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  • Holly Glowaty

Flourish in a Flash: Gen Z and the Future of Branded Currency

Episode Transcript

Please note: Transcripts are computer generated.

Intro: 0:04

You're listening to the flourish in a flash podcast. With the flourish team Dez, Holly, Kristen, and Erika

Holly Glowaty 0:15

Hello everyone and welcome to Flourish in a Flash. Today we are going to talk about some research we did in 2019. But how it's going to apply in 2020. So I'm really excited because we have a really great guest today. Her name is Theresa McEndree. She's the VP of Marketing for Blackhawk Network. So welcome, Theresa. We're excited to have you on Flourish in a Flash.

Theresa McEndree 0:40

Hi Holly great to be here. Thanks for having me.

Holly Glowaty 0:43

Awesome. Well, back at IMA in 2019. Theresa, Dez, and I were able to present some research that we had all done independently on Gen Z. And so what we thought we would do today is take you through just like a quick overview of how we did it, what we found, and then really talk about how this is actionable, how it applies to gift card marketers. So to kick it off, I'll tell you guys a little bit about what we did. K+H partnered with the IGCC and the American Marketing Association and conducted focus groups with over 40 college students, where we asked them about their attitudes towards gift cards, physical, digital, mobile, how they're using them, how they're not using them, and what their expectations are for us, you know, as an industry, and so we were able to take that and compare it against what Blackhawk Betwork did. So, Theresa, I'll have you explain what you were able to do.

Theresa McEndree 1:44

Yeah, absolutely. So we ran a rather large quantitative study earlier in the year in February, we went out to 10,000 consumers in the US, really to understand all attitudes surrounding gift cards—whether it's as gift giving, receiving, as well as incentives. So we took all of that research, and we absolutely looked at the different generational cohorts, and how they behave differently. So if you look at Gen Z, just to establish kind of a baseline, today in 2020, they are between the ages of eight and 23. So I think we only talked to the folks that were over 18. It would have been interesting to get the younger folks in there, but only over 18. And really, I think what Holly and I are going to dig into today is, what does this mean for marketers? What does this mean for the gift card industry because this is a whole new generation, right? They're in a totally different life stage. They grew up with technology that we never saw, right, that millennials never saw. So it's going to be really interesting to see how they come along with brands and payments and gift cards and all that exciting stuff.

Holly Glowaty 2:55

Absolutely. And it's funny because when I look at the top trends like words, we heard from our focus groups, I think the interesting discussion is going to be, what does that mean specifically for their generation that is different from what we've seen in the past. So the top trends, kind of what we heard from our focus groups in particular was the words convenience, experience, Instagrammable. They like loyalty programs, personalization, and customization. So those were kind of the top things that we heard over and over from the students and really, without any prompting, kind of got those responses.

Theresa McEndree 3:39

Yeah, and that's interesting. One of the things and we can dig into it a little bit is what does convenience mean and I think a lot of people hear that and they think, oh, it has to mean digital, and it has to be mobile. And a lot in a lot of cases it does. One of the really surprising things that we found in our research is that it just means this with omni channel experience, so Gen Z pays with cash, they also pay with a debit and they pay with mobile wallets. And their expectation of brands is that that is available whenever they want it. Right. So we all need to be clairvoyant in some ways and kind of craft this experience where they get exactly what they want at that moment, whether it means payment, whether it means the customization and personalization that Holly was talking about, or whether it means the gift card product, creative and delivery, that they're expecting. So it's a really interesting, convenience is a really interesting term as it relates to Gen Z, because if you start to unpack it, it doesn't just mean instant and mobile, it absolutely means that not just that.

Holly Glowaty 4:46

Yeah. And that I think is the most fascinating thing. And maybe the most influential thing that we'll see come from this generation is, their expectations of the buying experience are going to look very different and to me, it's you know, it's going to be it's tough for retailers, I think, to have that sort of clairvoyance, like you're saying, understanding where they want to buy next. But that is, you know, we're seeing the term contextual engagement, contextual commerce. That's coming up a lot more in conversation. I would say I hadn't even heard that until maybe two years ago, that that was even a thing. And I think that came up a lot with like, the, what were the Amazon, like, buttons that they had, you know, just

Theresa McEndree 5:32

They were Amazon dash

Holly Glowaty 5:33

Dash, that was it. And so it's interesting, because it's obviously the dash program, you know, it's changed. It's the buttons aren't really around anymore, but you're seeing Gen Z, kind of take that convenience factor and turn it into something that's completely different. And it all changes so much faster now than it did in the past. So I think the big challenge is going to be how to retailers keep up with that. And how can they implement that in a way, that doesn't, I mean, often what we see on the back end is it creates really complex sort of systems, right with payments and reporting. And I think that'll be the big challenge for retailers is sort of how do you build this in a smart way that allows you to still be able to use data and to still have a really good connection and clear sight lines into how your consumers behaving?

Theresa McEndree 6:21

Absolutely, yeah, it's really the challenge for retailers is how how do you take these insights and become proactive? versus reacting? Right. So I think, you know, in the last decade, we've definitely seen a lot of retailers come to the other side, when omni channel right first came onto the scene. It's been a buzzword for a long time, when it first came onto the scene, right? You just saw a proliferation of channels, you didn't necessarily see a connection of channels. And that's where we really we have really seen a nice evolution as a consumer and as a marketer, I think that's come a long way. But it is interesting, right? So another point of convenience, one of the things that we saw that I was again, surprised that is Gen Z, they like the IRL or the in real life. They want experiences. They like malls, actually, believe it or not. It's just what does that mean? And what is the expectation of that real life and it has to have obviously a very technically forward, very experiential kind of lens to it. But you see this generation kind of getting out of the shadow of all of the social media and they want to engage, and they they seek that connection, right? They want things that are Instagrammable, but they want it to be based on socialization, and they want it to be based on experience. So that's really important to connect for, for the retailers and the marketers.

Holly Glowaty 7:48

I agree. It's not just about the product anymore, right? So it's your that is really interesting. You're seeing retailers reintroduce things like restaurants that they may have done away with in the past. We're seeing Instagram walls go up, you know, at these different stores, but it's so true. I think we saw the same thing in our research. You know, in the in the qualitative sense everyone said, "Oh, I love getting a physical card." And and they all talked about how they're like, oh, there was a cute design or it was personalized. I would take a picture with it and put it up on my Instagram story. And so I think that's really an interesting evolution because for years, we are all like, everything's going digital. The next generations are absolutely going to want just solely digital and we've never seen that come to pass.

Theresa McEndree 8:39

Yeah, we'll always have physical gift cards. I mean, people definitely love the tangibility of it you love to walk around. I mean, myself, right. I'm a I'm a consumer first and foremost. And I love to get a gift card. I love it when people know the brands that I like, and it's kind of it's this trophy experience right i think about going shopping I enjoy the trip, I enjoy that somebody else paid for the trip. Right. So it's always, it's always just a great experience, although we do see a big growth in digital, right, because of the convenience factor. There's a lot of exciting things, just from kind of personalization and a take off of digital wallets and a greater adoption there at that space is consolidated a little bit. So again, to go back to it to an old but very relevant term, right? It's omni channel, it's the fact that you're going to have a physical card, you're going to have a digital card and we've even seen migration to more of the digital wallet format, which I can touch on in a little bit, which is that actually bypass a card and just load straight to a wallet. So load straight into your account. You can load straight to your Amazon account your Google account, which is really exciting because it's store value. Yes, right which which we all know and love, but especially in us we're starting to see Gen Z take advantage of that because they want cash. Yep. Because they've seen their parents struggle with debt, right and credit and they're more reticent. They're also at a life stage where they're not going to take out credit products. But they still want to participate in the digital ecosystem, right? They're still watching Netflix, they're still downloading games on Google, they're still taking Ubers. So then how do you connect the two if you're not using a credit product, you may not be banked you want to use cash and you want to be a digital customer. We're starting to see the gift card rails kind of move into that product area, which is really exciting for us.

Holly Glowaty 10:41

I think so too. And you you brought up two things that I want to touch on a little bit. So the first is the life stage that these consumers are at. I think it's a really interesting time to be reaching them. Because when you think about being let's say that 18 to 23 you are just forming your payment habits. And I think we all know that changing consumer behavior is really hard. So if we can understand and sort of be like you were saying, be proactive in understanding how these consumers want to interact with us, we can get right in while they're creating these behaviors that they'll probably stick with for the majority of their life. Really. I mean, you know, we're in payments, and I still do some of the same things I was doing when I was 18. And I'm like, there's a better way to do this. And I know it, but I still don't do it.

Theresa McEndree 11:37

Right. It is hard to unlearn things, right. So yeah, I mean, definitely, you know, if we can all remember back when we were 18 to 23. You know, you're you're developing Holly shaking your head no. It was a little bit ago. Yeah. No, I mean, if you can think back to those days, right you are, you're developing your own income. You're also you're becoming brand loyal to things, right? Because you're starting to become an adult really, right. So you're starting to learn what you want to buy, what your purchase behaviors are, what your spending and financial philosophies are. And all of those are inextricably linked to to brand loyalty. So it's a really big opportunity for marketers. Although Gen Z is not the largest financial cohort, they soon will be right. They will soon have the largest influence on the economy within the next 10 years. So it's an exciting, you know, it's every new generation comes along. It's an exciting opportunity.

Holly Glowaty 12:37

It is. And I think the other piece in there that you would imagine you'd mentioned was, you know how people are moving into this, these digital wallets. What I think is interesting about that is we have retailers who are taking a more pointed look at their path to purchase and where they're interacting with their consumers. I think that's a really huge opportunity for retailers, and particularly is to look at what consumers are coming to me online only, and who are coming in to have this sort of physical one to one experience. And I think we're finally at a point where we're looking at things like gift card as branded currency or branded payments. And when you sort of go in that route, it really to me opens up a ton of opportunity to have different strategies, and not just look at a gift card, as a product, but as a pathway or as a tool you can use to help your customers have a better experience with you, and maybe store value with you because there is there's value in you know, not just the monetary sense, but in convenience, and in creating a you know, a smoother customer experience

Theresa McEndree 13:47

When you say and I mean, I everybody talks about it, because it's such a great case study, but Starbucks, right? They developed a payments ecosystem as a coffee company, right? I mean, Ithey're a community experience by their by their brand definition. But they've created a payments ecosystem on the back of a gift card. Right? So they took that gift to the digital gift card. And they create an experience and loyalty around it. If you look at the other for a long time, the largest digital wallets in the US were Starbucks and Walmart, right and those were really born on the backs of gift cards and store value. So it's exciting if a brand puts their mind to it, what they can do to create a holistic experience and payments are a huge hook. Right? You've got your retail experience, the payments experience is a huge hook. I know I'm an avid shopper I think I can disclose probably already have. But you know, I mean, it's, it's it's kind of what Amazon has become if a payments checkout is too difficult online. Even with all of the automation if you're forcing people to create multiple accounts and create passwords, like I personally will abandon and go see if that product is available on Amazon. Like it's true, but just that, just that additional convenience. If you're asking, you know, for passwords, if you're charging shipping, you know, I'm sure I'm not alone in the fact that people abandon cart and go switch to Amazon or switch browser or switch purchasing channel, just because of those little convenience factors, which is why things like Amazon pay have taken off right now in Amazon's and other one that's created an ecosystem of payments.

Holly Glowaty 15:38

Yep. Well, and I think, you know, we're seeing, you know, the convenience factor has taken on so many different forms. Honey was recently purchased by PayPal, and I think that's really telling that people have, you know, widgets, they have Chrome extensions now that are just telling them Oh, you could be getting a better discount, you know, here and then you could go again with another one like, oh, could I get a better discount over there. So there's just so much happening right now. That's even really just out of the retailer's control, I think gift card branded payments branded currency they, they give the opportunity to have a little bit more control in your customer experience. And in their lifecycle if you can, if you can pay attention to the data, if you can pay attention to how your customers are behaving. There's a lot that you as the retailer can do. And the you know, examples you gave Teresa are the shining beacons of what it can be. But it takes the focus and it takes the price prioritization of you know, something that I think sometimes certain retailers see as more like, we have to have this. But then those that see it as the opportunity that I think we know it is, yeah, that's where something cool can happen.

Theresa McEndree 16:54

Yeah, I mean, obviously as champions of the industry, we we are great students of the Starbucks success. I mean, it really is the understanding of that you can take, you know, a gift card is it is plastic on a hook, but it's so much more right? It is a, it is the foundational element of a lot of these payments ecosystem because it's your own currency at the end of the day. That's why we call it things like branded payments and branded currency because it is, it is the currency of the brand. And it's it's exciting to see where or some organizations are taking it and how they're leveraging it, and growing. And I think that's going to be huge. As we develop brand loyalty with these burgeoning generations, right? It's going to be how do you create that how, which ecosystems do you belong in? There is a point of diminishing returns. We've studied loyalty for years here and people always vacillate around like six to seven loyalty programs that they actively engage in. And I think you're going to start to see that become the number of payment ecosystems that people engage in. Right though, as loyalty and payments continue this convergence, right? there gonna be a limited number of wallets and apps that people are then actively engaged with. And it's going to be your wallet, your app, your payment, right, which is, wallet and loyalty, it's going to become the same thing. So who are the six to seven that Gen Z are going to pick and it's interesting right now their most popular brand is entertainment brands. So you know, that might again just be because of life stage, they're less likely to buy an 80 inch TV and more likely to buy Netflix for like, eight dollars a month. But again, interest it's it's going to be really exciting to see how companies really tie all those pieces together because they're going to have to.

Holly Glowaty 18:47

Yeah, and I, you know, to that point, when we were conducting these focus groups, I had everyone when they came in write down what was when was the last time you used a gift card and by the end when I got all the forms back a bunch of people have scratched out because they forgot that using the Starbucks app or the Dunkin app, or for a lot of them, Chick Fil A, was technically using a gift card using stored values. So as we see consumers, again, like you're saying, really kind of blur the lines between what's loyalty, what's gift card, how, what is their understanding of it, we are going to have to sort of change the way that we're measuring and thinking about these things and understand that the opportunity is going to look so different in five years than it even looks today with these consumers, because they're driving a lot of how they use it, the language they use around it. And it's exciting to see because I mean, I think the opportunities are only going to increase from here. And I think as we start doing more research, and we're going to start seeing the real benefits of a gift card product of and also changing your mindset to not just gift card, not just loyalty, really blending it all and saying, Yeah, this is branded currency. This is a branded payments experience.

Theresa McEndree 20:06

Yeah. I agree. It's exciting.

Holly Glowaty 20:11

Well, Teresa, I really want to thank you for joining us today. This was a wonderful conversation, great way to kick off the new year. I think there's a lot here. And I think we'll start to see a lot come out as you know, all the conferences at the start of the year happen. So we'll see what happens with, you know, the NRF Big Show, and then we're excited that you know, Flourish is happening March 16, to the 18th. We're going to continue these conversations there. So really, I think it's going to be a big year for branded currency.

Theresa McEndree 20:43

Yeah, it will be we're excited. Alright, thanks, guys. Thanks for having me.

Holly Glowaty 20:48

Thank you so much for joining us

Outro 20:50

Flourish in a Flash is produced by K+H Connection, a branded currency consulting firm. You can learn more about K+H at You can always find out more about Flourish and the Flourish Conference at or follow us on all of our socials, on Twitter, Facebook and LinkedIn. It's at flourishcon and on Instagram, it's at flourish underscore con

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