The Code for America Chattanooga team recently expressed interest in learning more about the operations of CUTGroup to begin their own civic user testing group. Smart Chicago is dedicated to openly documenting our work for everyone to use. The Chattanooga team reviewed our documentation, we talked further and realized we were missing information about gift card mechanisms. In this blog post, we will share what we learned about gift cards.
Once a resident signs up to be part of the CUTGroup, we send them a $5 VISA gift card. If and when they are chosen to test a civic app, we give them a $20 VISA gift card.
When purchasing gift cards for your program, there are three main considerations: type of cards, cost and fees associated per card, and quantity and expiration date.
Types of Gift Cards
There are different types of gift cards out there – prepaid VISA of Mastercard gift cards, store-issued, bank-issued, online, etc.
We considered Amazon gift cards as an option; these gift cards do not have card processing fees, no expiration dates, you can choose small face values (as low as $0.15), and they can be sent directly from e-mail. This is a very convenient option, but by choosing this service we would assume that CUTGroup members have regular access to their e-mail, know how to use Amazon, and know how to access and use the gift card for their purchase. If someone is not an Amazon user, this could be a barrier to joining the CUTGroup. We want to include everyone, and this just does not work.
Other gift card types also include specific store- or bank-issued gift cards. Sites like ScripSmart can provide comparisons between gift cards, and can give you an idea of what you need to ask about before purchasing your own cards. Again, our goal is to provide the most flexible currency possible, so this does not work for us.
We purchase VISA gift cards specifically because they can be broadly used in different locations. It is important that CUTGroup spans all different types of residents in Chicago, and these gift cards should fit in the normal course of these residents’ lives. By purchasing these cards, we are spending more than face value on fees, and have to take time to mail them out, but the value of accessible gift cards is worthwhile to the goals of our organization and this program.
Costs and Fees
It can be hard to find companies that offer Mastercard or Visa gift cards in values smaller than $20. In addition, there are a number of costs and fees associated with each gift card. With our first vendor, we spent around $10 for each $5 sign-up card that we sent out. Here is a list of our costs associated with a 100 card order:
- Face-value of card: $5.00 per card
- Card processing fee: $3.95 per card
- Credit card processing fee: $1.00 per card
- Shipping Fee: $21.95
- Total: $10.17 per card
The card processing fee can be higher or lower depending on the quantity of cards purchased, how you are planning to pay, and lastly the length of expiration date.
With this in mind, we researched and found an option to lower our fees and have a longer expiration date through a new vendor, Awards2Go Visa Award Card. We were able to lower the cost per card to approximately $7.07 for every $5 sign-up card. Here are the new costs associated with a 100 card order:
- Face-value of card: $5.00
- Card processing fee: $1.75
- Credit Card processing fee (1% of total order): $5.00
- Shipping Fee: $27.00
- Total: $7.07 per card
Last October, we learned that we still had a lot of gift cards that were about to expire and some were already expired. With the gift cards that expired, we lost out because the cost of the fees to “restock” the cards would be higher than the value of the cards we would receive. We also had 118 $20 and 103 $5 gift cards that were going to expire at the end of November. If we sent back these cards to the vendor, we would only receive $10 for each $20 gift card.
We thought of some creative ways to use the cards including a refer a friend campaign, and a remote CUTGroup test that allowed many testers to participate. Still, some of our testers received cards late (after the expiration date), and we had to send new cards to our testers. We now have gift cards that have expiration dates set for 8 years later, with the value decreasing from the card after 13 months of receiving the cards (-$2.50/month). This gives CUTGroup participants a longer time frame to use the cards, but at the same time we still have to be mindful of the quantities we purchase to ensure we can use them before they lose value.
The success of CUTGroup operations is based on the quality of engagement with our residents and the open communication we have about our process. When our gift cards were about to expire, we told our CUTGroup members so they knew. When gift cards came too late, they e-mailed us to let us know, and we sent out a new card. These everyday conversations let us build a better community with Chicago residents around data and technology, and help us be better at what we do.
CUTGroup is an important program to Smart Chicago because it cuts across three of our areas of focus on access, skills, and data. Not only does it allow residents to connect around data and technology, it also creates meaningful communication between developers and residents. We will continue to share our processes around our programs in hopes that our experiences are useful to everyone.