Most gift cards fall into one of two categories – closed loop and open loop. Closed loop cards are the classic gift cards we’re all familiar with – you can only spend them at one store and, as a cardholder, you’re out of luck if you don’t need or want anything they sell. Open loop cards, in contrast, can be spent anywhere network cards, such as Visa®, Mastercard®, and Discover®, are accepted. They offer infinite choice for the cardholder, but are often maligned as impersonal.
For multi-store merchants like malls and shopping centers, neither option is ideal. Thankfully, there’s something in the middle – a custom loop card. More than just a compromise, a custom loop card program offers all the benefits of both open and closed loop cards with none of the drawbacks, for you, your merchants, and your consumers.
A custom loop gift card can be spent at any store or restaurant that you designate as part of the card program, but nowhere else. So if there are 150 different retailers in your mall, a custom loop card can be used at any of them, but couldn’t be used to buy gas across the street, or even at the across-town location of one of the stores in the mall. Here’s why that matters:
- You get to direct customer spend. If a retailer sells a closed loop gift card, the sales and lift from that card’s redemption go straight back to the store … but it may not sell that many gift cards in the first place. If a retailer sells an open loop gift card, it may sell many more … but there’s no guarantee on where the cards will eventually be redeemed. By offering custom loop cards, redemption spend will end up back in your mall or shopping center, bringing traffic and lift along with it.
- You give shoppers the freedom of choice, within your parameters. It really is the thought that counts. A gift card usable at any merchant in a mall or shopping center feels like a luxury to consumers. There’s no better way to give the gift of a shopping spree than with a card they could use for clothing, lunch, a spa treatment, books or electronics, all in the same place.
- You can maximize your return on investment. When you implement a custom loop gift card program, you’re offering something of value to your merchants. Unlike a closed loop program, which will cost the retailer time and money to manage, or an open loop program, which doesn’t incentivize the retailer to make sales through the promise of return traffic, a custom loop program gives each retailer the probability of driving traffic back into the store without the hassle of designing and managing its own program.
- You minimize your risk of fraud. Open loop card programs are often an invitation for fraudulent activity. By limiting card programs to just the merchants on premises, many malls and shopping centers have drastically dropped their instances of card fraud.
- You can rise above your competition. Building a custom loop gift card can be one of the best ways to counter marketplace sameness, rise above competitive noise, and drive program ROI. Malls and shopping centers with a well-designed custom loop program can build brand recognition, create a better customer and cardholder experience, and position themselves for long-term financial growth built on better cardholder relationships and networks.
It’s time to ditch the outdated idea that gift cards are an impersonal present. A custom loop card program, when carefully crafted in partnership with EML, feels more like a custom currency usable at multiple locations throughout your mall or shopping center. Ready to create a more personalized user experience, build your brand, and direct spending back to your stores? Contact me to learn more about crafting your own custom loop card program.