he consumer gift-card market is projected to be $95 billion strong in 2007, according to The Pelorus Group, an independent market research and consultancy company. A number that large cannot be ignored.

Industry research also indicates consumers prefer gift cards they can place in their wallets rather than paper gift certificates that can be torn or accidentally misplaced. And when shoppers receive a merchandise credit, they prefer stored-value cards rather than slips of paper that may be mistaken for receipts and thrown away.

ISOs and merchant level salespeople (MLSs) know the stored-value card market can be lucrative. Most in our industry would argue that to remain competitive, MLSs must offer stored value, loyalty and gift card solutions to merchants.

However, it is crucial that ISOs and MLSs find solutions that meet their merchants' needs while minimizing the work required of sales agents. No one wants to offer solutions that are difficult to manage or end up costing more in time and effort than they are worth. So, ISOs should be discriminating when choosing which loyalty and stored-value card programs to present to their merchants.

Data Shapers Loyalty Management Inc. (DSLM) is a provider worth checking out. Its parent company, Data Shapers Inc. (DS), is a provider of e-commerce solutions to North American businesses of all types and sizes. DSLM has a long-term processing and service contract with DS.

The majority of DS' more than 50 employees work in its Calgary, Alberta, Canada, office, which serves as headquarters for DS and DSLM. The companies also share a sales office in Toronto, Ontario. While DS serves merchants in Canada and internationally, approximately 80% of its revenue comes from U.S. corporations.

Identifying and solving a problem

DS was co-founded in 1995 by Kevin Turko, the company's President. Previously, he worked for Royal Bank of Canada for 24 years. Turko's banking experience gave him a solid background in financial services and extensive experience in cash management, electronic banking and the credit card industry. Many of his clients were seeking banks that could tweak processes and services to better fulfill their needs.

"Since banks are big and often monolithic by nature, they had difficulty with such requests," Turko said. "So, we started a company to deal with bridging the data-handling environment between banks and their major corporate clients."

Loyalty south of the border

Established in 2003, DSLM develops and markets Incentus, a loyalty and gift card service. "Having success with Incentus in Canada, we are now actively promoting our Incentus services in the United States," Turko said. "As the new kid on the block, we are looking forward to bringing our unique and powerful service to MSPs, ISOs and MLSs south of the border."

The Incentus product line is designed to help merchants attract and retain customers while also increasing sales. It is a flexible solution merchants can customize to meet their needs as well as their customers' needs. The Incentus line includes gift card, loyalty, stored-value and activity programs.

Formidable flexibility

As anyone who serves the retail market knows, it is replete with companies providing gift card and loyalty programs. A main advantage of Incentus is that it can be private labeled for an ISO or other partner, allowing clients to offer their own products.

"Incentus can also be easily customized, so if there is a feature that a merchant, ISO or partner is interested in having, we're able to meet their requirements," Turko said.

Also, Incentus is flexible in its support of loyalty programs. In addition to points plans, Incentus offers punch, rebate, discount and activity plans.

All cards can be branded with the merchant's name, logo and images. Merchants can choose between mag-stripe and smart cards. In addition, both merchants and cardholders can manage their accounts online.

Loyalty and gift card functions can be combined, which is an attractive feature for merchants who realize some customers don't want yet another "piece of plastic" in their wallets.

Three hot sales channels

DSLM is currently marketing Incentus gift card and loyalty services to numerous MSPs and ISOs in both the United States and Canada. Nello Mariani, Vice President, Business Development said, "ISOs and MSPs can customize and private label their own Incentus program and offer it to merchants as a distinctive value-added service, thereby increasing merchant retention levels."

DSLM offers a variety of Incentus programs for partners to sell. Each is designed to meet the various needs of MSPs, ISOs and MLSs. Its programs include those for private-label partners, value-added resellers (VARs) and sales agents.

The uniquely private route

Agents and companies joining the private-label partner program can sell the Incentus line under their unique name and brand. All products, services and collateral materials are private labeled, and DSLM is invisible to the end user.

With this program, DSLM provides behind-the-scenes loyalty processing, while partners provide service support. The private-label partner is DSLM's client; merchants are maintained as the partner's customers.

Mariani said each private-label partnership is unique. When DSLM and a partner work together on such a relationship, they aim to create a feature-rich solution.

"We sit down with the private-label partner, and they decide what it is they want the package to be and how they want to sell it," he said. "From that information-gathering session we develop a solution unique to them. It is not just something that has their name on it."

This freedom and flexibility allows ISOs and MLSs to choose the types of control and investment they wish to provide. "ISOs and MSPs can take our platform and technology and build a product they call their own," Turko said.

ISOs are free to choose how they wish their programs to work. "Potential changes come from the ISOs," Mariani said. "It's their business. We provide the backbone and infrastructure for them to run their business as they want."

"We offer a feature set unique to what we believe is going to make them successful in the marketplace," Turko said. "The flexibility and customization allows them to determine the pricing structure and to build a service package from the ground up. They use our technology to put a product they want on the street."

Many ISOs and MLSs have one-on-one relationships with merchants, and it is this relationship that differentiates them from their competition. Therefore, DSLM helps preserve that relationship by keeping the communication directly between the partner and the merchant.

"Typically the ISO/MSP provides first-level merchant support for the private-labeled Incentus product," Turko said. "Data Shapers [DSLM] provides second-level application and third-level technical support."

Raising the VAR bar

Agents who don't wish to support a private-label brand may be better served with DSLM's VAR partnering program. VARs resell the entire suite of Incentus services alongside their own service offerings.

These partners normally take on some level of responsibility pertaining to client ownership, implementation support, help-desk services or client billing. With this program, products are branded as Incentus, and agents present them to merchants. DSLM provides back-end processing and contracted service support.

The road to independence

A third option for ISOs and MLSs is the sales agent program. With this arrangement, MLSs are authorized DSLM agents, selling Incentus solutions.

Agents are independent and receive ongoing residual income on a per-transaction basis. DSLM is responsible for all aspects of the client relationship, and all products and services are branded under the Incentus name.

"In the sales agent environment, they turn everything over to us," Mariani said. "The sales agent looks after the sale, and Data Shapers' [DSLM's] sales team supports the agent with whatever they need to conclude the sale."

DSLM has other partner programs if none of its primary programs meet an ISO's or MLS's needs. "We invite anyone interested in our partnering options to contact us," Turko said.

Retention, customization and control

ISOs and MLSs working with DSLM enjoy many benefits. The most important ones include increased merchant retention, freedom to customize programs and the ability for ISOs and MLSs to manage their own accounts.

In working with clients and ISOs, Mariani has observed that merchant retention is "the number one headache they have. The guy down the street comes in and undercuts the ISO on rate, and you've got attrition."

"We build private-label or white-label programs for MSPs/ISOs to sell to their merchants, thereby allowing them to build a bigger and distinctive fence around their merchants, helping them reduce attrition levels considerably," Turko said.

According to Turko, customization is another key benefit DSLM provides. "We are a boutique player rather than off the shelf," he said, adding that merchants have unique requirements: They must come up with innovative ways to bring customers to their stores more often and spend more money per visit.

"Because we have the background, it is easy for us to take what we believe is an off-the-shelf product and tweak it to provide a unique, custom solution for our clients," Turko said. "We can deliver unique requirements right down to a merchant level to set ISOs and merchants apart from the rest of their competition."

Success breeding success

Mariani said DSLM has had much success attracting ISOs to its team. "ISOs are very impressed and eager to do business with us," he said. "I think what they find refreshing is our willingness to be flexible."

DSLM will work with ISOs and MLSs who want to open up markets to Incentus solutions. "We are relying on our partners to go after the hot market they want to pursue, and we will work with them to make it successful," he said.