Prepaid Expo USA March 6-9, 2011 Orlando World Center Marriot Florida Greetings and welcome to the Institute for International Research s Podcast Series: Progress in Prepaid. This is the first installment in a series of interviews with a variety of experts and stakeholders in the network-branded prepaid and stored value industry, each of whom will be featured at IIR USA s Fifth Annual Prepaid Expo taking place March the 6 th through the 9 th in Orlando, Florida. Joining us today is Rich Killian, Founder and President of RK Incentives, also based in Orlando. Rich, could you tell us a little bit about RK Incentives, what you do and who you are? Rich: Absolutely. Again, I m a consulting group that is focused on improving your corporate and B2B gift card sales for major merchants. I basically help major merchants in the industry. I help them sell gift cards, whether it is B2B or B2C. I do everything from sales brokering to consultation to helping them with their backend processing, as well as marketing, sales, magazine placements, order processing and building their Internet site to accept gift card processing. I m fortunate to have currently about 10 major, national merchants right now as my clients. Rich, you also serve as EVP of The Incentive Gift Card Council. Is that correct? Rich: That s correct. Can you tell us a little bit about them? Rich: The Incentive Gift Card Council is an association of major gift card merchants. We have a little over 200 members in our membership. We, as an association, promote the use of gift cards in the B2B space. The website for The Incentive Gift Card Council is just www.usegiftcertificates.org You and your colleagues and the rest of us have all survived Black Friday. With the Holiday Season in full swing, if you had to scorecard closed-loop, prepaid efforts that you ve seen around the Season, in general, what grade would you give them? Rich: I think overall I d use a B. I think there are some really good things going on out there and then there are some things that the merchants need to work on a little bit. So, that s kind of a general grade, but it s been good and bad. Let s focus on improvement. Those guys that aren t the A players, what could be done to improve their game? Do you have any examples? Rich: Well, to improve their game, again in the gift card space, I think that the merchants can do a little bit more in the gift card space. So many times the gift card department is in a
little, end-aisle office down the hall and nobody really focuses on it. We think that it just runs its own engine. But, I think that the more time that we spend on selling gift cards or making our program user-friendly, the more that we are going to get out of it and the more sales that can come. I see that some of the opportunities out there that folks can do is whether they can run some television ads -- and with it being the Holidays right now, they can run more television ads around gift cards or placing a visual of a gift card through their television ads. I could go on and on as far as what things we can do to improve. So, it s a matter of promotion? Rich: It s a matter of promotion. In addition, if you had to give me three of the biggest mistakes you think some companies are making in this space. This could relate to right now in the Holiday Season or in their efforts generally in the prepaid space, particularly closed-loop. What would those be? Or maybe it s the three biggest misconceptions. Rich: Again, during the holidays a lot of merchants sell the same volume of gift cards in a three-week period than they do during the rest of the year; the other 49 weeks. I think that s one of the things that major merchants don t do is focus on these three to four weeks in the month of December. We need to add staff, we need to do more in the Sunday circulars, we need to do some personalization with gift cards and make more of a themed gift card for the Holidays and really put some effort behind it. Why do you think that effort isn t 100% there? Rich: Merchants have, whether you are a major big box merchant or five-location restaurant chain, there s priorities, obviously, within the corporate organization that sometimes prioritize themselves over gift cards. Unfortunately, those priorities take over. I ve been very lucky and found success with obviously the more grease you give the squeaky wheel, the better the outcome. There s really some opportunity. We are going to get into that in a second. I want to ask one more question based on some of the things you ve said. Based on your experience with your own clients, how important is prepaid to their Holiday business and to business in general? Do you expect that to increase in the future? Rich: Absolutely. I think that prepaid is very important. When we say prepaid, we have to define it and exactly know what it is before we obviously can focus on it. Again, prepaid can be using gift cards. But, there s a lot more to that than just selling a $25 gift card over the counter. When we say prepaid, we are also defining some other things, whether it is personalization behind the gift card, whether it s giving -- if there is a return policy, instead of giving cash back we can incorporate the gift card back. If somebody has a bad experience within our four walls of the merchant, we can use a gift card as a promotion, as a comeback
to our store and spend your money. There is really a lot more behind prepaid than just selling a gift card. The focus, because it is December, naturally it s going to be on the Holidays. But, you are raising some really good points. That is, what happens during the Holidays? Well, for myself, I spend a good amount of time complaining, as well. Even in that capacity, these cards can make a big difference for people on a lot of levels who are trying to engage their customers on a deeper, more meaningful level. Along those lines, when you and I spoke before we decided to get on the phone and actually record this, you talked about the importance about communicating with your clients. Can you tell us a little bit about that? Rich: Daily, I am on the phone with B2B buyers of gift cards. I m on the phone daily with B2B sellers, B2B merchants of gift cards and I feel that communication is key. Communication can either get you the sale or lose the sale, whether it be communicating when your order is going to be on the customer s doorstep, where it is, when it is coming. We have to talk to our clients. If we don t return phone calls within 24 hours, if we don t find out new opportunities that they have, sales can be lost. If merchants aren t communicating with their buyers, then buyers are going to go somewhere else. We have over 250 to 400 major merchants out there selling gift cards. If somebody s not going to communicate, there s a merchant out there who will. You feel strongly enough about this to have brought it up. Do you have any experiences or anecdotes that you want to share related to this? Rich: Absolutely. We all have some good stories around this, but I can only stress the importance of communication. When I say communication, I don t just mean calling them on the phone once a month. I mean getting on an airplane to go and see them. Shake their hands. Find out when their birthdays are, how old are their kids, etc. You d be amazed what can come back to you. Find out who their clients are, whether it s a major bank or a major hospital group that wow, maybe my merchant gift card would be a perfect fit. If we are not finding out this information, it can be lost. You ve given me a terrific springboard into the next question. Why is customer service important? I know it is and you ve mentioned it in this conversation here or alluded to it. I ve certainly heard that before, but tell me a little bit more about that. Tell our listeners why that is so important. Rich: Again, customer service, it s the little things. You always hear that phrase: It s the little things. And it really is. It s finding out if they want their cards a certain way, if they want their cards with or without carriers, if they like them a certain color, if they want them delivered. There s ways that we can tailor our program with their program. Today, obviously, we are doing a lot of virtual; a lot of mobile cards. Maybe you look at this as an opportunity. Maybe this client could buy more from you if you just communicate and talk about the service that you can provide with different product options.
You mentioned something that put up my antennae. I think this is probably one of the things that is keeping people up at night. What about technology today? This will be the last question I ask you and then I ll let you off the hook after that. It s a matter of time for all merchants to be digital. What does that mean? Rich: There s a couple of ways of being digital in today s technology. Some gift cards can be delivered now through the telephone and through a merchant ID number or you can actually dine at a restaurant and give your server the 10-digit code and have them punch that in to the point-of-sale and have your meal paid for. That s one digital opportunity that folks are doing now through their telephones. Some merchants are getting very savvy around that and I think they are going to be the leaders with mobile technology. When you and I spoke earlier, we talked about paper gift certificates, for example. Where are we on the continuum of changing from a slide card, for example, to something that I can take my phone to and just scan? Rich: The change started with, like you said, paper gift certificates. We had to give change back with those. The technology went through a swipeable technology. Wow, we don t have to give change back. We can do promo cards. We can learn folk s names and email addresses now. If a card gets lost or stolen, we can replace it now with the information that buyers are willing to give. The ability to email a gift card to somebody and have them print it out on their printer and then have that printout come to a merchant or a restaurant is where we re at right now. Now we are going to go further, obviously, and take that having to print the gift card and actually have them use their mobile device, which is being used right now by a lot of major merchants. Those are the four levels that we are at. That fourth level, how soon until that s ubiquitous, do you think? Rich: Right now, I would say that the population is not comfortable with handing their cell phone to a server at an Italian restaurant or any restaurant at all. You do not want to let your phone go. So, there are things that you want to --- But, you ll let your credit card go. Rich: You ll let your credit card go. But, there s this new data -- there s companies out there that are polishing these ideas and making them work now. It s just unbelievable. Is this where you are looking? Rich: Absolutely. Absolutely. The buyers are asking: When are you going electronic? When are you doing mobile certificates? Let me know because we have opportunities. Do you get a lot of that? Are they clamoring for it?
Rich: Absolutely. I would say that all, if not most, of the major buyers now are interested in e-codes and mobile cards. Wouldn t you rather deliver a 1000 gift cards through the click of a button instead of licking 1000 stamps and sending them out that way? I think that says quite a bit. But by buyers, do you mean people? The consumer? Rich: The consumer, right. Yeah. I guess I meant in the B2B space, too, where if somebody had to fulfill 1000 gift cards, we could do that through email technology if we had recipients around the world. Isn t that much easier than having to send it through the post office? Rich, let me ask you a question. If I were looking at this space, what three things should I be really paying attention to? I think you hit one of them. Rich: When you say: When you re looking at this space. Let s say I m a retailer. Let s say I m a merchant and I m thinking about going into cards. Rich: Well, I would say, get to know your clients. Get to know your B2B buyers. Find out who they are. Go see them. Go visit the top 20% of your buyers to learn about them. How can I make life easier for you? I would make sure that your backend processor, you spend time with them and you look at their capabilities and make sure that you can take advantage of more opportunities. You know, there is so much more to a gift card than just selling a $25 card across the counter. I would talk to your processor and see what other things that they can do for you. I would also look into, obviously, mobile technology. Look into this. Customers nowadays are so much savvier than they were. What does that mean for us? You say: Look into mobile. What should I be looking at? Rich: A lot of folks like to be recognized when they come to a merchant or they like to give back, whether it s the green initiative or whether it s a coupon back. Spend more at a merchant, get some back. There are these capabilities that a gift card can have that you can collect this data now. There is a major coffee chain out there right now that has the capability of doing some of the things that I ve mentioned, whether it s going back to a global fund and being green or just for a merchant to capture consumer data and who is coming into their restaurants or who is coming into their stores. This technology is available through gift cards. So, my suggestion would be to look into that technology. Rich, before we end today (and I think we are going to be hearing from you again), are there any thoughts or pieces of advice you have as far as the Holidays go right now? Any observations? Anything that people should think about right now with regards to the cards? Rich: Well, again, from both sides. As a consumer, you receive a gift card, I m going to say: Go use your gift card. If you bought a gift card, keep the receipt with it. Go use your gift card. Don t throw it in your drawer. Go spend the money. Enjoy it. Too many times we lose them or they are left in a wallet.
The consumer messaging is something you ve been a part of on some levels, as well, right? Rich: Right. So, that would be my consumer advice. As far as being a merchant, I would say spend more time down the hall in that gift card division and find out what more technology, what other things can the gift card do for your group. It s amazing the incremental business that is out there just by becoming a little savvier. Well, we are about out of time for today. But, if you would like to learn more, Rich Killian will be moderating a panel of heavy hitters in the prepaid space including Walgreens, Hallmark and American Express on March 8 th at IIR USA s Prepaid Expo. Their topic: How to Stand Out in the Crowded B2B Marketplace. For more information about the event or if you haven t already registered for IIR USA s Prepaid Expo, you can certainly visit us online at www.iirusa.com/prepaid The Event will be taking place March the 6 th through the 9 th in Orlando and promises to be the industry s largest gathering of network-branded prepaid and stored value decision makers and influencers. So, certainly, please try and join us in Orlando and I ll look forward to future podcasts with our listeners. Until next time, have a great week and see you in Orlando!