Many of you who know us well are aware of our ongoing interest in how customers pay for things. Observing and understanding what-and why-consumers are doing what they do with their cash, credit cards, contactless technology and Google wallets is something we spend time on.
With that in mind we went to the Prepaid 2012 conference and expo in Victoria last week to see what the industry was saying, what was new and what type of beer they were serving. As usual, we found lots of interesting people with great insights, new technologies and innovations.
We attended a really interesting session about the use of prepaid in marketing, hosted by Kevin Harrington, Managing Director of Global Prepaid Exchange. He spoke about why retailers such as Starbucks and Subway offer promotional offers to their customers via gift cards, allowing them to put money straight into the hands of the consumer.
He articulated the benefits the retailer gets from understanding their customers better through the data which is captured. He explained how retailers can typically expect to get higher margin sales, new customers they would not otherwise get and incremental sales of 40% above the amount loaded onto the card.
But the story we liked best was his last. He told the audience about a prepaid programme which was implemented by the US Navy aboard their aircraft carriers. On first glance it would seem hard to equate how the benefits a retailer gets from a gift card type programme can equate to the goings on aboard a warship. But that would be looking at things from the conventional gift card perspective. Instead the Navy looked at it differently. Any (military) ship has to run as efficiently as possible. That means they are compelled to look at any way they can to make improvements to their operations. Ships whose job is to go to war always have limited resources and have to ensure their logistics are as simple as possible. It is against this backdrop that they saw an opportunity to totally take away cash from aboard the ships via a prepaid programme. By doing this, they removed the need for sailors to carry notes and coins. They removed the need to have ATMS on board. They removed all the security issues of having huge amounts of cash aboard. And they removed the need to have specialist personnel to look after all that money. But what was the biggest benefit to them? Well by removing all the physical assets associated with cash, they made the aircraft carrier lighter by three tonnes-you can imagine the savings in fuel costs alone of such a reduction.
It could be that this was a brilliant display of unordinary thinking on the part of the US Navy. Or it could be that it was simply a fortuitous by product of their decision to do something different in their ‘business’. Either way, I don’t think it matters-they got enormous benefit by thinking about their problem differently and being brave enough to change the way they do things.
Posted by Ajai Ranawat
Lexden is a marketing strategy agency which creates unordinary propositions to motivate customers and deliver commercial advantage for brands.
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