contents
contents
01
iNTroDUCTioN
page4
02
03
04
05
06
MaNageMeNT CHoiCeS
page 8b2b roLeS
page12
CLieNT eSSeNTiaLS
page 18iNTerNaL eXpeCTaTioNS
page 24FULLFiLLMeNT
page 14contributors
MATT HOOD
CARD COMPLIANTBRYAN WANG
GIVEXNICK BALESTINO
HALLMARK BUSINESS CONNECTIONSHEATHER ABBOTT
POWERHOUSE BRANDS DESIGNED BY DEAN WILLIAMS POWERHOUSE BRANDS WRITTEN BYMATT DAVIES
POWERHOUSE BRANDSDANIEL KIM
GROUPONMATIAS MARQUEZ
BUYATAB ONLINEANNE JETTER
GCINCENTIVESMARTHA WEAVER
GIFT CARD NETWORKIntroduction
As soon as
gift card
is launched in a retailer, they launch
card in-store
.
Most also add an
online component
to the mix. These are a logical
extension of the product experience, and all the investments in store
and online marketing, branding, and advertising directs people to visit
the store locations. The third party retail channel is another highly
visible placement that merchants look for initially, as it is a logical retail
extension outside their own doors.
The sales channel that gets the least amount of support, but is surprisingly affordable and easy to get involved in is the B2B channel. The concept is simple— merchants sell gift cards in bulk, at a discount, to resellers or directly to companies for a variety of purposes, such as employee incentive, consumer loyalty, or consumer promotional opportunities. Gift cards are a proven incentive, and compa-nies strategically use them to promote sales, certain products, events, and ongoing loyalty point programs. B2B is in many ways a simple transac-tion—namely the sale of gift cards in volume to another corporate entity that receives a discount for that volume
opportunity. However, the details of each deal can vary greatly, and since the process is labor intense and more about networking and connections, the relationships and politics of making business happen can be complex. The use of commissions is a standard compensation method for the companies that process and make cards available to their buyers.
To be clear, the third party retail sales channel (selling gift cards in grocery, drug, and other stores) is similar to B2B in that there is a distributor partner. However, B2B is a separate sales channel and should be treated as such with any distributors that happen to support both channels.
MAIN BENEFITS OF BEING IN THE B2B CHANNEL
l Enable consumer sales on major and minor online merchant sitesto consumers
l Find new customers and re-engage lost customers
l Higher sales—B2B programs can be between 25% and 50% of a merchant’s gift card program, depending on how they support their channels and what their service or products are.
l Access to numerous “closed wallet systems,” meaning that there is money being spent on incentives that the merchant is not currently a part of, i.e. an employee accrues points for performance within a company, and only those gift cards that are part of the “menu” for that employee to pick from are going to get access to those funds.
l In the instance of self-gifting, allowing the consumer (for that is what the end user is) to choose your brand, which may bring more value to their point redemption experience.
l Enable promotional giveaway relationships with partner companies, agencies, and internal marketing promotions.
l Enable digital programs outside your own company’s site traffic in mobile, online, and incentive programs.
l Marketing and Exposure—By having a significant program, lots of eyeballs are now looking at your brand. Promotional opportunities are another highly beneficial channel, where a company is choosing a specific merchant brand to promote and give to consumers (i.e. buy X, get a gift card from a different popular merchant)
l Most merchants are probably already doing corporate sales. Often companies who want gift cards are going directly to the store or third party shelves to purchase cards. By introducing a B2B program and building in a way to take leads from locations takes stress off of other channels and makes a possible ongoing direct relationship.
l B2B technology partners can additionally assist with management of your existing corporate orders. Helping streamline the ordering process, giving your buyers the ability to self purchase and easily re-order bulk orders. All of this will ensure that all corporate buyers inquiring about buying your cards in bulk (ranging from a handful of cards to really big orders) do not get missed.
MAIN ISSUES WITH BEING IN THE B2B CHANNEL
l Creating a reliable sales, support, payment, ordering, and fulfillmentsystem (See section below on different possible approaches)
l Time and resources needed to introduce and maximize the channel
l Executive buyoff on discounts and net terms
l Finding and taking advantage of marketing opportunities
l Some aggregate distributors will try to obtain exclusivity for just their channels from merchants (see exclusivity section below)
As you read further, do not let the B2B channel overwhelm you. There are many resources, including outside consultancy, that can assist with the program and make it successful with minimal internal work. Don’t be afraid to ask questions—the gift card industry is particularly friendly and open to discussing strategy and opportunity.
MAIN B2B INDUSTRY PLAYER DEFINITIONS:
Before we get into details, let’s define the players you’ll see within the gift card B2B space. You will find that names and roles may be combined within a single company, which can be confusing, but logical in this highly fragmented sales channel.
Merchants: Offer gift cards and makes those cards available to B2B clients, resellers, or aggregate distributors
B2B Consultants: Work for merchants to offer their gift cards to B2B buyers, manage sales, account management, marketing, promotions, ordering, invoicing, and other roles. Both retainers and commissions or a mixture of the two are common compensation methods.
Resellers: Offer and purchase large varieties of gift cards from merchants or consultants to offer gift card sourcing solutions to other businesses. Usually purchase in bulk as needed, but some are linking to processors to be able to activate on demand. Pay for performance discounts are typically used as compensation.
Aggregate Digital or Physical Distributors: Collect brands and build the ability to activate cards on demand with the processor (at the merchant’s request). Acts as a reseller in offering a “menu” of brands to customers as well as the ability to activate and/or deliver cards on demand. Compensation usually takes the form of a discount or commission. There are some who utilize a “per unit” pricing model. Digital is growing in the B2B space, as it simplifies and lowers delivery costs. Getting online with digital is now a key piece of the program, which can be done independently or through these Aggregate Digital distributors, who exist to create relationships and service buyers and offer merchants to them.
Processor: Company that generates and manages all card numbers and provides authorizations to other parties. Compensation varies, and is usually incorporated into the overall pricing for
processing all cards. Processors usually provide the basics of bulk sales (bulk activation) as part of their basic services. Processors are also vital in the expansion of the card program through aggregate distributors as they usually have existing connections with these providers or can build them easily.
Fulfillment Companies: Companies that warehouse gift cards and take order files to pick, pack,
and fulfill gift cards to a recipient from website or manual B2B orders. Compensation is usually on a per order basis with some sort of monthly warehousing or maintenance fee.
Print On Demand Solutions:
Companies that have the ability to store images and print on demand, or to take an art file and deliver gift cards that are custom-printed. Compensation is similar to fulfillment companies, with warehousing fees plus a per card print and per order fulfillment fee.
Client Companies: Companies that utilize gift cards for their programs (employee gifts, incentives, consumer incentives, etc.). These may be direct clients, if the merchant has developed those relationships, or are the clients that consultants, resellers and distributors have sourced and developed relationships with.
End Users: The consumers that choose or receive the gift cards through whatever program or promotion is giving them.
TYPES OF COMPANIES THAT PURCHASE GIFT CARDS:
(for a more comprehensive list, see the B2B Sales Channels document created by the GCN B2B committee)
Fundraising Agencies (Scrip): The original B2B buyers, Scrip companies offer gift cards to the constituents of nonprofit organizations. And the discount offered becomes raised funds for the nonprofits they work with. Scrip purchasers are usually very large purchasers of gift cards, this is in part due to their large subscription base and strong commitment from their users to purchase everyday items through gift cards (in support of the organizations cause). Scrip companies have effectively created a grass-roots marketing system for the promotion of gift cards in the fundraising space.
Employee Incentive Firms: Specializing in offering incentive programs to companies for sales, performance, or wellness, these companies purchase gift cards
regularly to satisfy their end user population. Example: Employee achieves a certain milestone and is rewarded with a gift card or a
choice of a gift card.
Consumer Promotional Incentives: Usually individual corporations, but sometimes managed by a third party, consumers can “earn” points by doing things and then “burn” those points on gift cards. Large retailers commonly use loyalty programs to promote the purchase of their products over time to earn and keep market share. Some of these programs utilize gift cards as a popular redemption item.
Credit Card Programs: Similar to consumer programs, but focused on the use of a particular credit or debit card program. Points are earned as a percent of purchases, and are redeemable for items, usually including gift cards. Most major credit cards and some debit card programs utilize points to compete in the market.
One Time Consumer Promotions: Cards are usually purchased directly by a company or through an agency for a particular event,
store opening, or promotion. Gift cards often offered to incentivize participation in promotion / event.
Corporate Gifting, Initiative Launch or Internal Event: Gift cards offer flexibility when a corporation is looking to give some sort of gift to clients, customers, employees. Usually purchased through the corporate directly or through an agency or reseller. Often the most alluring channel to executives as they tend to have large immediate impact, but the most difficult to find, and very unreliable to get stable sales from, as they are often one-time purchases.
In
troduc
Management choices
EDUCATE AND EXECUTE
WITH EXISTING STAFF:
Utilizing existing sales teams: Most companies who have an external sales staff plan on tasking them with including gift card in their everyday sales. There are benefits and drawbacks to this approach.Pros:
✚ Cost: Resources, commissions, and staff are already in place.
✚ Business Contacts: Salespeople already have purchasing contacts that purchase other things (product, company reservations, etc.) and can “add” this product to their portfolio.
Cons:
✖ Proper Contacts: The people who buy products are usually not the same people who purchase gift cards. These roles are often split between multiple people at a purchasing organization. Finding new contacts can be time consuming and difficult.
✖ Secondary Focus/Training: Salespeople who sell items that drive revenue immediately tend to deprioritize the gift card, whose primary value comes in its lift and incremental use.
✖ Discount/Commission Structure Differences: Gift card probably has a different discount and commission structure (usually less than product
sales, as gift cards can be used on anything regardless of the margin) so commissions are usually affected negatively. Leveraging an existing sales team who gets a hefty commission on regular products, and pays less for gift card is death to a B2B program, unless there are other incentives.
✖ Systems and Communications: Typically, a system that has been around for a long time (such as a large sales team orders database) is very specific in its function, fields, and reporting. Sometimes adding a very different product like gift card can interfere with normal functions
(calculating commissions for example) because the gift card sale has no retail value, has denominations, card numbers, and PINs, and must be activated prior to shipment. Usually fulfillment is separated as well, as gift cards tend to be higher security risks in the mail.
✖ Difference of Use: Gift cards are typically used for personal rewards and other individual purposes. The type of company that purchases gift cards is also different. Depending on the type of group sales a team is used to, the way they sell the product may not mesh with their existing methods.
Utilizing the existing gift card manager:
Using your existing resource certainly sounds easy, however, there are pros and cons to utilizing the existing manager for this role.
Pros:
✚ Cost: Using an existing resource instead of a new one is usually cheaper. Specific and dedicated expertise has a price.
✚ Focus and Accountability: the gift card manager has an obligation for the overall program, so has reason to drive sales.
✚ Trust: People like to feel close to consumer brands, so like to have direct points of contact. Cons:
✖ Time and Resources: Most companies do not have dedicated personnel for direct product sales. The gift card manager must fit all their responsibilities into their work day. B2B is the most time-intensive
sales channel. (See B2B Roles for more information) A successful B2B program can keep a full time staff member very busy. Clients must be found, negotiated with, account managed, and followed up with.
✖ Talent and Staffing: B2B sales are not always a skill easily found within a merchant’s company. The person chosen must be very entrepreneurial, driven, outgoing, and strategic. They must enjoy talking to a large number of people, must enjoy sales, and get satisfaction from the program’s success. Skill sets that make the gift card manager desirable for in-store, online, and internal support may not be the same skill sets needed for B2B sales.
The ways to
support a gift card program
are often debated and many
merchants delay their launch in this space figuring out what their
options are. Here are the
main options
available to merchants.
Find New Talent to Hire:
Finding a person to hire is a bit more complex. Most companies feel the most comfortable hiring within their own company, so it is challenging to find someone with gift card specific knowledge.
Pros:
✚ See above—similar to utilizing the existing gift card manager, the benefits of having an employee doing the work can be positive.
Cons:
✖ Confusing or Competing Compensation Structures: Some merchants feel that for a channel that is so individually driven for sales, a pay-for-performance model is best. Introducing a pay-for-perfor-mance model for internal employees can be fraught with pitfalls, including potentially complex compensation structures, introducing jealousy into a normally salaried workplace, or the embarrassing “We’re paying one employee too much” or “they’re not making enough” situations where the compensation structures built do not accurately match the opportunity.
✖ Establishing Headcount: To hire a new person, a headcount, salary, and benefits must be justified. In publicly traded companies, acquiring the approval for headcount is one of the most difficult things to do. In addition, since gift card’s profitability is based on secondary benefits, such as branding,
incremental traffic and revenue, lift, and float, (see the GCN article on gift card benefits to companies) it is sometimes hard to justify headcount.
✖ Alternate Focus and Goals: Any employee of the company usually has a number of different goals outside of their main goal. This is similar for hired salespeople, whose duties often extend into other aspects of the gift card program. As these duties tend to be “hotter” or perceived as a higher priority (i.e. meeting internal deadlines or expectations), the longer-burn items, such as looking for new clients, easily takes a lower priority.
✖ Time to Gain Knowledge and Networking: Training and educating a salesperson who is not familiar with the gift card space takes a significant amount of time. One must network, attend conferences and shows, and build relationships with their prospec-tive clients. Trust and being genuine, involved, and interested in the gift card industry gets attention and drives positive relationships and sales.
mana
gemen
t
FIND A SPECIALIST CONSULTANT OR AGENCY:
There are a handful of specialized gift card consulting firms that are already managing B2B programs for other companies. They usually have established relationships with purchasing companies, have billing and ordering capability built into their solution, and can find vendors for fulfillment or perform it themselves.
Pros:
✚ Aggregate gift card consulting firms are familiar and already interacting with buyers regularly, who have many reasons to build ongoing relationships. ✚ Resources for sales, account
manage-ment, ordering, paymanage-ment, storage and delivery of codes or physical cards may already exist or be managed as part of the solution.
✚ As their full time job, consultants or agencies have incentive to perform and deliver results, regardless of their compensation structure.
Cons:
✖ You are paying for specialized knowledge, established connections, and trust, as well as practiced execution. With that said, however, some agencies can be flexible in their approach to accommodate their clients, and can be cheaper and easier than adding headcount.
✖ Branding information must be communicated to the consultant or agency. Ongoing customer promotions, company actions, etc. must
be communicated.
✖ Inclusion of the consultant and agency in all discussions is essential, espe-cially when commissions are involved.
Sales: This is a critical role, driving new relationships through identification and outreach to prospective clients. Proactive research, marketing, advertising, PR, negotiation, strategy, and participating in networking events are essential for success. Expectation is that this role will need to travel to between 3-4 industry conferences focused on gift cards at a minimum, and focus on those events that drive partnership and sales.
Account Management: Once the account is established, it must be fostered and taken care of. The best partnerships with clients start with flexibility, creativity, and communication. Distribution partners are interested in company information, promotions they can leverage within their programs, as well as key product and brand updates. The account manager is in charge of turning an initial transactional sale into a budding, ongoing, growing relationship. Empowerment of this role is important (i.e. authorizing free expedited shipping or trial gift card/coupon release, for example) so they can act quickly for client requests. Account management usually works with sales to establish discount levels, and whether they change over time. An important note is to make sure to keep account history and informa-tion stored somewhere, like a database, where client information can be recorded and easily viewed.
Order Management: A way to take orders, record them, and authorize them for fulfillment must exist. Some companies
manage everything internally, utilizing excel spreadsheets or proprietary databases to hold order and card information. Others use outsourced B2B management teams to manage this complicated process. Order management is responsible for maintaining the agreed-upon discount rates, any shipping or other fees associated with the orders. This role usually also handles client issues (think mistakes in activation) that involves research and resolution. Taking Payment: A critical role— payment must be taken for the card orders.
Policies vary—some merchants only allow prepayment of live inventory, while others allow net terms. In order to ensure flexibility, a method of taking credit card, ACH or wire transfers, and physical check should be established. Some companies do not allow credit card, as it has percentage charges associated with it, but it is a preferred method of payment (due to the points the distributors receive from using it). Making sure the solution has the ability to allow cards to be sent prior to payment is important for client flexibility, and an invoice and collections policy and process should be established prior to launching. Fraud tends to be low in the B2B arena, as most clients are established in the space but if fraud is something that does worry you, services do exist that will underwrite and guarantee all of your
orders. Flexible payment types and net terms are desirable to distributors and sometimes can get a card into a program. Fulfillment: Card must be picked, packed, activated, and sent. Many outsourced solutions are available for both digital and physical card fulfillment, and is recom-mended as accurate fulfillment is one of the most common issues with orders, and one of the most complex to rectify. Although some companies do this job internally, utilizing a vendor to fulfill this need has many benefits for a B2B gift card program of any large size. (See the “Ways to fulfill gift cards for B2B” section)
Communication and Technical Support: In order to keep all the sales leads, incoming and outgoing orders, and pending payments straight, a
system must be created. From a simple Excel sheet to a complex online database, something must link all the different roles together and be the system of record for
holding order information. There are a number of outsourced solutions for these purposes.
A single everyday source of communica-tion to clients regarding ordering is recommended. A combination of ordering and account management is usually this point of contact.
B2B roles
Keep in mind these are
roles
, not specifically
people
. A single person
or company can cover any of these roles as long as the
skill set exists
.
WAYS TO FULFILL PHYSICAL B2B GIFT CARDS
Self-Fulfillment (from the gift card team)
l Setup of an internal database is recommended as orders will need to be tracked. Bare minimum is a excel spreadsheet of orders to track sales, invoices, etc.
l Keep gift cards in a safe storage location (Locked room, warehouse, etc.)
l Cards are usually stored in boxes of 500.
l OPTIONAL: Some companies create boxes of smaller amounts of cards and set a rule requiring a multiple of X (i.e. multiples of 25) and only fulfill in whole boxes.
WARNING: this “rule” will be broken over and over. A way to fulfill a flexible amount of cards will be requested frequently.
l Upon a successful order, pull cards of proper design from storage (must store boxes in order and pull from them sequentially).
l Record the card ranges and denomina-tions being sent (If cards have
scratch-off pads over the card numbers, a mag stripe reader is necessary to read card numbers.)
l Most processors provide a portal to manually activate cards for B2B. Log into the processor portal and activate card range (from X card to X card) for the proper amounts. Keep in mind that
there will probably be multiple denominations requested.
l Generate a packing slip and pack the boxes into a larger box with any notes or invoices inside.
l Create shipping slip, put it in the mail (Note: some clients need cards overnight or 2 day, so having a way to ship quickly is ideal).
l Collect tracking number from shipper and record it on the order.
l There may be a delay in the activation of large orders, so cards may be activated in route, so check activation to make sure they were activated successfully (unless processor offers real-time activations).
l Keep in mind that most merchants send cards “hot” meaning they have value on them. Most shipping companies will not allow the insurance of monetary equivalents (basically you can only insure the cost of the plastic product itself). Also, most contracts require (and it is logical) that merchants take the risk of theft or errors in shipping prior to the client receiving the cards. This means that utilizing tracking numbers is essential, and any shipping issues must be dealt with as soon as they are identified. See facing page for possible shipping and their potential resolution.
fulfillment
Issue: Delayed Shipment Cause: Delayed transport
Indication: Client reports not receiving the package Resolution: Wait—if needed, devalue first shipment and
resend new shipment—make sure to indicate to client that this has been done and which to use Prevention: Label clearly—double-check shipment
send priority Issue: Lost in the Mail
Cause: Bad address, could not find address Indication: Client never receives but cards not spent Resolution: Remove value from previous shipment, resend
new shipment
Prevention: Double-check shipping address with client, make labels highly visible and readable Issue: Stolen from the Mail
Cause: Carrier fraud or error, employee mail fraud, stolen from drop off (from the porch)
Indication: Client reports not receiving package, some or all cards used
Resolution: Remove any remaining value from cards and replace order for client with new more secure address, report issue to carrier for resolution Prevention: Shipping boxes should not be identifiable if
possible as gift cards Issue: Wrong Product Received Cause: Error in fulfillment
Indication: Client reports issue
Resolution: Remove value from order and replace Prevention: Tighter ordering/fulfillment controls
Issue: Product Not Activated Cause: Error in fulfillment or processor file Indication: Client reports issue or audit review Resolution: Activate product immediately Prevention: Check activation files
WAYS TO FULFILL DIGITAL CARDS
Self Fulfillment (Manual):
This method involves generating a large file of card numbers and PINs and storing them in some way (a CSV file, excel worksheet or database). Then as the numbers are sold, the ranges are manually activated via the processor’s batch activation tool, marked as ordered, and sent to the client directly.
NOTE ABOUT SECURITY: Make sure orders are password protected. Some
clients support encryption as well. If they fall into the wrong hands, a single digital order stolen can be devastating to the client’s end users (they will have a bad experience redeeming cards already used) as well as the merchant who sold the cards (who now must devalue and replace them.)
CRITICAL NOTE: When sending card numbers to clients, remember that excel worksheets only hold up to 16 digits as “numbers”—it will zero the last few numbers out (depending on the length of the number). You must format the sheet to be formatted as text in order for the full number to be retained if it is numeric.
Some clients will self-fulfill with their own technology, so be sure to ask how the recipient will receive the card information. Some basic solutions just provide a card number and PIN and little else—so make sure to give your stores a heads up on what is coming. This is becoming less of an issue as digital providers are more prevalent and more likely to deliver on the client’s behalf, but regardless, your stores should be able to recognize the card for redemption easily.
Digital Vendor or Processor: Sometimes processors or digital vendors
offer digital delivery services. They
usually provide some sort of back
end portal in
order to access, place orders, take credit card payment, and automatically activate cards. There are also solutions that allow a gift card program to take orders directly from clients through a website. A digital vendor may also assist in the design and look of the cards being sent out to ensure brand congruency. Digital vendors often provide the purchasers with a link for each card, the link provided sends the purchaser to a branded page that has the brands approved design, creative, tracking, additional functionality (reload, check balance etc.) as well as the card number and pin.
Building a Client-Facing Website for Orders:
Processors or Digital vendors allow the ability for clients to sign in and order cards directly from the merchant. One of the biggest mistakes that merchants can make is building a public “self-service” corporate order site and sitting back, expecting the orders to roll in. The client-facing site can be useful for managing existing programs, but be wary of public-accessible sites that allow discounting and anonymous purchases. This anonymity not only makes the discount for card transparent to consumers, but also adds a level of fraud risk that is typically relatively low in the corporate orders space.
The best way to approach adding a client-facing site is to treat it as a re-order opportunity for large B2B populations. Establish the client, set up an account, and give them access to place reorders through the portal. Expect that some clients will not immediately gravitate toward using the site. For larger programs, they may have automated processes that kick out purchase orders, and may not be able to order individual cards manually. Fulfillment House: (Automated
fulfillment)
l A sales file is sent from the portal taking orders (or a fulfillment portal is used, if offered from the vendor)
l The fulfillment vendor pulls the proper card designs from the warehouse, usually stored in boxes of 500.
l The appropriate cards are “picked” from the boxes in order
l An activation file is sent from the fulfillment house to the processor to activate the cards.
Remote Activation of “Dead Stock” Some clients are unable or unwilling to pay up front for “hot”(activated) card stock, and require “dead” (inactive) card stock sent to them. They then sell the cards and ask for activation upon need. Usually the order then contains a range of card numbers, which the merchant then activates (usually via the processor batch activation portal) and then collects payment.
Fulfillmen
DISCOUNTS
An essential in the B2B space, as the majority of major clients are reselling the cards in some way, and make their profit on the discount. Any new program should assume a significant discount on any cards sold in addition to the cost or resourcing the channel. Higher discounted cards tend
to be higher priority for buyers, assuming everything else is equal. NOTE: This can be one of the major stumbling blocks of getting the program approved as other channels (in store, online) typically has no commission costs.
BRAND POPULARITY AND
END USER PREFERENCE/
DEMOGRAPHIC
One of the most critical aspects of the decision process, the buyer’s role is to make sure that the brand fits with the needs of their buying community. Most companies who purchase gift cards have a good idea of their existing demands from their end user population, and needs change all the time based on prices (i.e. gas cards are more popular when gas is expensive)
REDEEMABLE LOCATIONS
Bigger is better. The main rule is that the more locations the card can be redeemed in, the better the choice for the end consumer. The size of the chain
also usually indicates popularity, which is very important to these
programs. Global redemption is particularly impressive to those buyers that do business globally, but must support multiple currencies to be successful.
A VARIETY OF PRODUCT/
EXPERIENCE CHOICES
As a rule, cards that give the user access to a large variety of products or services do better than cards that allow access to a single or very limited number of products. More variety appeals to a larger group of people. This rule may be broken with specific products that meet a market need or specific theme. For example—a retailer that sells sporting equipment may be a much better fit for a wellness program than a grocery store.
Client essentials
What
B2B clients
look for in taking
new cards
Reasons Discounts Make Sense:
✚ New Customer Value: B2B creates access to new customers, giving them a reason to try the brand
✚ Incremental Traffic: Customers who already shop at the merchant will most likely make an incre-mental visit
✚ Lift makes up for the discount: Lift is defined as the amount a customer spends above and beyond the value of the gift card when they use their gift card.
Customers are very likely to spend more during their visit. The perception of “free money” especially in the self-gifting arena is strong. All merchants see lift, on average they report 30%-100% in lift upon redemption. The discount would only apply to the card value itself.
✚ Branding: The brand will be seen be millions of people in a free exposure, pay-for perform-ance model.
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Gift Card 101 | B2B Overview Gift Card 101 | B2B Overview www.thegiftcardnetwork.com www.thegiftcardnetwork.com 19 18
GOOD SALESMANSHIP &
ACCOUNT MANAGEMENT
No one likes to work with people who treat them badly, do not call them back, or are rude or annoying. People like to work with attentive, respectful merchant contacts who understand they need to make decisions for millions of people and cannot rush decisions or provide instant results. A brief list of things not to do: ✖ Expect to get into programs
immedi-ately: These decisions take time, and taking another card in an already large portfolio is a difficult decision. Ramping up a gift card program for a desirable merchant can take eighteen months or more, depending on the support level. A more ‘niche,’ brand new, or less desirable merchant can take longer, especially for larger programs. Be patient and keep finding different opportunities to get the brand aware-ness up. A good rule of thumb is the less consumer awareness of the brand, the longer the B2B process will take. ✖ Don’t call buyers constantly: Some
approaches are to “bug them until they buy,” by constantly calling and
harassing them for not taking the card. This is not only irritating to the client, and delays or prevents the card from getting into the program, but if the card is finally taken in a program, it tends to not do well, as internal support is essential to get the card promoted and perform. While creating a relationship and checking in with the client is appropriate and essential to making sales happen, focus on a wider group of buyers rather than poking at a small group of contacts constantly.
✖ Attack competitors already within the program: Everyone knows that merchants are not favorable to their competition, especially when that competition is stopping them from entering a B2B program. Avoid tearing down the competition, as in doing so, you may be putting the buyer on the defensive (remember, they or their team made the decision to purchase the competing card in the first place). Instead, focus on the unique attributes that your card/company/service/ products have that would encourage consumers to choose and enjoy. ✖ Treat B2B buyers like consumers:
Consumers are numerous, and they come and go. Gaining new customers is a general strategy for every com- pany, and the amount of attention per customer is relatively low. There is a finite group of major B2B buyers, and they all have large purchasing power. Treat B2B buyers with respect and give them more flexibility and attention than a normal consumer. Extending this to their consumers (making issues go away quickly) can be very helpful in the relationship, opening doors to special marketing placements and other benefits.
✖ Try to Change Negotiation Terms Constantly: Keep to the things you’ve agreed upon. Most sales contracts are annual, so they have the ability to be changed within 12 months. Contract performance disputes are damaging to the relationship and may cause the card to be pulled from the program. On the other hand, be wary of clients constantly asking for additional discounts outside of contract negotia-tions.
✖ Once in the Program, Expecting Immediate Results: Things take time to build, especially large incentive or loyalty programs with large user populations. All programs have an “awareness” ramp up period where end users must be educated that a particular product is available, and they incorporate it into their purchasing behavior. Remember—many points-based programs have an extended performance cycle:
•Merchant is accepted by the buyer •Buyer and Team advertises the card
is available
•Client companies review annually and decide to take new cards
•Cards are placed in client programs •End users can now order the cards
and orders begin
✖ Charge Them for Everything: Clients (at least the bigger ones) will be spending hundreds of thousands of dollars, if not millions, on your card. Expect to give them a free shipping option, and don’t nickel
and dime your clients with random fees.
Essen
tial
NETWORK, NETWORK,
NETWORK
People trust salespeople they know. Attend conferences, tradeshows, and
industry events. Be involved in industry activities and associa-tions. This allows buyers to get to know you and find opportunities to work together. Buyers respect brands who put effort and resources behind their program.
INVEST IN MARKETING
Be aware of marketing opportunities. There are many buyers that use resources like buying guides (See the Gift Card Network B2B Guide as an example) or subscribe to trade magazines and look to those publications for ideas. Lesser known brands should utilize these publications to increase brand awareness and get exposure to a wider group of buyers.
MARKETING PARTNERSHIPS
Buyers like partnership with merchants. These partnerships may pre-exist in another form, i.e. one company is a whole- saler of another, or a cross-marketing relationship may already exist. In the case of consumer or incentive placements, they may also take on the form of an advertising purchase or other investment. Buyers will naturally give preference to companies that are interested in investing in their goals.
LIKE COMPANIES ARE
TAKING THE CARD
The biggest Catch-22 in this space. As more companies take the card, the card will become more legitimized, and other buyers will tend to take it. This is espe-cially relevant when a major competitor takes the card.
THE CLIENT ASKS FOR IT
Do not underestimate the power of end users or client companies asking the buyer for the card. Most access to buyer’s clients is limited, but gaining access in some positive way can be beneficial. Do not expect a lot of assistance with this from the buyer. Their job is to be the conduit of information and source of product, and
most are not keen on their suppliers going around them, so be respectful of existing relationships. Also, creating marketing materials outlining the company and brand in a clear, concise, clean way will help cut through competing cards.
CREDIT CARDS AND
NET TERMS
You can ask for funds up front from buyers, but offer easy ways for them to pay with their purchasing card. Most buyers prefer to get net terms from their gift card merchants if possible. This can sometimes be the difference between getting into a program and waiting around for years to get into a particular client’s program.
EASE OF OBTAINING AND
ACTIVATING CARDS
With hundreds of suppliers, having a clear and consistent way to order and pay for cards is essential. Having a single point of contact who is accountable for all aspects of account management
and ordering is preferred for quick ordering and resolution. Cards should
have the flexibility to be received activated to minimize consumer issues.
REDEMPTION PERFORMANCE
The cards have to work, have a positive consumer experience, and have minimal issues with redemption. The client is the first line of defense for customer service issues, and will be the conduit for any missing value or issues with redemption. Every merchant has issues with activation or customer service issues sometimes. Making sure that any issues are responded to and resolved immediately is critical, and future issues are minimized with policy, procedure, training or service level agreements.
EXCLUSIVITY
Be aware that limiting your opportunity within the gift card space by relying
on a single distributor is harmful to the overall performance of the program. You are able to integrate with multiple digital aggregators to reach a wider audience, and can offer different terms based on their solutions.
Buyers utilize the solution that meets their needs, and very large buyers may choose a particular Aggregator company to work with that brings the best services. Being flexible in where the card is distributed is key to being able to continue to expand and grow the program in new players. There are so many new players in the B2B space that are non-traditional, and it is such a growing opportunity, do not limit yourself in this space.
Ask around with your peers prior to signing exclusivity agreements with particular aggregators to gain perspective. One exception exists for this rule, which is when an outside consultant is used to actually run the program. These consultants should be neutral and act as an agent for the merchant, usually not owning any particular points of distribution or bias. By having more than one independent agent or company representing the company, they will most likely compete with similar clients and will ultimately increase the discount to the merchant. By granting exclusivity, you are creating a partner in the industry that is empowered to represent you accurately and negotiate in your best interest with anyone.
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DISCOUNTS & FORECASTING
Discounts are necessary to make the channel work. Remember that you are “paying” the distributor with your discount. Sometimes the concept of “discounting” cash is not understood
especially by the finance and accounting departments— see the above section for the benefits of B2B and gift cards in general.
An expense will need to be booked for the discount. Some companies take the expense hit immediately, and some take it in an “expense schedule” that allows the discount to be amortized over the predicted life of the card. Historical data is necessary to be collected and reviewed, and reflect in this amortization schedule to be legitimate.
Some companies require the discount to be budgeted. In these cases, an under-standing of the benefits of gift card is VITAL to establish early, with the understanding that more sales are better for the company. What will inevitably happen is that a major opportunity will suddenly arise that would make the team miss that budget line item, and unless it is understood that the gift card sales are positive to the company’s overall financial health, there may be pushback on the order based on the budgeted discount impact.
SALES GOALS OVER TIME
AND “BUCKETING”
Sales goals are tricky, and especially tricky within B2B. Most merchants are consumer based companies, with reliable traffic on a regular basis. Therefore there is a basic expectation that B2B will “comp” regularly year over year. This is not necessarily the case, as some buyers will pre-purchase large amounts of inventory, or might over-purchase inventory,
expecting sales to be higher. In addition, if the brand is promotionally focused, a particular year may have very high promotional gift card sales. The solution to this issue is to “bucket” sales goals by company type (or how they use the cards), which will give a more predictable flow to the goals over time, and will allow discussion on the types of activities that drive certain types of business. i.e. a large promotion the year before might bump sales one year, but not be repeated from the same client, so marketing, advertising, and networking activities may be in order to replace that order the following year.
Another opportunity is to work with the client to get their sales information and report that alongside the overall sales results to show the internal audience what the consumer demand is for the card.
MARKETING ACCESS
FOR APPROVAL
Some more ongoing opportunities will have longer turn times, but promotional opportunities might have very quick response times, especially with agencies who may be looking at multiple sourcing options.
Companies have lost millions of dollars to competition or lost opportunities by not having a defined decision making process around quick-turn promotional opportunities.
Usually marketing and brand want to have some say in any partnered promotional opportunities, commonly avoiding “sin” themes (Sex, Drugs, and Guns are the big three), but also sometimes having issues with the brand of the purchasing company. These issues should be addressed as the program develops and promotional opportunities begin to be available. Quite often an initial partnership opportunity with a real cash order is the catalyst.
EXPECTATIONS OF SUPPORT
Don’t have any. B2B and sales is a mystery to most people who work for merchants, specifically retailers, and salespeople tend to be expected to be on the phone constantly, are commonly looked up on with envy from salaried employees (if the have a commission component) and tend to be driven toward their goals. Executives as rule are never satisfied with any volume of sales, and will constantly be pushing to seek more.
Expect questions around why the biggest and best programs (and they programs they are involved in from a consumer perspective) do not have your card yet. Expect them to boo the competition being included in programs you ARE included in. Industry realities and politics are unim-portant to most other members of the company, and the person making sales will need to be proactive in understanding and explaining the reasons performance is not immediate.
