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Saturday, December 31, 2011

Virtual Cash: How You Can Use It for Social & Mobile Commerce


Virtual currency – it’s one of the most powerful ways to encourage people to buy/spend more than they normally would. Don’t believe it? Ask any credit card company and listen to their joyous tales of other people’s spending the moment they get their hands on money that doesn’t look like money.

But it’s not just about credit cards anymore. Today, there is a plethora of other stored value payment systems, or cash cards, that mobile and social commerce companies can use to promote their products. So now, for the average consumer, there is no escaping the influence of these virtual currencies; and for the ambitious business, their power simply cannot be ignored.

Here are five types of virtual cash that exists:

1.      Gift cards. Gift cards are very much like debit cards, with a crucial difference: you can only use them at a specific store or with a specific brand.

This is the card’s main advantage. Around 8 out of 10 people who use their gift card are buying the target brand or at the target store for the first time, and statistically, 3 of them will become repeat consumers.

The other value of gift cards is that people tend to forget that the amount they hold is actual money, so consumers often end up spending 40–120% more than the card’s value.

2.      Promotion card. Going one notch higher than the gift card is the promotion card. Like gift cards, these can be used for specific brands and stores only. Unlike gift cards, they have a defined expiration date – use it or lose it! Most people choose to use it.

3.      Discount card. This card rewards buyers by giving them a set discount on their next purchase after they spend a specified amount or buy a certain product. This card is not for first time buyers; it encourages current clients to buy more.

4.      Surprise-value card. Behavioral psychologists have proven that people tend to repeat a behavior more compulsively when they are not sure what the reward is. This card exploits that feeling of suspense, when a business gives away a gift card with a mystery value. The eagerness to reveal the mystery pushes the need to buy to a higher level.

5.      Reward card. These cards mix and match the benefits of all the above cards, toward two simple end goals: reward the existing customers and encourage unplanned purchases.

In a nutshell, what all these cards do are (i) increase the amount of incremental spending that your business receives, (ii) firm up your customer retention, and (iii) expand your current client base. Whether your store is located in a brick-and-mortar structure or viewed from a computer or a tablet or a smartphone, these cards ensure that your venture remains profitable and expanding.

Now what business wouldn’t want that?

Yash Talreja

1 comment:

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