Jen LaForge 0:00

Welcome to Stacked. I'm Jen LeForge. This is a show about how real people and real brands are stretching value in today's economy. Not theory, not generic money advice. We're getting into how rewards, loyalty, partnerships, and digital tools actually work and how they're being used in real life. Let's jump in. My guest today has been close to two decades in payments, fintech, and rewards. And our whole thesis right now is that we've been thinking about gift cards completely wrong. Nicole Stanaland, welcome and thank you for being here.

Nicole Stanaland 0:30

Thank you so much for having me, Jen. It is an honor and a privilege to be here with you.

Jen LaForge 0:34

Well, I'm excited for the chat. We get along famously and you have a wealth of knowledge here. So I'm gonna dive in and I'm going to actually start with provocation. Most people hear gift cards and they think birthday present, awkward holiday swap, money that you forget to spend, you know, breakage. You'd push back on that framing pretty hard, I assume.

Nicole Stanaland 0:54

Absolutely. Yeah. In fact, it's interesting that you say that because being in gift cards my entire career, which it's been a minute, historically you're right. It was thought of as a reward or an incentive or a birthday gift. And especially when you think about cards hanging on a peg in a store, in a retail store. But the evolution and how I really prefer to think of gift cards now is more in the terms of branded currency because ultimately it is a different form of currency that we're seeing a major shift towards self-use. So I could talk ad nauseum about it. And I know we're going to do that today, but you hit the nail on the head with that, that it really has evolved from this mechanism of just being kind of an afterthought of a gift into a way to power self-use and rewards and value.

Jen LaForge 1:38

When did that shift actually start? Like this just a shear, or has this been a growing trend? That is a great question.

Nicole Stanaland 1:44

We actually, so it depends on where you sit. And I say that because a lot of people in the US have credit cards. And historically, credit cards come with their own form of reward system. So whether you're earning points or other mechanisms through an airline credit card or you know through Rackadin, however, you're looking to use and kind of grow, other countries don't necessarily stay as heavy in the credit card space. So when you look at countries like the UK, where historically users use more debit cards and they aren't getting those traditional credit card rewards, I think the evolution really started there a few years ago. When you think about the banking infrastructure in general, the UK and Europe tend to be ahead of North America. And I think that also has been the trend with gift cards. So there, the behavior has really shifted, I would say, over the last five years in a big way, into how can I use gift cards to unlock everyday value. Here it's still evolving. So it really just depends where I think you sit geographically to when that trend started.

Jen LaForge 2:42

Okay. So consumer behavior is shifting. Uh you mentioned the banking infrastructure side. So let's dive in there because I think, you know, most people have no idea how complex this actually is. So when say a loyalty platform or a fintech company launches a modern reward experience today, can you give us like a breakdown of what's actually happening behind the scenes?

Nicole Stanaland 3:09

Yeah. Wow. Where do I start? Um, that's a really, really great question. And it is there, it's a big infrastructure. So I think there is a misnomer that it's just a very easy, okay, you get your gift card and maybe you're getting it bulk and ordering it, but there really is so much more that goes into having an ecosystem within rewards. These days, kind of the core kind of model is leveraging an API. Some are global. And so with that, you know, comes the compliance piece, the technical piece, the brands. So when you think about where a, you know, any kind of provider or API sit, they sit in between the fintechs and the, you know, the bank programs and loyalty programs and the brands and merchants. And so the goal there is ensuring that there's the best assortment, there's the best kind of rate and passing through of any kind of discount or value. And then, like I mentioned, all of the other pieces, the compliance, the instant delivery, frictionless experience. So there's a lot happening behind the scenes to make sure that it feels seamless and really gives that surprise and delight moment, no matter what platform is distributing to that end user.

Jen LaForge 4:20

Right. So it's fair. There's so many layers to uh a brand's journey and experience. And so that friction, creating a friction point is very dangerous, especially uh when you're in the middle there. There's so many rewards programs out there. And part of what we're doing here on Stacked is helping people understand how they work and how they come together. Um, you know, let's be honest, some reward programs kind of suck. Um, you earn something, you never use it. So what, you know, putting gift cards in that reward space, what's the actual difference between a program people engage with and one they ignore? And kind of how does gift cards play into that?

Nicole Stanaland 4:57

Again, there's so many pieces here and nuances, but when I think about the space, and you do you think about card-linked offers, other spaces where you get this great value, but sometimes it is hidden, right? There it maybe goes into the account and it's used for things that isn't top of mind in a kind of a self-use. How am I going to treat myself? When you think about or when I think about gift cards and programs that are successful, it's really figuring out a few things. One, what is some, what is someone trying to drive, whether that's the brand or the buyer or the kind of program. I think everyone's trying to drive, though, engagement, kind of spend and really meaningful value. So I think the big piece for me in when I think about kind of my experience and what I see in the space is getting creative and innovative, but knowing that the most important piece is always going to be that it's a very frictionless experience and that the value in kind of choice and flexibility is superior. And so, you know, whether it's now there's products that have more of a choice solution, so you get a gift card, but ultimately whatever that reward balance is, you can spend really seamlessly across any brand within that mix. So if it's, you know, some at Starbucks and some at Target, it's really seamless to do that. And it's instant. In terms of when any program is gonna, a loyalty program is gonna see really great engagement, is when you're providing a lot of choice. So across whether it's a choice product, an open loop product that essentially rides the Visa and MasterCard Rails, or just having the brands where someone's already shopping. To make it meaningful, you have to meet people where they already are. And then there are other loyalty programs where there is an incentive. So it's whether it's an incentive on the front end, on kind of the urn, or on the payout with an incentivized kind of off-ramp. So frictionless experience, instant ability to spend, and choice would really be the top pieces that are gonna drive someone back into an ecosystem to continue to engage.

Jen LaForge 6:53

Okay, I feel like what you're touching on is the uh value, really making sure that there's actual value in engaging. So I'm gonna throw uh softball at you here. We've been asking all of our guests to uh define what value means to them. And this feels like a good moment to touch on that. So when you think about value in your life, Nicole, what does value mean to you?

Nicole Stanaland 7:16

Wow, I haven't been asked that in a long time. Um I or ever, I love that question. I think for everyone right now, it's making money go farther. You know, we're all seeing a big change in kind of the economic landscape globally. Um, and you know, we want to still have the joy and the and the things that make us feel good, but those are coming at a cost. And then, you know, and I have some examples of where that how that would work. But the other big value for me is how can I make things easier? As a mom of two uh daughters uh who are in elementary school, and you know, as a full-time working mom, including having a daughter with disabilities, candidly, I really need time. And so I need things that are going to make my life really easy, but also provide kind of whether that's uh delight value, right? So bringing joy and you know, having some of that anything that makes me feel happy. Um, but then also value to where I am working hard, but how can I then make the money that I'm earning go as far as I can to, you know, travel and to go out to dinner and you know, be able to have the ability to be with my family and create memories. So it falls in two different places, I would say.

Jen LaForge 8:33

I'm gonna go a little bit deeper now, and I think uh where I'm going is going to to excite you. But I think what the really interesting question we should be asking today isn't, you know, what people are doing, it's why they're doing it. And I think the data is genuinely surprising. 70% of consumers bought a gift card for themselves in the last 12 months, which is huge. I think it's a 340% growth. That's not a niche behavior anymore. What is going on on the psychology side? Ooh.

Nicole Stanaland 9:04

So again, when you think of gift cards as a branded currency instead of a traditional reward, that's where you're seeing the unlock. So, how can I make kind of my everyday spend go farther? I mean, it would fascinate you all the different verticals too, outside of just like the loyalty space and the fintech space of people who are really looking to use gift cards to drive financial literacy. So that self-use is coming from this space of they now recognize that there's this value that can be unlocked. So, one use case, for instance, that I really love because I think anyone can relate to it, is you know, we power a partner out of the UK called SprIVE. Sprive essentially is just a marketplace for gift cards, but they are using the brand's discount to add a little bit to like the essentially the cashback element. That money is then being put into account that is used to then pay off their mortgage. You know, if someone was going to go to Target anyways, or they were going to go to Whole Foods or Tim Hortons, they were sh gonna do their everyday shopping, they've just figured out that they can take this one additional step that's instant. So there's no friction at the side at checkout other than entering in the amount that they want. And then that money can be used to really offer them an amazing value in in everyday life. So it's making we're seeing again that financial literacy piece expand significantly. And so that self-use number is going up.

Jen LaForge 10:25

To me, it feels a little generational because it's closer to 80% of self-purchase when you're looking at 18 to 44 year olds. Are we thinking about money differently, or is it the digital fluency aspect that's driving it?

Nicole Stanaland 10:39

Definitely the digital fluency. I think you were seeing from what I understand, a lot less, you know, younger generations also get traditional credit cards. So, you know, because a lot of, you know, I'm a millennial, I still kind of lean heavily, even though I am educated in the space, I do still lean heavily on my credit card rewards. But if you have someone who doesn't have credit cards, they're gonna look for other ways to unlock value. It's even an interesting space in buy now pay later. You know, that is a space I think that we all recognize has grown a ton of traction globally. Well, buy now pay later providers who are offering gift cards, they're not even offering an additional value. They're just offering the mechanism to pay off, right? Differently. But I would argue that those are some of the largest gift card programs in the world. So it is definitely a generational piece where it's, you know, they want that instant gratification. They want to be able to, you know, really make their money go farther. And I think they're really good at treating themselves. And gift cards are a way to do that.

Jen LaForge 11:41

Yeah, we are, we're definitely in a treat-yourself culture. There's gonna be a whole other episode on that. Um, so I want to talk something that blew my mind. I'm a very data-driven person, and there's a hidden data problem here. Um, you know, the industry is still categorizing a lot of self-use gift cards uh activity under the B2B and B2C buckets. So it's basically hiding the data, which feels like a real business problem to me, um, not just a reporting one. What can you say here?

Nicole Stanaland 12:09

I think brands would agree with you on that. You know, one of the things that we have, you know, in my career, so you know, historically I was in more of the B2C space. So when you think of going into a retail store and buying gift cards, you know, that space has been kind of commoditized, right? You know, brands are looking for new user acquisition. There's not a lot they can track when someone's just coming in to a retail door, pulling a card off of a peg and walking out. I think where there's a been an evolution and where, you know, in my current role, I lean into heavily is this idea of how do we work closer with fintech's loyalty programs to drive more data around what is working, to also not only pass that on to brands, and not in a way that we're sharing any customer data, but just more of the trends. But then also, how do we use that to help the brands also drive more engagement? So if I know that a fintech is driving massive transactions in Home Depot, how relevant is that going to be to Lowe's to then say, okay, well, I also want to see more engagement and unlock more of that revenue. So, what is that an above and beyond kind of discount or promotion to drive more value? So it's still a space where there's a lot of opportunity, truthfully. And where I typically sit, I don't have that visibility. We, we, you know, intentionally kind of where, you know, our API is not meant to have any of that PII, but we work really closely with both the brands and the, you know, loyalty programs and the fintechs and and other providers to say how can we do better? How can we keep everyone at, you know, top of mind? So, of course, that end user, we need their experience to be really great and their value to be best in class. But we also need the brands and the platforms to feel really good about that experience. And so, how can we create dialogue between the two to ensure that everyone feels good about the program and there is the ability to exchange data? But it is still, it's it's a challenge. I mean, brands, to your point, if someone comes in and they, you know, go through kind of an API and it is that B2B2C, you do lose a little bit of the data visibility that brands really want. Um, so always open to kind of creative ideas. And it's something that I think we're gonna see a big evolution, I would say, in the next few years on how that's managed.

Jen LaForge 14:28

What a great segue because I wanted to talk a little bit about what comes next and the evolution. Um, I think the direction here feels like it's accelerating. Um, 92% of 18 to 28-year-olds are now using a mobile wallet. That physical wallet is now a backup, it's not the default. What does that actually mean for how rewards and branded currency get built?

Nicole Stanaland 14:51

There's a lot of ways that mobile wallets unlock a variety of different kinds of spend. So, you know, when you think about the traditional making very easy for someone, again, if I'm in Starbucks and I want to go order a latte, I can very easily access my mobile wallet within an app, hit Starbucks. The second I see that my total is $8.93, I key that in instantly and render to barcode where I can scan and check out. And those funds being pulled from the wallet, it's a really nice use case. And especially if I'm offered 2% every time I go into Starbucks. So whenever I do that scan, that 2% value goes back into the wallet. It's going to keep me coming back because now I have funds in my wallet that I need to really use. But then there's also, you know, partners who will then use that in a in a slightly different way to say, okay, you've earned, you know, $27.38 in your in your wallet. And there's a few different ways you can do it. Some partners are even getting really creative where they almost have different buckets. So I could move that into my vacation bucket. I could move that urn into a student loan bucket, or I can off-ramp it onto another gift card, maybe there's an additional value, or even onto a branded prepaid visa or MasterCard. So if you think about for a company whose mobile wallet, they want to stay top of mind so that again, those users continue to spend in that ecosystem. If they can do a quick off-ramp onto a Visa card that has their branding, can be added instantly to the Apple, Google, or Samsung wallet, it makes it really easy. And so what happens when that customer has a really great continued kind of cycle experience, they're going to come back. So I think that that's where, again, we're a little behind in North America, but that change of behavior, once that unlock, once it spreads, which we're seeing in that younger generation, it will become the norm.

Jen LaForge 16:48

Okay. So you mentioned earlier closed loop, open loop, multi-retailer. Um, the data suggests that consumers want all of the above, but in different contexts. So most brands right now are still forcing consumers into one lane or to choose one model. Is that a product problem or a philosophy problem, do you think? A little bit of both.

Nicole Stanaland 17:13

You know, because you have so many different brands and so many different back-end processors, you are gonna see a slightly different user experience across multiple stages. So some may have only fixed denominations. So if you want to purchase that card, it's 25, 50, 100. Others, which is more common now, is gonna have a variable. So you can literally load $23.92, uh, you know, anywhere between a penny to $500 typically is kind of a range. But then also some can be added to the mobile wallet, some can't. So there is a little bit of, I think, restriction there versus, you know, a Visa or MasterCard, it's pretty seamless in terms of the spend there. You know, you can see pretty seamlessly kind of what that balance is and it can be spent anywhere. There is, you know, a nice middle ground with a choice product because it allows users to easily, you know, convert. Um, so if I have a $25 reward, and again, if I'm in Starbucks, that $828 can go off into that. But then the rest I can add to a DoorDash gift card that I know I'm gonna, you know, order this evening. So it's all about giving ultimately the most flexibility and choice because no one likes to be stuck with a card that they can't use. I mean, even going back to your birthday card, you know, example with that being the traditional, no grandmother wants to buy her grandson a Nintendo card if he's a big Sony PlayStation player, right? Like, why not give a gaming card where if he's on Roblox above the others, he can just use it there. So it's really not only simplifying the buying experience for someone who does still want to give traditional gifts or any kind of reward, but it also just makes the redemption a lot more seamless for the end user.

Jen LaForge 18:56

Your grandparents seem very savvy. Um, mine might not be able to distinguish. Um, but but what we've said is bringing me back to uh this framing that I keep coming back to over and over again in my mind. It's the idea of branded currency and embedding those rewards becoming, uh, you know, when you embed them, actually becoming infrastructure in commerce. It's no longer just a marketing add-on here. Do you buy that? Or what do you think it's actually going to take to create the infrastructure to do that?

Nicole Stanaland 19:27

The infrastructure is there, which is great. It's more just the education piece. It's teaching people that it doesn't have to be difficult and that it can be for self-use. Um, ultimately, it's the same rails. So, so the back end doesn't change. It's more of understanding that you can make your money go farther. I mean, you think about platforms, you know, especially even publishers, right? If they're driving kind of these great deals that already exist, you know, if they uh on any kind of network, well, what happens when they go to check out? What if all of a sudden there's a pop-up that drops down from an extension that says, hey, if you can uh if you use a gift card to tender this transaction, you can actually even earn an additional 5%. Like that's meaningful. You're stacking those rewards. And and some, and candidly, some brands have mixed feelings about that, right? The idea of kind of they don't necessarily love that in every case, but if it's going to get someone to spend more and get someone to have a great moment where they're coming back, because now there's like this, you know, deeper affection and affiliation with that brand, everyone really wins. And with gift cards, it's a nice, you know, you you mentioned breakage earlier. Yes, historically that's been thought of as the value. But the truth is if you talk to brands, they're not interested in the breakage. Is they really want that overspend. They want someone coming back because that's how they win. You know, sitting on $2 in their back end versus someone coming in and with a $50 gift card and spending $80, it's an obvious win.

Jen LaForge 20:55

You nailed it. I think it's looking at the full value that gift cards are delivering in those stacked rewards and that long-term value. Nicole, thank you. I've always promised practical takeaways. What we're trying to do is really, really pull back the curtain on how consumers could be maximizing their value, however they define it. So let's switch over and bring this back down to earth a little bit. Very practical. Someone's listening to this right now, maybe they're running a mid-sized brand, maybe they're on a loyalty team at a retailer. What do you think they're actually doing with the information today, or what should they be doing?

Nicole Stanaland 21:30

Well, first they need to think about what is their goal. So if their goal is to get, you know, a new user, which is 99% of what brands want, if it's to reward their, you know, existing users, like I think that guides the answer. It's figuring out what is top of mind and what is their ultimate mission. The great news is gift cards are branded currency, can always meet them wherever it is they need to be. You know, my favorite part of kind of being in gift cards. My entire career is meeting people and figuring out is brainstorming. Like, where is it? Whether, again, you're on the platform side or the brand side, like, what is it that you're trying to drive in your consumers? And how can we help, how can I help you get there? Um, because there are so many different use cases that, you know, I mean, even you think about appeasements. A lot of people now will use gift cards for appeasements, any kind of returns, any kind of, hey, thank you for doing this survey. Like there really is a million spots where it can fit in. And as long as that end user feels appreciated, valued, and has that surprise and delight moment, really, again, all of those part parties win.

Jen LaForge 22:40

What I'm picking up is that there are so many opportunities to use gift cards across the entire journey, multiple different incentives for different customer groups to drive the behavior that you're looking for. And we already have the data that's telling us that consumers have already very quickly shifted over to this behavior. So our brands really do need to be looking at this with a new lens and to be looking at it more strategically, depending on what their goals are. So I think you nailed it. We're gonna switch now that if a brand is listening and they're like, Nicole's right, I got to look at this, but they're starting from scratch on modernizing, say, their reward strategy this year. What's the honest first step? Now you said the goals, um, uh and we all get that. Um, and I don't want an aspirational version. I want like a real honest first step.

Nicole Stanaland 23:32

You know, for a brand who's looking to get into the space, there's a lot of areas that they can start. I, you know, they can call me for one, and I'm going to give them honest feedback. My goal in being in the space for a long time is I love helping people. Um, so even if it's, you know, that I'm not the right person to ultimately help them, you know, fully end-to-end, I can definitely help point them in the right direction. You know, my back-end experience being more in the physical brick and mortar space and driving a lot of um value. Like in my past life, I ran Costco's gift card program, GameStop. I've run a lot of, you know, places where you have third-party malls, like in physical spaces. Now I do lean more heavily into that B2B, B2B2C kind of incentive space. So it really just depends whether it's helping them get their foot in the door to expand their distribution or get creative on how they can leverage other brands and ones, of course, that aren't competitive to their own business, you know, in a digital ecosystem to really move the needle to drive, again, more engagement, new user acquisition in a really frictionless manner.

Jen LaForge 24:36

Perfect. And I can attest to calling you first. We had a chat at uh Rect and Optimism earlier this year. Uh, and you opened my mind to the the strategic opportunities of gift cards in 10 minutes. So I will take that as practical takeaway. Call Nicole. We're coming to the end of the podcast. There's so much, as you've said a couple of times, where do I start? There's a lot to talk away. Um, but what I want to end on is a bit of like a stack or skip. So, you know, I'm gonna give you a behavior, a strategy, a trend. You tell me whether brands should stack it into their roadmap or skip it entirely. Sound good?

Nicole Stanaland 25:13

Okay, yeah.

Jen LaForge 25:14

Okay. So brands are treating rewards and gift cards as a side feature. And nice to have, it's a bolt-on instead of a core part of that engagement strategy. Stack or skip? Definitely stack.

Nicole Stanaland 25:27

I think the big piece is figuring out that there are a lot of different areas where you can really unlock benefits and do it in a really seamless way. And especially for brands who are global, there's a ton that can be done there. And we're seeing, like you mentioned, that trend shift. If they're not kind of paying attention to different ways that they can be thinking about the space, they are going to be left behind.

Jen LaForge 25:54

Okay. Nicole, this was fantastic. Um, for anyone who wants to dig deeper, uh, you know, we already called it out, call Nicole. Um, but I do want to note uh that you also shared with me earlier a wonderful white paper. Um, you have a ton of information that you can provide to understand the space and consumer behavior. So I want to give you an opportunity to mention uh, you know, more, give yourself a plug here, what data you can share. Uh, help us help people find you so that they could really lean into this evolution.

Nicole Stanaland 26:24

That is so kind. And before I do that, I just want to say such an honor to be here with you, Jen. I mean, we hit it off, like you mentioned, in Arizona, um, Soul Sisters from here on out. This has been a really great just opportunity to spend time with you. I wish it was longer. Um, and yeah, I, you know, I appreciate you giving me the platform. I've met, you know, I've spent a long time in this space. Um I've been at Tillow the last three and a half years and really loved being able to meet new people, build relationships, but also brainstorm so across the entire ecosystem. So, gift cards in general, the other great piece is you have these mechanisms with great value, all of the top brands that you could want globally, and it doesn't expire, right? So there is this and with these incredible competitive rates. So I'm always happy to brainstorm on how I can help someone and kind of figure out where the right fit is. And again, if I'm not the right person, how can I help someone get to where they need to be? Because the the consumers are demanding it. Um, it's a it's an it's a big change in behavior. And it's something that funny enough, I have really started to expand on. You know, as part of a Tillow employee, we even have like not only the nice great, hey, it's your anniversary or it's your birthday, here's a choice product, right? So I can spend it anywhere that I'd like, but also in we have our own rewards marketplace. So I can go in and I can purchase gift cards at a discount, even. So it's a really nice way that's like instant, this like member benefit, no matter where someone sits, whether it's part of a loyalty program or just an employee kind of, you know, within a company, but being able to really make a value go farther, and there's so much of a discount that it's also can be a little bit of a revenue driver just by offering this great incentive. So there's so many things here that I'd love brainstorming with people and you just giving me, like inviting me to be a part of this and share some of this knowledge, yeah, it's a moment I won't forget. Thank you.

Jen LaForge 28:26

Of course. Well, I'm glad you're here because as we've broken down today, the consumer shift has already happened. If brands are not playing in the gift card realm strategically, they're already way behind. And so uh I want to thank everyone uh for listening here today. If this has sparked something in you, please send it to someone who is maybe building a loyalty program and doing it wrong, or that you see that there's a ton of opportunity on the table, they'll thank you. Nicole, I thank you, and thank you again, everyone, for listening. We'll see you next time. And that's it for this episode of Stacked. If you found this useful, follow along as we interview leaders shaping the future of retail and learn how value really works behind the scenes. And if there's a topic you want us to unpack, I'd love to hear from you. See you next time.