Magazine article Marketing

Dining out on Vouchers; Competition Is Hotting Up as Retailers See the Attractions of Gift Tokens

Magazine article Marketing

Dining out on Vouchers; Competition Is Hotting Up as Retailers See the Attractions of Gift Tokens

Article excerpt


The regional sales manager beamed. "We've hit the target on the North-east 90 campaign and it's all due to you. So there'll be a little cash bonus as a thank-you, you know." How much? "Er - 25 [pounds], actually, and Happy Christmas."

Snorts of derision from the sales team. Cash is the bottom line: measure any other similarly priced reward against it and almost every one will score higher.

Certainly this is true of gift vouchers. Spending on gift vouchers in the business sector is almost impossible to measure, but there is no doubt that the market is expanding, despite economic cutbacks.

Gill Edwards, managing director of Voucher Bank, which represents 76 voucher brands, says there are precedents. During the 1974 and 1981 recessions money was switched into incentives at the expense of advertising. "Financial directors have had their heads for the first half of this year," says Edwards. "Now it is the turn of the marketing and sales directors to get the company performance back on course."

The big promotional thrust seems to be coming from retailers, who are no longer content to let middlemen - the multi-option voucher schemes - do most of their marketing for them. The extra activity has thrown up a number of added benefits.

Back-up services are increasingly touted by voucher traders who are eager to show that they can do more than push pieces of paper. First, there are in-depth consultations to assess individual company needs. Then come tailor-made packages and even timely boosts for a long-running campaign.

Grand Metropolitan's Wine Dine voucher was launched last month and is redeemable across the group's collection of restaurants, wine bars, off-licences and fast food outlets. "We sell direct and through multi-option schemes - but that's under review," says development executive Matthew Holgate.

"The trouble with selling through third-party schemes is that you don't have a great deal of control over the service the customer gets.

That's important to us because we are trying to offer more than just a voucher."

Competition is already intense. In some cases, the reaction is more basic with growing price discounts on offer - so much so that there are already mutterings of a voucher price war. Voucher marketers tend to take on that familiar haunted look when they talk about competitive activity boosting the market as a whole.

"People realise that this means big money and they are starting to sell more on discount," says Simon Hay, client services manager for Boots' voucher operation. He also points out that Marks & Spencer, for example, used to be very strict about discounts until it farmed out corporate sales to Counter Products Marketing.

"A price war is possible, but it depends on how aggressive voucher sellers are prepared to be; there's a point at which most will walk away," says Hay.

Multi-option voucher marketers either offer hefty discounts for schemes instantly redeemable at up to ten named national store chains - or they sell their own vouchers, to be swapped for others from huge lists of retail, travel and entertainment companies.

High Street Incentives is an example of the first category. "We'll give a 9% discount on all cash orders," says sales and marketing director Tony Brooker. "Retailers are commercially rather reluctant to go down this route. …

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