Magazine article Marketing

The Voucher Variants

Magazine article Marketing

The Voucher Variants

Article excerpt

Vouchers have secured a key place in the promotions and incentives business. Sue Bryant investigates the rise and rise of cashless incentives

In just 20 years the voucher market has grown from simple gift tokens to a thriving, |pounds~350m promotions and incentives business, with over 60 big retailers jostling for corporate sales.

The market has matured to the extent that vouchers are now being used for anything from sales promotions and customer loyalty schemes to incentives, both performance and service-linked. Looming on the horizon is the prospect of pan-European promotions and exciting innovations in electronic points collection.

People may say vouchers are unimaginative and boring, but they work in promotions and motivation campaigns. Recent research by incentive specialist Motivforce shows that, given a choice, up to 85% of people will choose vouchers in a campaign, while travel attracts 20% and merchandise 10%. Vouchers still have a financial edge on other motivational carrots such as cash, travel incentives and merchandise because they are exempt from employers' national insurance payments and are easy to administer.

In the consumer market, customer loyalty is the current buzzword and vouchers play a big part here. Look, for instance, at BP's Options scheme, where participants collect BP tokens and exchange them for high street vouchers. The Argos Premier Points and Air Miles loyalty schemes both use vouchers -- paper or electronic. In these schemes, vouchers are not just a reward -- they're a means to an end, and that end is retaining customers.

"There's a move to much more specific loyalty programmes, wanting to change the consumer's behaviour and find out what they're doing," says Stephen Taylor, marketing director of Air Miles. "It's all about tracking them, monitoring them, knowing what they're spending and rewarding them appropriately. It's the way marketing is going and people on the incentive side need to take note.

"There's still a place for relatively simple incentives, and retail vouchers will always have their market, but what we're into is long-term loyalty programmes. You've got to know who your customers are and the firms that do know this are going to be the winners."

Of course, vouchers play a part in both long-term loyalty schemes and short, sharp promotions. As far as the actual mechanic goes, it's important to use the right technique. "The Premier Points card is a long-term loyalty programme. It's not something you can switch on tactically for three months," says Ken Liverseidge, general manager of Argos Premier Incentives. "Electronic collection is more expensive than vouchers and with a loyalty programme you can amortise the cost over time. A paper voucher, on the other hand, is good for any promotion, short term or long. It says 'Thank you'."

Although consumer loyalty programmes and sales incentives are in principle quite different, technological innovation on the consumer side by companies like Air Miles and Argos has created a spark of restlessness in the industry. Are the recipients of vouchers in incentive schemes going to start craving something more exciting if they're getting swipe cards and computerised points statements for something as mundane as buying petrol? According to Liverseidge, this is not the issue and in corporate sales service still rules. "The promotions market is cyclical and while vouchers are very important in the portfolio, clients are looking for something more personal," he says. "There are so many new players in the voucher market that clients sometimes get spoilt for choice. It can make life difficult for people deciding what to give -- a piece of paper is not the same as a piece of jewellery or a stereo, after all. So I get the feeling there's a slight move towards the more personalised merchandise item."

This, says Ian Sparks, general manager of Thomas Cook Promotional Travel, is why more emphasis should be placed on making vouchers exciting. …

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