KAREN WEBSTER: Hi, it’s Karen Webster, for Payments.com, and I’m here today with Rod Boyer, President of TSYS Loyalty and Prepaid. Rod, thanks, and welcome to the show.
ROD BOYER: Thank you, pleasure to be here.
WEBSTER: So, Rod, I think you’re fairly new to this particular role at TSYS, but you’ve been with TSYS for quite a while. I’d love to get your perspective, though, on the findings of the newly released survey that you guys did on TSYS Loyalty and Prepaid from the consumer perspective. So starting with, why did you decide to do this study, and who actually participated?
BOYER: TSYS has been in the prepaid industry now well over a decade, and with that, we have a wealth of kind of data points and knowledge around prepaid programs, from both the perspective of the companies that are offering the cardholders that are receiving them, as well as various other industry points.
But what we really wanted to do is to validate our beliefs regarding the consumer awareness and acceptance of, specifically, prepaid incentive programs. But also kind of be able to provide our clients with other information that could help them optimize the program’s performance, and that’s really what our company focuses on. And prepaid solutions with a goal of optimizing the engagement of the cardholder, as well as optimizing the business performance for our clients.
Thus, we commissioned a company by the name of Retail TouchPoints. We thought it was important to get an independent third party involved, and they’re a digital publication firm that emphasizes, really, on customer – kind of customer-centric initiatives.
So, we conducted this study. Responses were about 400 – I think about 430 qualified online surveyors from, principally, consumers. Of course, with statistically valid demographic segments, that would very much mirror the population that we serve. So in other words, we had an appropriate division – men, women, generation X, Y, Boomers – as well as kind of the income levels and geographic locations that would put a great deal of validity into the information that we surveyed.
WEBSTER: Let’s dive into what you found as a result of doing the survey. What were the top three findings, and were there any surprises?
BOYER: Ah, great question. Let me first kind of highlight the top three. First, if I had to just big picture it, open-loop prepaid cards clearly were preferred 2 over one of gift certificates, merchandise and closed loop gift cards for incentive programs. It certainly wasn’t a surprise, but it’s always nice to have the data – kind of empirical evidence – validate that consumers prefer today prepaid over other forms, such as gift cards. So, that was the first one.
We’ve also found prepaid incentive programs really do drive retailer revenue and fairly quickly. More than half the cards distributed last year, we learned, were used within a month after the receipt, at least based on this evidence. We also go back and validate that from our own findings, and it’s true, so that’s good.
But I think most importantly, and certainly, a pleasing surprise to us, is that we found more than a consumer – almost seven out of ten consumers, if you look at it – have had an experience with a prepaid incentive card already. This is the first study we’ve done, we think that if we had reached back a year or two, it wouldn’t have been that high. So, the awareness factor is really playing well here, in terms of the adoption as well.
Those that have received three or more prepaid rebate cards prefer them to checks. Of course, that’s important because we know that checks and paper have all long been a standing solution for marketers trying to put incentives in the hands of consumers these days.
So those are the three top that come to mind, and we’re most pleased of the awareness. We did this study really from two perspectives – one, certainly self-serving for us and our clients, to make sure that it’s course correcting us and fine tuning and validating our thoughts, as well as for the industry at large, collecting, like I said, empirical evidence of what the market’s doing, and the investments that we’re making collectively as far as kind of a citizen of the industry.
WEBSTER: Interesting. So, let’s dive into the incentive piece just a little bit, since that was a critical finding and a pleasant surprise, but perhaps a surprise nonetheless.
What did your survey results suggest some of the incentives that are being put forward and that consumers are actually taking advantage of? Are they in any particular categories, and how do they drive consumer behavior? Are consumers, then, reacting more to the offers that these manufacturers are putting forward? They’re obviously redeeming them, because it’s easier to redeem, but could you give us a little bit more insight here?
BOYER: We find many consumers reported receiving prepaid cards at a value of $25 or less. Now, these were for employee incentive programs as well as for consumer incentive programs. So, retail rebate cards tended to be a little bit higher in value, and of course, we would expect that.
We also found prepaid cards are very valuable motivators overall. I mentioned earlier, they get people to take action. Driving the actual result in based on what people are telling us, they’re driving them in the stores, and quite frankly, get them in the shop pretty quickly.
I think, additionally, we found that the prepaid incentive cards were, you know, they’re becoming really beneficial in getting people to do things like respond, actions like online surveys or post-product reviews, especially in social networks, seeing that play a bigger role over time.
Lastly, I think one of our clients has been very successful at using reloadable prepaid incentive cards, and to reach out to a very different segment, which is physicians. Doctors are notoriously hard to get to pay attention to anything, but working with them and supported evidence by this survey, what we have found is, doctors, approached right, practitioners, which really conduct kind of medical research just in time, really do respond to the kind of product that prepaid incentives provides, which is immediate, safe, secure and material relevant commerce in their hands. So, it kind of cause and effect. We’re finding that to be very positive.
Which is good for us and any type of a marketing program that marketers want to apply towards different segments, not just block-and-tackle, get somebody out of their car into a store to shop. It’s a number of different things that we’re finding that consumers are responding to.
WEBSTER: That’s interesting. The physicians example is one I wouldn’t have thought of, but that is really interesting. So, let’s pull back a little bit and talk more broadly about the whole category of prepaid, and what’s driving innovation in that category. Can you give us your point of view on that?
BOYER: Well, overall, I think kind of holistically, certainly – especially over the last three to five years, growing awareness that prepaid cards aren’t just products appropriately for the under-banked or underserved individuals, but for much broader than that. As this study conducted showed, the prepaid cards reached a higher economic level. And that’s driving interest in really utilizing prepaid in more innovative ways. So, using them to really, truly incent consumer behavior.
So, I think that when you step back and look at the bigger picture, the real awareness has been driven around general purpose reloadable. I think the Wal-Mart effect has had a tremendous influence on that. But when you drill down into it, it really is a valuable tool to drive consumer behavior. It is becoming a very innovative model to do that.
But in order to get kind of the enabled targeted prepaid programs to benefit both the clients and their customers, we focused heavily in the last few years on creating a really secure, scalable and flexible end-to-end solution, because when you look at this, they have to be tightly tailored and focused on getting as close to one to one as you can.
So, that means we have to be able to provide the ability to tailor everything from the brand, the messaging, the offer, the timeliness, the relevancy of it, of the program, to meet the specific need. That, I think overall, is the biggest challenge, as well as what’s driving the innovation for our company and the industry at large, as you look at driving the relevancy of the solution. In other words, the result set, and that’s going to continue, I think, for quite some time.
WEBSTER: Interesting. You touched on the under-banked as a demographic that is closely associated with prepaid, but obviously, there are other demographics that are adopting, as your survey points out. Are there particular segments or industries that you see going forward in the next couple of years really driving the growth in the prepaid sector, and are there prepaid poster children that you’d like to comment on?
BOYER: Yeah, that’s a good question. I think, looking at the survey itself, we clearly can see that the older segment of the Gen Y and Gen X’ers are the ones that are most likely to receive the prepaid incentive cards. So they are heavily targeted at this point in time.
More men than women receive them, of course. I don’t think that was a big surprise to us, but certainly something, I think, that we all have to be aware that there is much more activity focused on men than women as far as incentives at this point.
From an economic perspective, those are making between, believe it or not, $60,000 and $100,000 annually, were most likely to have receive the prepaid incentive cards. So, the typical recipient of a prepaid incentive card would be a man in his early- to mid-30s who makes between $60,000 and $100,000, or maybe even more. You know, when you zero in on what the facts from the survey tell us, those are the facts
Now, when you stand back and look at who is really the likely target of the prepaid incentive programs overall, I think they do make sense. Consumers at the ages when they’re starting households and families are certainly attracted to retailers who are trying to promote consumer goods and services. And individuals who earn high incomes are more likely to be in the kinds of careers that offer employee incentives.
So, I think logic prevails, as well as the facts from the survey. When you look at that, I think that the ones to watch are certainly the people who are more open in adapting to kind of the new age of how commerce and promotions and mobile and social media is changing our entire society. I think the survey fleshed that out.
WEBSTER: Interesting. Well, that kind of segues into the next question that I wanted to ask you, and that’s prepaid is in our vocabulary, but it’s still a very small percentage of overall transaction volume. You talked a lot about incentive programs as a way to ignite prepaid overall.
Are there other things like that, that you think will really stimulate the rapid growth of prepaid, and if so, what are some of those things?
BOYER: Of course, that’s kind of a crystal ball question, difficult to really pinpoint. We believe, as we’ve done our homework, we’re going to continue kind of the forging ahead around the GPR awareness campaigns and messaging, and we think that’s a big market.
But over the next two to three years, I think we’re going to begin to see even more dramatic growth and changes in the prepaid industry, driven principally – I think we’re going to see a tipping point from -by the increasing awareness, both from the consumers and corporations that really understand the value of prepaid. That’s both driven at the consumer as well as the business, principally, finding more efficient ways, driving costs out of their business.
Now, the incentive segment is one of the fastest growing in the prepaid industry, and I think that can be attributed to, because incentives – incentive tools that get results get adopted. It incents behavior, it drives revenue, it can be proven through analytics and kind of tests, and that can be just a very powerful weapon in the arsenal of a marketer.
Now, greater awareness around the ease of administration of the prepaid programs, and the ease of use and the security that the prepaid cards bring to the consumers, I think will also drive the increasing usage, as well as kind of propel the industry forward to – continually investing in, and innovating the solutions that serves the needs of the overall marketplace.
But overall, I think those are the highlights.
WEBSTER: You mentioned innovation in your response, and I’d like to close our conversation by just asking you to talk a little bit about the specific things that TSYS is doing to drive innovation in this category. You mentioned, obviously, the incentive aspect of your platform, and your solution, and the end to end approach that you have.
But what other things can you tell us about the ways in which TSYS is innovating in the prepaid category?
BOYER: I think when we step back as a company and look at innovation, it’s one of those topics that always brings the attention of our financial teams to the front of their chairs, because along that comes an investment, a continued investment. Our marketing team, because along that comes greater capabilities in our clients, because it gives them a competitive advantage in the marketplace.
So, we start with making sure that we have a clear vision and view of what the consumers are doing, as evidenced by the investment of even this survey. We want to make sure we’re keeping attuned to the marketplace and listening as clear as we can.
From an innovation perspective, I think it does start there. What do consumers want, and how can we best enable them to get it through our clients? And so, our innovation is heavily focused on technological. There’s a balance here. Technological flexibility and speed without sacrificing safety, security, quality and scalability. We believe to really bring to the forefront into the marketplace, what prepaid needs to become, the scale players acting like boutique players.
That means the scale and stability of the major players like TSYS in the market, but the flexibility and adaptability of a system and the innovative mindset and thinking as boutique players can do. We bring the best of both worlds.
So, we’re working hard on the flexible, configurable parts of the technology and offerings that are focused squarely at making sure that the consumers are able to, from a use and ease of use, and no matter how they want to use it, gets enabled. That also, we believe that continuous education, especially around the prepaid market space, the education and awareness and disclosure, all that communication has to be threaded through every touch point.
We talk about moments that matter, and the prepaid customer lifecycle. You know what? It’s not one moment. It’s many moments, and those moments have to be thoughtfully designed and then tactically executed every day in a flawless manner. We have a team of people here through all, kind of the main expertise or areas across all domains’ expertise, that’s focused on that.
So that’s kind of what we’re doing today at a high level. Technology plays a major part of that, but so does the talent that other folks bring across the other parts of the organization to make that come to life every day for our customers and their consumers.
WEBSTER: Well, it’s great to hear that the consumer really drives a lot of the work that you’re doing, because they’re ultimately the consumers, no pun intended, of the product. And it’s good to hear that that’s the way that you’re looking at all of this great innovation in a category that has a lot of room for growth and certainly is growing by leaps and bounds.
Rod, thanks very much for sharing your insight with us on prepaid and loyalty and giving us some good food for thought on the role of incentives and driving that innovation as well. So, thank you very much.
BOYER: You’re welcome. Thank you for having me.
Rodney Q. Boyer
President
TSYS Loyalty
Boyer, a TSYS leader since 2000, brings a wealth of industry knowledge in his new role at TSYS Loyalty & Prepaid, where he leads the company’s efforts to penetrate the further burgeoning markets. He has more than 20 years of senior management and leadership experience with fast-growth, technology-focused companies.
Prior to TSYS Loyalty, Boyer was chief operating officer for TSYS Acquiring Solutions in Tempe, Ariz., where he was responsible for all aspects of the firm’s day-to-day operations. During his tenure at TSYS Acquiring Solutions, Boyer also served in other key leadership roles including senior vice president of Product and Marketing and senior vice president of Client Relations, and was responsible for TSYS Point-of-Sales Systems and Services.
Before joining TSYS, Boyer was executive vice president of client relations for TrustWave, a leading provider of information security and compliance management solutions to Fortune 2000 businesses. He also served as executive vice president of sales and marketing for a national systems integration firm serving enterprise clients with best-of-breed technology solutions. He also was a managing partner of a software development and consulting firm that focused on design, development and deployment of Internet-based applications to the travel industry.
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