The Green Sheet Online Edition
June 22, 2009 • Issue 09:06:02
Franchise that closed-loop
At the Electronic Transactions Association's 2009 Annual Conference & Expo held in Las Vegas in April, the inaugural Prepaid Day included a discussion on how a successful gift card program operates. The presenter was Thom Aldredge, President of World Gift Card.
In 1998, Aldredge founded the wireless data firm. However, by 1999, the company had morphed into a gift, loyalty and specialty card program provider focused on small to medium-sized merchants.
To reach merchants, WGC employs ISOs. "We feel like they have a much better idea of what their customers want and need in their gift card programs," Aldredge said.
In 2002, a WGC ISO requested an expandable, closed-loop gift card program. The ISO had a franchise startup based in Seattle that wanted to expand operations in Washington state, with the dream of going national. But the merchant - makers of smoothies - hadn't yet opened a store.
"They needed a gift card program that they could offer to all their franchisees with card [acceptance] at every location the minute the store opened up," Aldredge said.
Aldredge applied the motto "Keep it simple, stupid" to the program rollout. It had to be simple, given the fact that different franchisees wanted to use different POS terminals, he said. WGC relied on its ISO resellers to troubleshoot the problems of individual locations.
According to Aldredge, a crucial concept that WGC kept in mind when it launched its program was that it had to scale seamlessly when the smoothie company began adding new locations.
Evidently, the franchisor offered a tasty product because, by late 2006, it had opened 33 locations. The gift card program was integral to the company's success, Aldredge said. "And, remember, we were going from scratch," he said. Aldredge reported that the company now has 60 locations in five states, with opportunities in three additional states pending. The company is also considering expansion into Canada.
"We knew that deployment wise, the platform would be profitable," Aldredge said. "Logistically, the needs of the locations were the same wherever they opened. So as far as getting them up and running, it was not a big problem." But Aldredge wondered if gift cards would be redeemed at multiple locations. "Most of us who have dealt in retail know that 80 percent [of foot traffic] is going to come within two-and-a-half miles of their location," he said. "And in the franchise operation, where there is exclusivity for locations, there was a question about whether the cards would be able to cross over."
The results dispelled any worries. "We felt, like well-marketed gift card programs in major markets in the United States of America, they would get crossover and [merchants] would see the benefit of a card accepted anywhere," Aldredge concluded.
The franchisor was also concerned about reporting capabilities; its corporate office wanted to be able to keep tabs on each location - intrastate and interstate. "So we were able to provide reporting that allowed them to see what was going on in the various locations, regardless what state that location operates in," Aldredge said. In March 2009, the smoothie company added WGC's Elite Patron loyalty program. To date, it has a 70 percent commitment from its franchisees to offer the program, he said.
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