Incentive - January 2009 - (Page 63)

GIFT CARDS Gift Card Issuers Join Forces Consumer-friendly best practices, accurate information are goals of the new association By Leo Jakobson new association dedicated to the issues faced by retailer-issued gift cards has been announced. The Retail Gift Card Association had its roots at September’s Motivation Show, when representatives of closed-loop gift card issuers including Applebee’s, Best Buy, Home Depot, Marriott International and Subway met to discuss the formation of a group that would provide them with a unified voice, lobby for their interests and create a set of consumer-friendly best practices. Closed loop gift cards are those that can only be used at the issuer’s stores or Web site, as opposed to a Visa or American Express card. “The RGCA is an association formed by a number of large retail brands that recognize that there is no unified voice representing closed-loop gift cards,” says Carman Wenkoff, co-president of the association and president of Subway’s gift card and loyalty program. After several years in which gift cards have grown immensely in popularity, they have also come under increasing fire from consumer advocates and politicians over practices like some issuers’ expiration dates and dormancy fees that chip away at the value of unused cards. Last year’s bankruptcy of The Sharper Image also highlighted the fact that the cards’ long-term value is only as strong as the company that issues them. First and foremost, the founding members of the RGCA are working on a set of pro-consumer best practices, Wenkoff says, including a ban on expiration dates and A dormancy fees, that members will be required to abide by. The reason, ultimately, is straight self-interest: “Consumer-friendly policies protect the reputation of the industry,” Wenkoff says. Another main goal is to provide more accurate information about gift cards, notably the size of the market, sales levels, and other data that often varies widely—by billions of dollars—depending on which analyst estimates it. “A lot of consumer advocates are so far off,” Wenkoff says. “Some say 30 percent of gift cards are not spent.” But there are currently no hard numbers publicly available to dispute that, either. The reason for this is that many closed-loop gift card issuers are private companies or do not break out gift card sales numbers publicly, Wenkoff says. The RGCA hopes to be able to collect this data and aggregate it, providing accurate numbers without divulging private information. While the group ultimately has a retail-facing focus, it should be of interest and use to the incentive market, Wenkoff says, noting that the founding members are very familiar with this sales channel. The aggregated information the group is looking at will be of use to corporate buyers, as it would provide a more accurate picture of when and how gift cards are used, for example. Beyond that, it would let card issuers gain a better understanding of the size and buying patterns of incentive and special markets sales, which would help them quantify and better serve this market. And obviously the best practices the RGCA is planning to enforce are ones that have, for all intents and purposes, been enforced in the incentive and loyalty arena by market forces—as loyalty program buyers hardly want to hear complaints from an award recipient that a card he or she worked hard for has suddenly become useless. Initially, the RGCA will be going on a membership drive starting this month, with the goal of holding a major meeting in March at the Prepaid Card Expo, Mar. 911, in Orlando, Fla. Membership will be limited to premier brands with longevity in the market. More information about the fledgling group can be found online at www.thergca.org Send comments to ljakobson@incentivemag.com incentivemag.com | January 2009 | Incentive | 63 http://www.thergca.org http://www.incentivemag.com

Table of Contents Feed for the Digital Edition of Incentive - January 2009

Incentive - January 2009 Contents Editor's Note: Rewards Must Be Sustainable Headlines Cover Story: Responsibility's New Role Incentive Interview: Patrick Lencioni Family Rewards: Who They're Working For Primer: Working Design Leap of Faith: Religion in the Workplace Cook Up Engagement: Kitchen Teambuilding My Turn: Procurement Possibilities Motivation@Work: Hard Times Recognition Legal Ease: The Tax Facts on Corporate Gifts Travel News: Where to Go and What to Do The Bahamas: Islands in the Sun Field Reports: Four European Destinations Golf: Around the World in 18 Holes Potentials Here and Now Watches and Clocks: Strike the Pose Golf Merchandise: Awards with a Solid Swing Computers: Digital Delights Retailers Band Together for Gift Card Market Gift Cards: The Prepaid Reward Spectrum Advertiser Index On the Web www.Incentivemag.com

Incentive - January 2009

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