Marketing prepaid to Gen Y
eneration Y consumers, also known as millennials, represent the future mainstream of consumers. Born after 1982, millennials think of payments differently than their older counterparts. Teenagers and young adults today have no knowledge of the pre-Internet age. They take for granted that purchases can be made online at any time of the day or night. They socialize and network on Web sites like MySpace.com and Facebook.
But there is a fourth characteristic of millennials that edō Interactive engages: They are wizards with gift cards. Just ask Ed Braswell, Chief Executive Officer of edō and father of two teenage daughters.
"I saw the amount of gift cards they were getting on the closed loop side and the value that they weren't able to maximize because they were losing the cards; they didn't know their balance; they were not interested in the store," Braswell said. "And I just said, you know, can we create an open loop product that assures they get the value of the gift received from whoever it is."
Braswell recognized that kids in their teens, all the way up to individuals on the cusp of full-blown adulthood, use gift cards like adults use credit and debit cards. Because the majority of millennials do not yet have access to lines of credit and personal bank accounts, they use gift cards as a payment alternative, especially for online purchases.
A nontraditional banking service
Founded in June 2007, edō taps into that alternative payment method with facecard, an open-loop, MasterCard Worldwide-branded general purpose, reloadable prepaid card that offers cardholders' incentives for shopping with select retailers. The facecard is designed to replace multiple, closed-loop gift cards with one card that can act as a gift registry, gift exchange and peer-to-peer payment system.
"Payroll can be directed to it," Braswell said. "Gifting can be directed to it. It's a general spend service. And so, in essence, it acts like their debit card that they get from a bank. But it has a lot more features. It's integrated with their mobile phones, Preward options, account balance delivery, gift card services. Again, we're trying to leverage all the technologies that this generation uses on a daily basis."
Prewards is an edō-trademarked technology that allows retailers to connect with facecard users. Select retailers load cash deposits on cards if cardholders make purchases at retailers' stores - essentially discounts. When combined with edōCash, a program in which retailers give rewards to loyal patrons, the marketing technologies promote closer relationships between retailers and consumers.
The facecard comes with no activation fees and no monthly fees. Cardholders can check balances online and create customizable profiles to receive the Prewards they desire.
Another innovative feature of the facecard is that it gives cardholders the ability to transfer money to other cardholders.
"Let's say you were visiting us in Nashville, Tenn., and we all caught a cab home and four of us were in the cab and one guy pays $20," Braswell said. "We pay that guy back $5 electronically [with facecard] versus writing a check or figuring out a way to hand over cash."
Facecard can also be used as an educational tool, teaching young people how to budget expenses. Cardholders cannot overspend with the cards: Like traditional debit cards - and unlike credit cards - funds need to be available on the cards for purchases. Therefore, parents are not liable for overdraft fees.
Communities of interest
In June 2008, the Nashville-based company partnered with the Bonnaroo Music and Arts Festival held each June on a 700-acre farm in Manchester, Tenn., to offer the facecard to festival-goers. The promotion involved $5 Prewards given to individuals who signed up for the card. The Prewards could be redeemed at specific Bonnaroo merchants, or at the Bonnaroo Web site.
"We think that marketing a product has several aspects," Braswell said. "One, viral marketing using the Internet and social networks. Two, marketing around communities that are popular to our cardmembers, such as the music festival, colleges and high school campuses, and team events."
Of course, edo is also leveraging the behavior of Gen Ys to market the facecard. Braswell called millennials "tribal in nature," communicating through social networking Web sites, e-mail and mobile text messaging. "The fact that they do communicate so effectively, if they like a product, they're their own viral marketing channel," Braswell said.
Edō launched the facecard only five weeks ago. According to Braswell, the company has received a tremendous response to it. Edō has even been featured on a segment of FOX Business News.
"We're starting to see a lot of interest from just outside that [Gen Y] group, saying, 'Well, why can't I get this product?'" Braswell said.
He compared the possibilities for facecard's adoption by a wider cross section of consumers to the evolution of Facebook. The social networking site began as a localized college campus network, but since has expanded beyond those confines to a point where, today, 50 percent of its 24 million users are nonstudents.
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