EDINA, Minn.—Customers respond better to retail offers that include general use prepaid cards rather than closed loop gift cards. Customers are more likely to purchase products at a store that presents an open loop reward, according to experts at Young America, www.young-america.com, an engagement marketing, loyalty and incentive firm. Yet, until now, retailers have struggled to get customers to spend back those rewards at their store.
“Research indicates open loop cards are a better reward than closed loop cards and work best with an offer that engages the customer beyond the initial purchase,” said Mark Lockwood, Senior Vice President of Payment Services for Young America. “A better reward means more people are willing to take you up on your offer. The key for retailers is to then continue to market to that customer to ask them to spend that reward back at their location.”
According to recent research by Mercator Advisory Group, open loop cards are gaining favor among both businesses and consumers, and are taking market share from closed-loop cards. In 2009, open-loop card load increased 37 percent, while closed-loop card load declined 8 percent, the data found.
However, offering an open loop card alone is not enough to engender loyalty, said Lockwood. “A typical open loop rebate card in the industry will bring about 12-15 percent of customer spend back into the store,” he said. “Our comprehensive Spend Back program, which features consistent customer engagement, targets customer return at two to four times that rate, based upon a variety of tools.”
The difference, he said, is in the continuum of the campaign.
“Young America is committed to building customer acquisition programs that optimize the whole process for our clients — from the initial offer, to the purchase, to the reward offered and to the spending of that reward,” said Lockwood. “Too often we see programs in which the retailer sends out the card and considers it a cost of acquisition only. Our mission is to work with our clients through the entire process to drive that reward recipient back to their store to use that reward.”
By using multiple points of contact to entice the customer to use the card at the store, retailers can dramatically increase spend back rates, sometimes doubling or tripling revenues attributable to those reward dollars, he noted.
For more information about Young America’s Spend Back Program, visit www.young-america.com or call 800-533-4529.