Saturday, July 7, 2012

This week in customer experience: long-expired gift cards

Photo by James Currie

When visiting my boyfriend's mom in San Francisco in May, she kindly gave me a couple of old Macy's gift cards she had laying around for what I assumed was maybe a few months or a year or so. No biggie. I figured that before going shopping with them I'd call the number on the back to find out the balance and to see if they were expired. Indeed, both of the cards were past their prime. The card numbers I entered weren't registering, and once I got a live person on the line, I found out that not only were the cards expired, but they had been expired since 2003 and 2004.

I was sort of flabbergasted, mostly at the fact that they were still in existence. But that's beside the point. Without me even asking what my options were at this point, the woman on the other end of the line told me that before making a purchase, all I had to do was ask for a store manager and explain that the cards had expired, and the store would be able to provide me with new ones.

Fast-forward to Macy's. When I went to make a purchase later that same day, the cards somehow magically worked, so I didn't actually have to ask for replacements. I don't know if that's because they had been re-activated or what. Most important here was that Macy's replaced the cards without any hassle to the customer.

This was great considering billions of dollars in gift cards never end up getting spent because people forget about them or lose them. This translates to lost money for consumers (both the purchaser and receiver of the card), and potentially unwarranted (at least in my opinion) profits for the companies issuing the cards (though there are rules that limit this, which I get to in a second). Not only did I end up with a nice new pair of shoes, but I appreciated feeling like Macy's cared about making sure I got what I should have.

Of course, it's not like Macy's had anything to lose in doing this. While researching the topic of unused gift cards, I found out from the WSJ that retailers can't count the money made from the sale of gift cards as profit until the card is actually used, unless it meets the expiration limit minimum of five years. They note that
The Securities and Exchange Commission allows companies to take unused gift-card money as income once they can reasonably say the card won’t be redeemed, but there’s no set time limit. Best Buy, for example, sets that level at about two years [I'm not sure how this meshes with the five-year expiration minimum...] In fiscal 2011, the electronics company recorded $53 million in income from gift-card “breakage,” or cards that are unlikely ever to be redeemed, up from $43 million a year earlier.
But some states don’t allow companies to keep unused gift-card cash. They demand that companies give the money to the state after a certain period of time to add to unclaimed-funds accounts.
Macy's could have simply followed the federal limit of five years and cashed in on the cards, knowing how old they were. Instead, they chose not to, perhaps in the hopes that the cards would eventually be used. After all, gift card purchases can benefit retailers beyond their original face value. The WSJ cites Brian Riley of TowerGroup, who estimates that over one-third of of purchases made with a gift card have a value that exceeds the amount of the card. It also helped that the state in which the cards were issued (California) does not follow the above-mentioned escheatment rule like some others do. The only other possibility I can think of is that Macy's does actually add unused gift card dollars to its coffers, but happily gives them back when a customer comes calling. And that's how it should be.

During my experience with Macy's, I was offered a quick, simple, no-hassle solution right up front. There were no fees for inactivity or lack of use. It's a great thing when retailers put the customer first and take into consideration their crazy, busy lives, prioritizing the customer relationship  rather than a few extra bucks in profit. That can go a long way in the world of brand loyalty.

In other customer experience news, I recently tweeted about the poor experience I had at a recent Chicago Le Cordon Bleu MasterChef cooking class last month (International Cuisine 101: Taste of Latin America). A day later, I noticed that LCB Chicago began following me on Twitter. Hmm, I thought, and moved on. Then, a couple days after that, I received an email from Kirk Bachmann, the president of LCB Chicago, who had apparently seen my tweet. Apologizing that my experience "wasn't what I had hoped for," he offered to chat with me over the phone to learn more about my experience and how they might be able to improve. I'm impressed that he took my tweet so seriously and am looking forward to our call. Will post more on this after our conversation.

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