gift cards).
Loyalty and gift cards - allowing retailers to utilize the gift card platforms to reward top customers.

Incentive Industry - A Lighthouse In An Economic Storm!

The incentive users are business people all across the world that need access to help, ideas and solutions via technology. They need information, they need definable and measurable results. Clients need and demand documented results and information - real-time. Technology allows this to happen. In the past an average program could take 30-days processing to take in sales data and invoices and then another 30 days to process the results and then another 30 days to post the results and award earnings. Today, that's unacceptable. 90 days is equivalent to two years in today's technology driven business. The proposition of focusing on the client contact has flipped and now it is the voice of the award earners that must be directly addressed.

Incentive Industry Trends to watch or think about:

Industry shake down - for too long it has been an acceptable idea that the incentive industry is a 'fragmented' grouping of businesses only interested in turning a dollar based on selling 'pots & pans.' The next five years will be the true test if the incentive industry can grow beyond the past, inward focused activities and more towards an industry willing to document, prove, share and build a business case - globally - that incentives work. That it's less about lining the pockets of the incentive suppliers and more about meeting the business objectives of the sponsor companies.

Reward & Payment Technologies - Award earners and sponsor companies are going to continue to look at new reward technologies, like cards, web based virtual awards, smart cards and other payment technologies. In the next two years we will see award programs move to PDAs, cell phones, lap-tops, web-TV, etc. Hopefully not focusing on the 'gee-wiz' factor of technology, but what does it mean to award earners being able to get more of what motivates them, sponsor companies more easily and accurately being able to track, confirm and audit issuance and results.

Productization - The incentive industry has not begun the full exploitation of the idea of taking the products, services, ideas and support they sell and turning them into recreate-able events, with a standard of quality and experience at a pre-determined cost. It has been a 'one off'/ custom industry for a long time, but now will require a variety of products that can be packaged, branded and sold time and time again.

The incentive industry is a greatly fragmented business. At this time there are no clear leaders, owners, pathfinders. But technology will allow this to change. It will allow people to begin pulling together their skills, their products, their services and begin offering them to anyone and everyone. Overnight we will see this fragmentation change to 'great alliances and partnerships' all thanks to technology. We will also see mergers, acquisition and joint ventures become the norm within this industry. Technology will begin linking up suppliers, clients, competitors, etc. A seamless line of solutions and resources globally. For a complete review of trends check out: http://businesshive.com/page438485.htm#III

BusinessHive is a Saint Louis based product, market and business development firm, with a core focus on supporting the incentive, loyalty and payment industries. For additional insight contact David C Carrithers, Chief Bee Keeper at 636.225.4103, David@BusinessHive.com or www.BusinessHive.com.