Smart Strategies for Using Prepaid Cards in Acquisition and Loyalty Programs


We’re a nation of deal-seekers. It’s probably safe to say that’s always been the case, but today it’s more pronounced than ever.

As marketers, we’ve trained consumers to actively seek out deals and promotions. With unlimited technology at their fingertips, consumers are working hard to find the best deals possible-especially with today’s economic climate of inflation and possible recession.

Does this deal-seeking behavior mean retailers are in an inevitable race to the bottom?

We don’t think so. On the contrary, we think we’re in a perfect promotional storm. We think prepaid cards can be the centerpiece of an overall loyalty strategy that attracts the deal-seekers without sacrificing your profit margins or your brand.

Prepaid cards work for both consumers and retailers

The profitability, ROI and long-term customer value of prepaid cards, especially when they’re used in promotions like loyalty programs, can be substantial.

One reason may be the first rule of prepaid cards: Look at the overspend. Consumers tend to see prepaid cards as a bonus or play money. Spending more than the card’s value doesn’t really count to them, since the prepaid card was “free money,” anyway.

Another reason is that promotions using prepaid cards are more effective than promotions using discounts or coupons. In fact, 44% of companies using reward-based promotions see an increase in total sales.1

Understand the deal-seeking mentality

As we’ve said, price is the primary influencer in most purchasing decisions, and it’s becoming more of a factor for more shoppers. In fact, 75% of consumers are considering changing how they shop by seeking more deals.2 These types of insights into customer decision making are crucial to profitable growth and driving product development and marketing investment decisions.

Contemporary consumers have a reputation for instant gratification, but what they want more than getting it fast is getting it cheap. Having helped create this psychological need to get the best deal possible, the trick for loyalty marketers becomes finding a way to capitalize-to give customers something of value, but also to get something in return.

Win-win-win

Here’s an example: Your new promotion is “buy $100 worth of pots and pans and get a $10 prepaid card.” It’s easy to structure the retail customer experience for an advantageous impact to your bottom line.

This process presents an opportunity for incremental loyalty. You’ve brought a customer in, you’ve made a $100 sale, you’ve collected their data, you’ve sent them a prepaid card and they’re going to come back to spend-and overspend. As a result, you now know:

  • They bought pots and pans
  • They responded to a gift card promotion
  • Who they are
  • What else they purchased

This is a robust data set for remarketing to this shopper, all thanks to a $10 prepaid card.

Do the math

In the end, all promotions come down to numbers. Fortunately, doing the math is easy when it comes to using prepaid cards. Want another example?

Let’s suppose the promotion is a $100 purchase with a $25 prepaid card. Here’s the breakdown:

  • $100 purchase
  • $25 gift for those who redeem (usually well under 100%)
  • $25 spend-back
  • $9.50 overspend (38% average)3
  • CRM data

The cost of acquiring CRM data varies, but let’s assume $90 per customer. Using that number for the purposes of this illustration, it all adds up to an approximate $200 total value per customer for those who redeem.

Again, that’s a lot of heavy lifting done by a prepaid card.

Loyalty marketers don’t always give prepaid cards a lot of consideration as a mainstay of their customer loyalty programs. I hope this article gives you reason to take another look at prepaid cards as a valuable and extremely effective tool in your promotional toolbox.

Bonus strategy: Talk to Blackhawk Network

Loyalty marketers don’t always give prepaid cards a lot of consideration as a mainstay of their customer loyalty programs. I hope this article gives you reason to take another look at prepaid cards as a valuable and extremely effective tool in your promotional toolbox.

A proven incentives provider, Blackhawk Network can help you develop your referral or loyalty program from set-up to fulfillment. We have the platform to handle the most complex programs, and the people to solve any problem. Whether you’re just starting your incentives journey, or optimizing your current program, we’re here to help. Just click here to get started or call 866.219.7533.


1. Aberdeen Group, 2021

2. Blackhawk Network EQ 2022 Inflation Study, 2022

3. The Secret Life of the Gift Card Industry, Infospace, 2016

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