Consumers accustomed to receiving coupons for product samples or trial sizes of laundry detergent or dish soap in the mail soon instead may receive private-label prepaid cards they could use at a retailer to obtain full-size versions.
Loyalty and incentive firm Young America Corp. is working with Citigroup’s Prepaid Services unit to provide packaged-goods manufacturers with proprietary single-use cards they can send customers to test products for free.
Young America’s new product-sampling process takes advantage of consumers’ increased comfort in using prepaid cards, according to Mark Lockwood, Young America senior vice president of payment services.
“Consumer education on prepaid cards across all aspects has increased in the past two years thanks to the efforts from the networks, the program managers and even regulatory groups,” he says.
Indeed, prepaid cards have achieved a level of stickiness with consumers, observes Brian Riley, senior research director with TowerGroup. “Consumers are quite disciplined in using prepaid cards and get the concept in how they work,” he says.
Citi restricts purchase authorizations on the sample cards to the specific product’s stock-keeping unit, according to Tim Wall, managing director and global head of sales for Citi’s prepaid division. The unit is a number or code used to identify individual products at store locations.
Citi’s process is accomplished by deploying software technology that works directly with participating retailer’s point-of-sale system, Wall says. “Sampling cards can include additional fraud-prevention security features that coupon and voucher systems do not offer,” he adds.
Citi’s sampling technology is in commercial use at more than 25,000 retail locations across all 50 states and Washington, D.C. “Citi continues to grow its retail-partner network based on our clients’ strategic needs,” Wall says.
Young America works with its partners in any way they see fit to distribute the cards, Lockwood says.
“It could be a defined list of customers, or it can be a campaign with a regional aspect,” Lockwood says. “The only real difference [now] is that [the manufacturers] are moving away from small foil packs of laundry detergent” to cut costs related to creating and mailing the trial-size products. The cards enable manufacturers to use the stock they have in stores as samples, he adds.
“In the current economic climate, organizations are working to streamline their operations in search of efficiencies that can impact their bottom lines,” Citi’s Wall says. “As a result, the market for more efficient, cost-effective payment methods, in particular prepaid [cards], continues to grow.”
Riley believes Citi has been in a good position to play in the loyalty and incentive space since its acquisition in 2007 of Ecount, which became Citi Prepaid Services. Ecount provided customized prepaid products for companies looking to deliver promotions.
“Prepaid cards really do have a way to spawn loyalty,” Riley says. “You can make the cards for one-time use of a product or some kind of recurring benefit.”
Young America is working with its partners to roll out the cards, Lockwood says.
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