Gift and Loyalty Smart Card Technology
Ensures Customer Loyalty
Beyond
offering great customer service, what can merchants
do to make more sales and keep customers coming back?
The notion of customer loyalty seems almost quaint today,
when shoppers openly defect to competitors that offer
lower prices. But the good news for merchants is that
shrewd shoppers also value flexibility, convenience
and security. And a simple way for merchants to de-emphasize
price - and attract more business - is to offer customers
other incentives to shop, such as a wider range of payment
options or the ability to earn loyalty card rewards.
Thanks to smarter payment technology and changes in
consumer attitudes, electronic payments have become
more prevalent than ever. MasterCard International,
one of the world's largest credit card networks, reports
that its branded cards were used in more than 11.6 billion
transactions in 2001, generating a gross dollar volume
of $986 billion. This almost trillion dollar volume
is up 17.6% from 2000.
It's no mystery why the number of e-payments is growing.
Consumers love credit cards because they are easy to
use, offer increased buying power and are safer to carry
than cash. Debit cards offer shoppers another fast,
secure way to pay. And electronic checks - secure transactions
that verify the availability of funds and automatically
transfer money - represent a third, increasingly popular
alternative to cash.
For storeowners, accepting these electronic payments
has never been easier. Merchant accounts can be approved
in as little as 24 hours. And payment solutions exist
for virtually every type of business, from restaurants
to online retailers, mobile merchants to home-based
enterprises. Best of all, business owners don't have
to pay up front for terminals, printers or software,
because most payment providers offer short and long
- term equipment leases. Merchants who offer more payments
options to their customers enjoy many advantages, including:
Access to a wider customer base
Higher frequency of sales
Larger ticket amounts per sale
Increased customer traffic
Augmented revenue from customer impulse buys
Strengthened credibility
Lower incidences of employee theft
In addition to credit, debit and e-check acceptance,
businesses are using gift and loyalty cards to attract
and keep customers. Research shows their efforts pay
off. In a national survey on plastic card usage, 45%
of respondents said they spent more money at stores
where they were loyalty program members.
The same study revealed that gift cards, like loyalty
cards, help merchants increase store traffic and boost
incremental sales. Approximately 55% of survey respondents
who have received gift cards reported that they needed
more than one trip to deplete the value stored on their
cards. In addition, the majority of return shoppers
said they spent more than their cards' initial value.
Not surprisingly, many businesses that once offered
gift certificates have traded in paper for plastic.
Card Marketing magazine estimates that by 2005,
plastic cards will represent 80% of the gift certificate
market, a total of about 850 million cards. The advantages
plastic cards offer merchants are undeniable. For one,
retailers no longer have to refund cash for unspent
balances. To storeowners, this means more positive cash
flow and repeat business. Plastic cards are also great
advertising tools because they are brandable, durable
and are easily carried by shoppers. Equally important,
the cards are much more difficult to forge than paper
gift certificates. And that's just the beginning.
A business owner can also use the information encoded
on a gift card's magnetic stripe to determine where
and when the card was purchased, where and when it was
used, and what the card recipient bought. In addition
to these benefits, loyalty cards offer merchants even
more options, including the ability to:
Track customer behavior and history
Allow cardholders to earn points toward rewards
Overcome slow sales by offering extra points on purchases
made during off-peak seasons
Encourage customers to spend more by offering bonus
points for purchases over certain amounts
Create special promotions, such as members- only discounts
Allow customers to apply their points toward future
purchases or to redeem points for free branded merchandise
The list of benefits grows as payment technology gets
both smarter and more economical. But the bottom line
remains the same: One of the best ways to attract new
business while maintaining existing customers is to
offer shoppers more ways to pay for goods and services.
Payment flexibility helps clinch sales and encourages
new customers to return.
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