Businesses that fail to employ digital payment options and “branded currency” will be left in the past, rendered as the “losers” of the digital revolution, according to a report from Mark Bonchek and Gene Cornfield of the Harvard Business Review.
“Coupons. Gift cards. Loyalty points. These tried-and-true tools of the retail trade might not be as sexy as other forms of marketing. But together they account for more than $165 billion in purchasing power,” report the two men.
They added that that amount of revenue is almost equal to the total amount of e-commerce spending.
However, they argue that businesses that fail to adapt to digital modes of delivery for gift cards and other similar items will be doomed to be left behind. They separate companies into three distinctions, based on how quickly they adapt to branded currency options: losers, laggers, and leaders. The latter companies will create brand identity by creating integrated mobile and digital approaches. The former group, however – those who offer rewards points and gift cards via analog options, as they always have – will “steadily lose their competitive edge,” and then, their customers.
“The mistake would be to think that [retailers] can keep doing what they have always done, but just add a little digital to it,” said Bonchek and Cornfield. “Instead, retailers need to think about coupons, gift cards, and loyalty points not only as three separate tools, but as different forms of Branded Currency.”
The potential of digital conversion
One fact becomes clear, in light of the two men’s findings: merchant account services are the way of the future for business owners, and decision-makers are in a position where they’re forced to adopt or die. Many are already reaping the benefits, in fact.
Early in 2011, Starbucks instituted options for consumers to reload their gift cards, or to purchase new ones, through smartphone applications. They now claim over 7 million regular users, who collectively make an average of 4.5 million payments every single week.
“Mobile platform is giving us a greater speed of service, higher attachment, higher ticket, and higher reload,” said CEO Howard Schultz to his investors, arguing for the viability of mobile gift card options.
He added he also agrees with Bonchek and Cornfield that the potential for profit is much higher than most comprehend.Back To Blog