Branded currency is, today, an essential notion for brands and retailers, whether they are operating in e-commerce, retail or both. So, what is this concept and what is its added value?
Branded currency definition
In “branded currency”, we have on one side the brand and on the other the currency. If we take a purely economic definition of currency, we have: a reference value accepted by everyone that facilitates exchanges. The value fluctuates, it will not be the same depending on whether you have a dollar or a euro. The exchange rate allows you to convert it.
Then, a brand represents a preponderant element in the success of a company. It is ultimately the reflection of all the efforts undertaken (communication, quality of products, services, slogan, logo, positioning…) by employees and managers to develop the business. Basically, a brand is a marker allowing consumers to differentiate certain products from others, and ultimately make their choice.
The notion of “branded currency” is a fusion of the two. It defines the value of a brand through a particular representation. It consists of placing the brand as a currency (similar to the euro or the dollar). Like bankers with money management, companies will have to activate the right levers to make their currency stronger (better exchange rate), generate liquidity… It brings an additional reflection. Here, the brand is linked to “money” which allows a better understanding of the actions undertaken impact and to have a clearer vision.
Branded currency tools
For traditional money, there are different forms of physical or digital representations: check, credit card, cash, bank transfer…that everyone knows about and has already used. What about the brand? Well, there are gift cards, discount codes or coupons, loyalty points, prepaid cards, loyalty cards, credits… In fact, all the elements that allow customers to be able to redeem them for products of a specific brand. Let’s take the gift card: it is the very example of branded currency. When a customer buys a gift card, he is ultimately buying a brand’s reserve currency. And usually, he will offer this reserve to a friend or a family member so that they can exchange it for a product or service.
It is therefore in the best interest of retailers to work on their branded currency and to offer fluid and omnichannel exchange places to keep up. Moreover, with the shift to digital and mobile, the movement is accelerating as it has never been easier to deliver efficient exchange services to customers.
Levers to increase the branded currency value
As everywhere, the tools (gift card, loyalty card…) reflect a high or low branded currency. For example, it is certain that customers will more easily buy gift cards from a brand with a high reputation than from one with a low one. The card will have more value in their eyes and can easily be given to a loved one as a gift.
It’s a virtuous circle: the more a brand works on its image and awareness, the more its brand currency and its tools will be used.
A brand with a strong branded currency will draw more attention, will be recognized by a large number of people and will have created enough value to redistribute it to its community (via loyalty programs, etc.).
A brand with an average branded currency will, on the other hand, be lost among all the others. For the moment, it is not differentiable or only slightly. It is necessary to find a way to stand out from the others and make the possession of a loyalty card interesting, for example.
Finally, a brand with a low branded currency will not be able to consider implementing tools such as the gift card. Here, we are talking about a brand with a bad reputation, either too expensive, or with a bad after sales service… The disadvantages are more visible than the benefits for the consumers.
So, what are the drivers to increase its value?
- Quality and price of products and services
- Customer experience
- Customer journey
Putting brands in currencies is a practice that is becoming more and more widespread among retailers, especially in the United States. Today, those who will quickly take the turn towards this new trend, coupled with the integration of new technologies, will gain a significant competitive advantage.
Suggestions for further reading
Stand out thanks to your loyalty program