Say No to Gift Cards. Just Give ‘em the Cash!

For the past five years or so, purchasing gift cards have been a convenient method of gift giving over the holidays. Especially when children reach that “hard to buy for” stage (otherwise known as the teenage years.) Why screw up? Just purchase a gift card and it’s up to the recipient to spend as he or she wishes. Here’s the problem: what if he or she forgets about or loses the card? The purchase was a total waste and it becomes a donation that isn’t tax deductible. The solution: just give ‘em the cash!

Now, every story has two sides. Before I begin ripping on gift cards, let’s look at the bright side. From a business standpoint, owners would be foolish to not implement a gift card program. Gift cards are cheap to produce, and offering gift cards has been shown to increase sales (people tend to spend more than the value of the cards), increase customer loyalty and perceived customer value. Have you ever purchased a particular item and received a five-dollar gift card as a bonus? It’s obvious that gift cards used as marketing tools can have positive effects on a company’s image and relationship with customers. Financially, getting the money ahead of the purchase improves cash flow. And the cards that go unredeemed? Bonus in the bank! And although the accounting department still views the unused card value as a “liability” and delays the reporting of revenue, the fact remains that after a year has passed, the possibility of redemption is very unlikely and it’s money in the bank.

But we're talking about gift giving here. From a consumer’s point of view, the thought of unredeemed gift cards is bothersome. There’s nothing worse than losing money, in my opinion. And that’s exactly what happens when a gift card recipient forgets or loses his gift card. Even if a recipient doesn’t necessarily lose a card, but simply holds on to it too long, he could face fees or expiration dates that devalue the gift amount, ultimately causing frustration. Although gift card losers (don’t take that personally) remain to be a small percentage of total recipients, it’s still a lot of ching that’s being tossed away. Financial services consultancy, TowerGroup reported that in 2006, gift card volume was at $80 billion and it predicts that amount to exceed $100 billion in 2008. According to experts, about 10% of gift cards are never spent. Let’s do the math; that’s about $8 billion dollars! EIGHT BILLION DOLLARS! (In 2006, Best Buy had about $46 million in unused gift card revenue.)

Cold hard cash, people, always gets redeemed. If you’re not a great shopper (or just hate it) or just don’t know what to get someone, slap a few green backs inside a thoughtful card and I promise you this: ain’t no one gonna complain about gettin’ some dollars.

Resources:
A Gift from Me to You: Cross-Channel Gift Cards, Multichannel Merchant
Accounting for Gift Cards, Journal of Accountancy

Additional Reading:
Billions in Unredeemed Gift Cards!
Roboshop Gift Cards
Marginal Revolution: Seigniorage fact of the day
$25 Billion in Christmas Gift Cards, But Spend it Promptly
The Conglomerate: Abandoned Gift Cards

Hugging In School Must Be Stopped!

Thirteen-year-old, Megan Coulter of Mascoutah Middle School was recently punished with two days detention for giving her friends hugs. According to the student handbook, it states: “Displays of affection should not occur on the school campus at any time. It is in poor taste, reflects poor judgment, and brings discredit to the school and to the persons involved.”

Yes, what has this world come to? Showing love and affection toward friends is certainly unacceptable and inhuman. Hugging friends and family members in public certainly should be considered offensive and would discredit any public education facility and the persons involved. What would the community think if schools started letting friends engage in activities like holding hands or hugging! What a disgrace!

In my opinion, this school policy should be taken a step further; students should be banned from smiling, laughing, joking or showing any display of emotion or affection toward other human beings. Students should walk around the day with absolutely no signs of sensitivity, love, or emotion because that would be more in line with how humans should properly behave. Certainly huggers should serve the same punishment as those students who engage in fighting, teasing, harassing and causing damage to school property. Hugging, fighting—what’s the difference? It’s all just a bunch of offensive, damaging behavior and it must be stopped! Hugging should only occur in the privacy of our own homes under supervised and controlled situations. If schools were to allow such a display of affection, it could only lead to more harmful and offensive behaviors—like kissing and groping. If Mascoutah Middle school allowed hugging, what’s next? Allowing teenagers to have sex in the classroom? It’s about time a school takes action and punishes those who deliberately violate school policy. This eight-grader should have known better. If I were the superintendent, I would have given her a week of detention!

Written in reaction to MSNBC story: Girl, 13, gets detention for hugging two friends
View these other blog reactions:
Dear Mascoutah Middle School
No hugging in school!


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Nobody Searches for My Web Site. So What?

It’s true; nobody searches for anything on the Iron Range. I don’t mean literally nobody, but in the big bad world of search, searches for northern MN are insignificant. It’s interesting, however, that our second most profitable industry under iron ore mining is tourism. And we all know that about 80% of online users use the Internet for travel information. So, how come nobody’s looking up here?

Well, there could be lots of reasons. First of all, it could be that the largest chunk of tourists visiting the Iron Range has purchased lake homes or come year after year for the same fishing trip. It’s a small area; the same little bars exist year after year and the locals expect to see the same faces during the tourism season. But on the other hand, locals continue to hear these words: “What’s going on around here? Where are the “good” restaurants and where are the “cool” bars?” Because when people finish snowmobiling, skiing, ice fishing, whatever…they wander into town snooping around for stuff to do. Wouldn’t they be interested in a local entertainment and dining guide? My guess is that they would; they just don’t necessarily search for it before they come here. Hmm....maybe tourists don’t expect the Iron Range to be “with it?”

Or maybe, just maybe, my niche doesn’t require huge search marketing. Just about 80% of my traffic has been created through PR efforts and local, traditional marketing and advertising tactics. Yes, I do PPC for anyone who might consider heading to northern MN, and some traffic has been received. My ratio of 50% new 50% returning traffic holds firm. Do local newspapers invest in large PPC budgets? I would have to say, no. Their core audience is local; nobody local searches for the place they live unless they’re looking for zip codes or phone numbers via online directories. It’s their vast amount of content that gives them organic prominence to the non-locals searching. No need for big budget PPC in a small town, non-competitive market.

Ah-ha! More content. (Well, duh.) That’s the answer I feel will create more and more visits to my little local entertainment portal. It’s the “blogging” about the area I live in that will bring people to my site. Let’s get some local video on there. Let’s face it: there’s nothing I can do to create “more searches” for my product. And the locals enjoy reading about themselves. But my job (I think) is to give them something different—something “off the wall” or funny or slightly risqué to create attention. I mean, who the heck needs another world news site on the Internet? Let’s have some fun…

Virtual Reality Creates False Memories?

Recently, I read an interpretation of a study that discusses interesting delusions our brains manufacture while playing in the virtual world. In this study published in the Journal of Consumer Research, December 2006, Ann Schlosser writes that the brain is more likely to create “false memories” (should they even be called that?) about a product when a website description includes an interactive demo. Anne points out that if people believe some feature or function exists about a product (in this case a digital camera) because of a virtual experience, this may lead to post-purchase dissatisfaction. I think it’s certainly a valid concern marketers should think about. However, the conclusion poses many questions.

What is a false memory?
Is a “false memory” a false memory recalled or a false memory created?” People rarely recall word for word, feature by feature about anything. Eyewitness testimony has been deemed unreliable. The questionnaire used in this study to test “false memories” reminded me of one test from hell I experienced in college.
They test questions were written something like this:
“…the answer to this question is:”
a. blah
b. blah blah
c. blah blah blah
d. blah and blah blah
e. blah and blah blah blah
Whatever! Impossible! (I hated that teacher.) How exact must one know the subject matter to be able to accurately choose a correct answer among similar, possible or likely truths? It’s manipulative! One second guesses himself; he thinks, “Well, I know for sure a. is true. But I can’t quite remember if b. is true, but it sounds familiar. So, could c. be correct? Or is it e.? I’m 100 percent sure that a. is correct but only 60% b or c is correct?" The ability to differentiate terminology or specific details has to be lower when presented in such a confusing way. The human memory simply does not work this well unless maybe the person understands the subject on an expert level. Creating suggestive features about a product that were not real but sounded like they could be real shouldn’t imply one would feel deprived post-purchase.

Could it be people were more taken or impressed with an interactive demo, therefore simply favored additional feature suggestions verses ever thinking they existed in the first place? Don’t people get more excited watching an explosion verses reading about it?

The conclusion from this study, as it is, is ambiguous. The experiment should continue forward by testing whether a higher level of customer dissatisfaction occurs when a purchaser used an interactive demo before purchase. Truly, this will satisfy the notion that people received a product they thought would perform better versus thinking a feature exists only when it was suggested.

Awareness to Purchase in Two Minutes

A few months ago, I was checking my gmail and one of those little Adwords above my inbox catches my eye. It says, "Coffee Exposed: A shocking secret coffee co's don't want you to know." Well, I'm a total java nut, so I'm like, "Hmm...what kind of secret? What sort of controversy exists over coffee now?" So, I click. Next, I'm lead to the Coffee Fool home page where I read about 5 paragraphs of kick-ass copy writing. The writer apologizes for speaking the truth about "truly fresh coffee" and promises that once you've tasted "truly fresh coffee", you will never be able to tolerate anything but "truly fresh" ever again. I read the whole page. Then, in the corner of the site, there's a picture of two happy ladies, and below that is a link that says, "Check out what others are saying about Coffee Fool." I'm already impressed with what I've read, but I click again. Brad Davis--some country singer-- wrote a song about how awesome Coffee Fool coffee is. And the song actually sounded pretty good. (Click here to check out the archive link and hear the song.) So...I'm totally convinced I NEED to try this damn coffee. So I order 2.5 lbs of Kenya AA and because it's my first time using Google Checkout, I save $10. The coffee shows up at my door 2 days later. I busted open the box, ground up the beans, and brewed this mysteriously superb coffee. Guess what? It was some of the BEST coffee I ever drank.
My point here, however, lies not in trying to recruit more Coffee Fool drinkers. It's to give kudos to some clever and effective AWESOME Internet marketing. Seriously, how often do you click on a little google ad, let alone buy something when you click through? Almost never, right? But, the creative, entertaining copy writing--that's all it was, folks--led me from awareness to purchase in two minutes. TWO MINUTES! That's huge. Oooh....great marketing makes me feel all happy and giddy inside :)
If you truly are a coffee lover, check out these coffee blogs.
I'm a coffee fool! McEs, A Hacker Life
Kerfuffles--the-coffee-fool--seriously check out the funny little joke here
Another comment on the clever marketing tactics used by Coffee Fool

My First Post: Peddling Internet in Rural Minnesota

Since this will go down as my first blog post ever, I will spill all the blah blah about who I am and how I got here.
After working 4 long years for Northwest Airlines and hatching a first son, I decided I'd return to the University of Minnesota Duluth to earn my degree in Business, Marketing. I still remember the conversation I had with my husband; I returned from my grueling reservation sales agent job at NWA after being abused by another unhappy frequent flier, and said, "That's it. I'm going back to school. (I already had 2 and some years under my belt.) I've had enough of this crap. " Zoned into Letterman, he lethargically replied with, "Sure, honey. Whatever." Two days later, I packed up a diaper bag and my nearly one-year-old son, drove to Duluth, walked into the business school, and left the office registered full time. That's how I am--if I decide something, it's done. So, I busted my butt commuting 60 miles one way to Duluth , still working part time at NWA (another 20 minute drive from home) for 2.5 years until I graduated.
One of the first classes I registered for was titled something like "Communication in the Age of Technology and Information." The subject matter was so over my head! I didn't navigate the Internet, let alone have any freaking clue what html was. I was introduced to technology and forced to dive in head first into the world of gadgets, gizmos, and e-zipping info. I struggled through what felt like learning a foreign language, but what became the beginning of my non-stop obsession with the Internet.
I live on the Iron Range--a cluster of mining towns in northern Minnesota--where marketing jobs don't avail too often. In fact, it's rare any decent jobs surface and when they do, it's like 1000 tigers fighting for a 4 oz steak. So, I got a job at Wells Fargo as a banker. The only positive words I can truly say about that job is the training was great. I was pregnant with my second child and was given a company credit card to eat whatever I wanted for three weeks in Minneapolis--that totally kicked ass. Otherwise, the job was horrible. Wait--let me clarify. The "job" really was not terrible. I always enjoyed helping people, making relationships and getting sales. The in-your-face, never good enough, ridiculous numbers game turned what could have been a great job, into a nightmare of plummeting self-esteem and dissatisfaction. I can't describe to you how I loathed going to work. I was pregnant then, and I missed several lunches because if people were waiting--too bad. Then, after having the baby, it was impossible to pump and at five o'clock, I thought my chest was going to explode. I'd go through this ridiculous routine of building my milk supply over the weekend and by Friday, it was almost non existent. We were expected to cold call locals and try to get "sales" or appointments. The only people who were ever interested in coming in were either old and lonely, or they had no credit and saw an opportunity for getting some help (and of course, we never could help them.) I HATED the phone! I then found myself lying and selling people shit they didn't always need because I was desperate to make goals. I couldn't sleep at night, I was depressed, and I had to leave. I wouldn't work for Wells Fargo again for ANYTHING.
Luckily, I was talking to a friend one day who was getting a loan from me, and she referred me to a small ad agency in town. She even said she'd make a phone call and talk to a fellow hockey mom who worked there on my behalf. Ten minutes later she called me back and said that someone had quit THAT DAY and they needed to fill the position immediately. HOLY WOW! My escape card had been dealt. I was to bring my resume between five and six that evening. I worked at "Hells Fargo" until 5 but I just left at 4:40 anyway. I DIDN'T CARE! I just packed up my stuff and said, "I gotta go." I raced home, edited my resume, drove back to Virginia, got pulled over for speeding (it was my birthday and the cop must have seen the desperation in my face, so he let me go) and delivered my resume. A couple interviews later, I was hired as a media buyer and AE assistant. I actually was going to be creating advertising and marketing plans and I was pumped. To make a long story short, I learned a TON working at the agency. But, I still didn't feel fulfilled or happy. The atmosphere lacked dynamics and energy, I was working for peanuts and I had virtually no leadership or direction. Then, one day, a conversation with a friend changed everything.
She said, "Do you know what I wish?"
"What's that?" I replied.
"I wish there was somewhere online I could visit to find out what's going on around here."
"That's a great idea," I thought. So immediately, we googled the "Iron Range" trying to find some online guide to nightlife, events, dining, etc. Nothing existed. Now, if you’re not familiar, let me fill you in about “Da Range.” The Iron Range is a region in northern Minnesota where several small towns exist; its number one industry is Iron Ore Mining and tourism takes second place. It holds a notorious reputation for being slow to adopt, its people are set in their ways, and many residents share the perception that “nobody is online”. Back to the idea: So, my brain starts churning and I do some research of other sites like the one I created, check my credit card limits, hire a cheap but decent web designer in Minneapolis, and, racing to be first to market, I secretly planned my new venture: Rangebuzz.com.

I set up this model with two revenue streams: 1) Bars and Restaurants could have a profile and access to keep their content fresh, submit daily specials, and events taking place in their establishments for only $49/month. I’m going for quantity here; I wanted to set a price where hardly anyone would say no. 2) Once I created a nice flow of traffic, I would sell banner ads at a higher price. The site would grow and develop in 3 stages. I had to have content before I had traffic, and I need traffic before I can sell ads. So, I created a homemade media kit, bought a new laptop, a new outfit and shoes, and hit the pavement. I called on all the people I knew and showed them how this would work (although, I wasn’t quite sure it would.) I couldn’t believe I sold my idea to over 25 bars and restaurants in my first month, without seeing virtually any traffic. Next, now that I had something to show, I started driving traffic the only way I new how: traditional advertising methods. As a media buyer, I had developed some close relationships and was able to negotiate a deal on indoor ads (you know, the ones you see above the urinal?), traded a banner for some TV time, did a little radio, and ran some ads in the local paper to get people to check out my site for lunch specials. I created an e-newsletter and gave those who signed up a chance win a night’s stay at Fortune Bay Casino. I had table-toppers and window clings printed and gave them to all the bars and restaurants to display. I got my friends in bands to put plugs in for me at their gigs, and asked another guy who does karaoke around the area to plug me in exchange for a banner on my site. I did some reciprocal links with our tourism bureau’s site and listed on the major search engines. And that’s about it. I just started my Adwords campaign, and Google FINALLY listed me in their directory. I’ve had almost 75% direct traffic. My traffic improves each month (currently at 1410 visits between May 1 and May 24, 130 visits more than April, and my best week peaked at 502 visits last week) and I want to start selling advertising, but my site does not have the traffic I feel is needed to show enough value. So I’m still in phase 2, trying to figure it out.
During the last few months, I realized I’ve made several mistakes, seen about 100 more opportunities, and have changed my mind about 100 other things. Now, I’m reading like a mad woman on SEO, SMO, whatever-O so I can draw bigger numbers. I’m subscribing blogs, subscribing to feeds, examining sites like del.icio.us and Digg, and trying to get with the Internet program. I’m overwhelmed but SUPER intrigued and SUPER excited to keep learning…