News

Jul
09
2015

Spurred by Heavier Marketing, Gift Card Loads Grew 9% in 2014, New Report Says

With a little more marketing oomph behind it, the gift card market rebounded in 2014 after a down year in 2013, according to a report released Wednesday by Mercator Advisory Group. Virtual gift cards, a small but key segment of the market, held their own and may soon benefit from the emergence of more digital wallets, a Mercator analyst says.

Overall, gift card load volume grew 9% last year despite what retailers reported as a slower holiday season. “The big thing was the growth vs. 2013,” Ben Jackson, director of the prepaid advisory service at Maynard, Mass.-based Mercator, tells Digital Transactions News. “There was almost double-digit growth. Issuers were able to turn things around.”

Driving that growth was stronger marketing, including efforts to promote gift cards in connection with more holidays and special occasions, Jackson says. While birthdays and Christmas have always been obvious occasions for the cards, now merchants are pushing them for graduations, Mothers’ and Fathers’ days, and other lesser holidays throughout the year.

“There was more of a marketing effort, more of a push to say gift cards are worthwhile around more holidays,” Jackson says.

Another key driver last year was the market for so-called consumer-incentive cards. These are prepaid cards handed out to consumers as a reward for some desired behavior in a store or online, such as trying out a product. “There was some good growth in consumer incentives that helped the overall market,” Jackson notes.

Perhaps the most interesting segment of the market is that for so-called virtual cards, or cards that exist digitally on a mobile device rather than as plastic. Issuers like Starbucks Corp. and Dunkin Donuts have been especially successful with such cards in recent years.

Jackson estimates virtual cards accounted for 3% to 4% of all gift card loads last year. That’s a small chunk of the market but one that could grow dramatically in coming years with the advent of mobile wallets, Jackson says. “We’re still not seeing digital take over the market, but it’s very valuable for some retailers and popular with digital natives,” he says.

Wallets like Apple Pay and Android Pay have already launched or are expected to soon, and they are expected to be followed this summer or fall by products from Samsung and MCX, a consortium of major retailers. If some or all of these products integrate virtual gift cards, that could boost the market by providing a ready-made platform for more retailers, Jackson says.

Indeed, the wallets could prove to be the best of all worlds for virtual-card issuers, Jackson says. That’s because they are usable across multiple merchants but any single gift card loaded in them can only be used at the issuer’s stores, eliminating the possibility of so-called customer leakage.

On top of that, the platform comes built and tested, which means merchants don’t have to assume the development costs of building their own. “Now I’ve got MCX to do it for me,” says Jackson.

 

Source: Digital Transactions

MEDIA CONTACT:
KATY LASEE | MARKETING DEPT.
651 554 8533
KRLasee@traveltags.com 

TAGS:   card manufacturing, holidays, trends

Jul
01
2015

The Gift Card Network Presents: Debunking the Myths - Using Paper or Wood Gift Cards instead of PVC

Each year, as an industry, we manufacture over 35 billion gift cards globally. Most of these cards are made with a common plastic; polyvinyl chloride (PVC). PVC is a plastic that contains pollutants which are harmful to the environment and are slow to decompose. And, as there is no true recycle stream for these cards, they typically end up in landfills or get incinerated. As an alternative, there are many durable paper and wood substrates available in the marketplace which use less energy to manufacture, come from sustainable resources and are recyclable, compostable, and bio-degrade in a fraction of the amount of time when compared to plastic.

Over the past few years, paper and wood substrate manufacturers have spent large amounts of time and resources developing products specifically engineered for the gift card industry. The Gift Card Network Forest Materials Committee, made up of a diverse group of industry experts who are passionate about sustainability, has identified the top five reasons merchants say prevent them from making the switch from plastic to paper or wood and has set out to debunk these myths through an awareness campaign. This head on approach is meant to educate the gift card industry in an effort to move away from PVC to a greener solution.

 

Did you know that Travel Tags offers several unique and earth-friendly substrates? Click here to learn more!

 

5 Myths of Forest Materials Gift Cards

Myth #1: Paper and Wood are not durable enough for gift cards.
On the contrary, there are billions of paper cards in the market today, with no known consumer complaints or product failure.

Myth #2: Paper and Wood are more expensive to procure/print.
When comparing forest materials to traditional PVC, the price per sheet is comparable. Price can fluctuate based on many factors: Printer and processor’s pricing structure. Experience and production methods of the printer. Card run size.

Myth #3: No Merchants are using these products for gift cards.
That is not the case at all. In 2014, the Gift Card Network recorded over 20 major brands had a paper card in the market.

Myth #4: My Company doesn’t care about the environment.
In 2014, 53% of the S&P 500 and 57% of the Fortune 500 Companies reported on their environmental, social and governance (ESG) impacts. For the first time, the non-reporters are in the minority.

Myth #5: Consumers don’t care what substrate their cards are printed on.
Not true. Just look around your grocery store, office space and gym. Reusable shopping bags and water bottles are now becoming the norm. The US market share for recycled content, reusable and degradable packaging is $34 billion.

To view the campaign and The Gift Card Network's full responses to these myths, click here.

The Gift Card Network would like to thank the members of the Forest Materials Committee for their contributions, passion for educating the industry, and deep product insight. The Gift Card Network would also like to thank it’s media partner, Powerhouse Brands, for developing the copy, design, and finished product.

The Gift Card Network Forest Materials Committee is made up of the following Industry Professionals:
Chairs:
John Fidalgo - ArjoWiggins
Jim Moriarty - PBM Graphics, an RR Donnelley Company
Jim O’Rourke - Monadnock Paper Mills

Contributors:
Elizabeth Corbett - Neenah Paper
Peo Akesson - Sustainable Cards
Lisa Berghaus - Monadnock Paper Mills
Matt Davies - Powerhouse Brands
Martha Weaver - The Gift Card Network

About the Gift Card Network
The Gift Card Network is the first gift card-specific marketing and collaboration platform. The network focuses on the identification of vital issues in the gift card industry and empowering its members to address these issues using connection, collaboration, and creativity. Members include companies that focus on the gift card industry. Find Everything Gift Card at thegiftcardnetwork.com.

Source: PRWEB.com; The Gift Card Network

MEDIA CONTACT:
KATY LASEE | MARKETING DEPT.
651 554 8533
KRLasee@traveltags.com

TAGS:   card fulfillment, card manufacturing, card services, Education, FSC Certification, Gift Card Network, Green Initiatives, trends

Jun
08
2015

Talbott Roche has the team and the strategy to help Blackhawk Network dominate

The transition from small entrepreneurial company to global industry pioneer has been both challenging and rewarding, says Talbott Roche, president at Blackhawk Network Holdings Inc.

“When we started the company, there was no concept of selling a gift card in a third-party environment,” she says.

“We created a new category that now exists inside 150,000 retailers around the world. We offer prepaid products, something that had never been done before. It was very challenging to evangelize this new concept that we’re going to make buying a gift card in a grocery store as easy as buying any other item on the rack.”

That was in 2001. Fourteen years later, the rack of gift cards at the grocery store is a primary destination for the couple heading out to dinner and a movie, children who need a quick gift to slide in their Mother’s Day cards or the manager who wants to reward an employee for a job well done.

It’s the place to go to buy gift cards and Blackhawk Network, which took in $1.4 billion in revenue in 2014, is the company that helped make it all possible. Roche gives the credit for this success to her executive team and the rest of the company’s 1,860 employees.

“The folks who lead the company and who work at the company are the ones who make the difference,” Roche says. “To me, a high-functioning team is one where you have diversity of thought, but you also have a tremendous level of trust.”

Roche joined Blackhawk in July 2001 as an assistant vice president.

At the time, the company was still a specialty marketing division of Safeway Inc. Blackhawk was incorporated in 2006 and became publicly traded in April 2013. Roche was named the company’s president in November 2010.

One key to having such a strong team is leadership that has the discipline to take a great idea and make sure every detail is addressed to enable the idea to live up to its full potential.

“It isn’t just about what’s the next hot product we can put on the shelf,” Roche says. “It’s also how do we do it in a scalable and efficient manner.”

Focus on the details

In developing the concept of selling gift cards in a third-party environment, Blackhawk had to set up the systems and technology that would support the new product.

“One of the things we had to step back and look at in our business was where can we be more efficient?” Roche says. “Where can we insource some of the capabilities? We decided to insource our own processing, which was a strategic decision because that was going to be fundamental to our business. We insourced a lot of our customer care so we could control the customer’s end experience.

“That was a transformation for us. We really went from thinking about the entrepreneurial perspective of what’s the new product we can put out there in the marketplace to how do we operate it at scale and continue to innovate at the same time we’re making our core business more efficient? So it’s doing those two things simultaneously.”

Patience is a vital part of launching a new product. You sometimes have to resist that excitement a bit to make sure the actual opportunity matches your enthusiastic vision.

“You have to take the time to plan in advance to think No. 1, can this be large enough to create meaningful value when you’re a larger entity?” Roche says.

“No. 2, how am I going to build it to scale? Will it scale? Is it attractive enough? Is it a big enough opportunity? Will it have a powerful enough value proposition to be meaningful across my entire network? How am I going to make it across that network in an efficient and effective manner? What are the processes and resources necessary in order to do this correctly?”

The dynamics of your organization tend to change when you go from a smaller entrepreneurial company to a larger business.

“When you become larger, you have to have cross-functional teams to get these products to market because they touch lots of different systems,” Roche says. “They require different functional support to be scaled into the market and it’s just a different mindset. It requires more planning upfront and a real commitment by the team to superior execution.”

The skill of Roche and her team was put to the test when Blackhawk sought a deal with Visa. Up to that point, the focus had been on retail-branded gift cards such as Nordstrom, The Home Depot and Starbucks.

“We saw an opportunity to introduce network-branded, or open loop cards — Visa, MasterCard, American Express — which could be redeemed at any retail outlet that accepts those types of cards,” Roche says. “When we first met with Visa, they were very resistant to the idea.”

Blackhawk had to step up and present a value proposition that reflected the success that had already been achieved and the potential opportunity that awaited Visa if it came on-board.

“We had to invest in the systems, risk controls, fraud controls and different processes to bring this to market,” Roche says. “We had to contract with banks, which we had not previously contracted with and have a very well thought-out plan, as well as a spirit of innovation of our willingness to commit to creating a new product that never existed before.

“It was invention, but it was invention that had to be very well thought through and planned out. We were able to scale it and today, we’re doing billions in open network gift cards and it’s our most successful gift card on the rack.”

Embrace conflict

Roche does not want a team that agrees with her at every turn. Quite the contrary, she embraces conflict and believes it leads to a better decision for her business.

“We can have a really healthy debate and bring all the disparate points of view to the table, debate them and come away with what I think is the best strategy,” Roche says. “If you can’t embrace that conflict while you’re formulating your strategy, you won’t come up with the best strategy. You need to consider all the different functional points of view in how you do things.”

This ability to work through disagreement to reach the best solution should begin at the top. It showed itself when Blackhawk was making five acquisitions over the last two years and Roche and her team spent a lot of time evaluating different assets in the marketplace.

“There may have been a time where I wanted to go in one direction and other members of the team wanted to pursue a different asset,” Roche says. “Through the debate, we actually came up with the best conclusion. That was for me to allow the team to challenge my point of view and actually change my point of view.

“Particularly when you’re thinking about acquisitions, you need to think about the fit within your company. That’s an example of where I think we made a better decision as a company because I invited the team to challenge me. Leaders do that and they should do that.”

One of the challenges in a growing business is that the top leaders can sometimes become more detached from the rest of the organization just from the sheer increase in people and responsibilities that come about.

“It’s harder to do when you’re larger, but it’s something I’m always working on,” Roche says. “We’re stronger when I make decisions that are informed by my team.”

As Roche continually works to strengthen her bond with Blackhawk’s internal team, she also devotes a lot of energy to an external network that she has built up over the years.

She called upon this group when the credit card business came under scrutiny from the federal government after the financial meltdown in 2008.

“It could have been devastating to many of us in the marketplace and could have changed gift cards for consumers forever,” Roche says. “But by being able to reach out to that network and call on them and bring them together to work on the issues collaboratively, we were able to fix what could have been a devastating situation.”

Often, this external network is just as important as the team you talk to and trust within your business.

“Every time I meet with somebody else in the industry, I learn something that allows me to be a better leader,” Roche says. “I can’t imagine running this business and not doing that, especially if you’re a high-growth business. You’re always looking for ideas on how you can improve or new products you can bring to market or new ideas on how to better manage your business.”

As she looks to the future, Roche is thinking a lot about the digital realm.

“Digital is transformative for us because it allows us to take the services we represent in the physical retail channels and think of our services as a platform and expand them into digital markets,” Roche says. “It’s another opportunity for growth.” 

 

Takeaways

  • Be detail-oriented when evaluating growth opportunities.
  • Give your team what it needs to help you help your business.
  • Build and maintain a network of external support.

 

Source: Smart Business Online

MEDIA CONTACT:
KATY LASEE | MARKETING DEPT.
651 554 8533
KRLasee@traveltags.com

TAGS:   Blackhawk Network Holdings, card manufacturing