By Ray Birch
BROOKFIELD, Wis.—With the holidays approaching, credit unions could benefit from unwrapping a new gift card strategy now to capture more members’ spend, according to one company, which says the key is offering digital cards.
After all, pointed out Fiserv, gift card usage is growing, spiked in part by the pandemic and one product in particular.
“Over the last four years we've seen digital gift card adoption really accelerate. As you can imagine,” said Tom Niedbalski, VP of gift solutions at Fiserv.
Niedbalski told CUToday.info the pandemic drove the “digital” POS and online infrastructure to the point where it can accept digital gift cards.
“Merchants now have been able to evolve and get to where they need to be, to do a lot more in that digital space,” he said. “Gift card is something I feel is a very dated term. It obviously originated many years ago when we went from a gift certificate to a gift card. When you look at the evolution, whether it's physical or more digital, the use-cases now are wide. It’s gotten well beyond just gifting. And it's not just a gift brands that are using these cards for marketing promotions…incentives.”
A Wider Range
Niedbalski said the range of use cases for gift cards has opened up.
“The concept of a gift card and the core foundation of a gift card was truly around loyalty. Back when you were dealing with gift certificates it was not stored value. It was a gift certificate and then you came in and redeemed that certificate,” he noted. “Now you're capturing that consumer spend to your brand, and it's becoming your branded currency, which is driving that loyalty, which is driving those KPIs, foot traffic and customer acquisition and retention.”
Citing Google Wallet and Apple Wallet as examples, Niedbalski said that today, more than ever, all brands are trying to create their own branded wallet with their mobile app to capture the consumer experience and be able to use that as an engagement with the consumer.
Tom Niedbalski
“When their cards are stored in Apple or Google they lose that engagement capability because it's in the Google or the Apple environment,” Niedbalski noted. “So, we're seeing that trend to where merchants are doing their own merchant-branded wallet to defend their mobile apps so they can store their loyalty, their gift and payment options—things within their own environment and gain from that interaction.”
Great Engagement Tool
Niedbalski emphasized gift cards are quickly becoming one of the best ways to engage with consumers and drive loyalty and interchange revenue.
“A lot of loyalty programs can be confusing. And if your loyalty program is not driving consumer behavior—and what I mean by driving is changing consumer behavior—then your loyalty program is failing,” he asserted. “If you're just giving rewards away without changing consumer behavior, what's the purpose of giving away the incentive?”
Niedbalski said a gift card loyalty program must drive a desired behavior from those consumers the credit union wants.
“A lot of loyalty programs consumers might find are confusing, or they may not really understand what the value is—what they're getting out of it,” he said. “Money talks to consumers, especially in today's economics, with inflation and so forth. Money is very intuitive. When people see they spend X amount of dollars, they earn X amount of points and those points turn into stored value within their wallet that they can immediately redeem on anything within that restaurant or store, they're seeing more adoption and more use.”
The Value of Stored Rewards
Niedbalski said Fiserv is seeing a lot more use-cases in that loyalty play where the reward method is stored value.
“So, we're doing a lot of integrations into loyalty programs to help enable that,” he said.
Niedbalski emphasized gift card rewards programs must be simple to use, easily converting points into dollars that can be used across many merchants nationally. And, to also make the redemption front of mind with members, such as access through mobile app and online banking.
“I've earned some points, so how can I redeem them? I don’t want to have to go through a catalog to figure that out,” he said. “I want a gift card that makes all that very easy. We have a program that can be white labeled for any credit union or bank. But, you need to make it very easy to convert points into dollars and then redeem them.”
You Better Watch Out…And be Ready
Niedbalski said credit unions should have their gift card programs in place for the holidays.
“Christmas shopping is so much easier, because come December, instead of running to the store to go buy gift cards or buy gifts, I've got this free money that I've earned from my credit union that I can use to do all my Christian Christmas shopping on that credit union website or app.”