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The Green Sheet Online Edition

April 23, 2012 • Issue 12:04:02

How consumer segmentation leads to success

sellingprepaidGift card usage continues to rise and ever more data is available on the behavior of gift card buyers. The trick is how to translate that information into more productive gift card programs, according to Michael Hursta, Vice President, Prepaid Category Manager at First Data Corp.

"The gift card is such an interesting tool for merchants and creates such an emotional connection with customers," Hursta said. "But the messaging [retailers] use to talk about these products, especially within their store or on their websites, is monolithic. And it's the same story that everybody sees. It's one message."

But with processing companies like First Data capturing so much purchase and usage information about consumers, merchants can tailor messages to resonate with a variety of consumer segments. "You need to have different messages for different consumer groups," Hursta said. "And the beauty of some of the new technologies that are out there is that you can micromanage the channels and the way that your message is getting out there, so the right groups are hearing the right message."

Defining segments

First Data's inaugural 2011 U.S. Prepaid Consumer Insights Study, conducted in collaboration with Market Strategies International, reported that the market for closed-loop, retailer-specific gift cards continues to grow. The average amount spent per gift card in 2011 jumped 23 percent from 2010. The average annual amount consumers spent on gift cards in 2011 was $211, up from $161 the previous year. Behind those numbers is segmentation data that First Data used to formulate five gift card buyer profiles.

At the top of the list are Budget Tamers – consumers who purchase over $500 in gift cards per year to budget discretionary spending at places like discount stores and coffee shops. Next are Card Enthusiasts who buy gift cards for special occasions, such as holidays and birthdays, and like to receive gift cards as well.

Helpful Husbands and Convenience Shoppers follow, with the former not particularly excited about gift card buying and receiving, but buy the cards as Christmas gifts, while the latter substitute gift cards when they can't find their primary gifts. The final category is Last Resort – consumers who buy gift cards at the last minute, but otherwise find them too impersonal to give or receive.

From data to displays

Segmentation data is only useful when the information is appropriately applied. "For the Budget Tamers, these are individuals that are very interested in making sure that they know how their money is being spent," Hursta said. "And they find that prepaid cards are a very effective way of categorizing their money into entertainment, food and fuel."

So First Data recommends that merchants hoping to attract Budget Tamers provide gift card registration and reload programs where budget conscience consumers can safely and securely register and reload gift cards.

The same thinking goes for Convenience Shoppers. If they cannot find the gifts they are looking for and gift card displays are not nearby, the merchant has likely just lost a customer for good, Hursta said. "If it's not convenient for them, and they felt like they went to that store and wasted their time, then you've changed their mindset," he noted. "Now they're not going to use that store as a place to shop."

So First Data advises merchants focused on this consumer segment to recognize their purchase preferences. If popular items are out of stock, and merchants know Convenience Shoppers will be looking for them, merchants should place gift card displays where the sought-after products would normally be found. Hursta believes when their favorite items are unavailable, Convenience Shoppers will turn to gift cards, and be happy about it, thus reinforcing what merchants should strive for: convenient shopping experiences that spur repeat business. end of article

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