STAFF REPORT TO THE CITY COUNCIL
DATE:
Regular Meeting of May 24, 2022
TO:
Members of the City Council
VIA:
Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Program Design Considerations for Yiftee Digital Gift Card Pilot Program
Recommendation
Approve the Yiftee Pilot Digital Gift Card program components and implementation measures.
Fiscal Impact
The Gift Card Program will be funded through the ARPA funds Background
On April 26, 2022, the City Council authorized the City Manager to execute an agreement with Yiftee for a Shop Local/Gift Card program utilizing the approved allocation of $65,000 of ARPA monies for funding. As indicated at the 4/26/22 meeting, Yiftee has no set-up or monthly costs, and the approved budget of $65,000 of ARPA monies will pay for:
The $1+5% eDelivery fee (purchaser fee) plus a $1 bonus gift fee per card.
A bonus gift card to incentivize the use of the program and provide a benefit to all community members.
Branding costs associated with the development of the “shop local Hercules” campaign.
Marketing costs for advertisement and promotion of the program and related point-of-sale signage and posters for participating businesses.
Recommended Program Design
Shop Local Program Bonus Gift Incentive
Many communities are integrating a bonus gift incentive to the community to encourage the success of their programs, amplify the infusion of dollars into the local economy and provide incentives to shop local. Typically, community digital gift card programs have a resident buy a gift card (for example) valued at $50, with the initial investment from the resident being $25. Then they receive a ‘purchase bonus’ amount of another $25 paid by the city through ARPA funding. In other words, it is ‘buy one and get one free’ for residents. Hercules has the discretion to set the level of incentive appropriate to our community, in addition to limits on purchases per customer. Staff is proposing the following incentive system to pilot with the Program, which will be available to all purchasers of community gift cards:
Buy a gift card valued at greater than $5 and receive a bonus gift card equal to the value purchased, with a maximum purchase limit of $250 per card with the promotion.
A limit of 5 cards per customer.
The Gift Card (original purchase amount) does not expire. Still, the staff recommends that the bonus gift card expire six months (120 days) after purchase (any expired unspent bonus gift funds would be returned to the City for redistribution after a restocking fee).
The City will pay all purchasing and delivery fees during the Pilot Program while funds remain (first come, first serve).
Eligible Businesses
Staff is recommending the following parameters for business participation in the Pilot Program:
Is a for-profit business in one of the following categories:
Retail
Restaurant/Cafe
Personal Services limited to the following only:
hair stylists
barbers
estheticians
massage therapists
gyms
nail salons
dry cleaners
tanning salons
pet groomers
fitness/specialty studios including martial arts, yoga, dance, and music Operates from a physical storefront (home-based businesses are not eligible) Maintains a current City business license
Has no open code enforcement actions
Has 20 or fewer full-time equivalent employees as of December 1, 2021 Is either independently owned/operated or a locally-owned chain (i.e., local outlets of chains or franchises headquartered outside of Hercules are not eligible) Marketing
Marketing is an essential component of the Pilot Program. The City needs to market the availability of the gift cards to the public. The marketing strategy starts with the branding of the program. HdL Econ Solutions will lead the branding and marketing effort and work with a local business (as recommended by the Chamber representative at the Economic Development Committee meeting on April 20, 2022). The purpose will be to develop an identity for the program, including graphics and tag lines, and assist with a marketing and distribution strategy. At a minimum, the program would be marketed on social media, flyers, posters, and window clings displayed in the storefronts of participating merchants, at community events, and via the local press/media. The web portal, provided by the Yiftee platform and customized with Hercules’ branding, will be used as the landing page to detail the program, showcase participating merchants, highlight the incentive/bonus gifts, and allow customers to make gift cards purchases. The web portal would be linked from the City’s website. At no cost, Yiftee provides the City with template marketing documents, press releases, flyers, and social media posts that can be customized and distributed.
Expiration of Program
Staff recommends that the Council consider receiving an update on the success and challenges of the Pilot Program after three to four months of the Program's official launch to fine-tune the Program if required. The Council may consider an additional allocation of APRA funding based on the Program's success. Metrics to measure the success of the Program could include:
The rate of sales of gift cards verses the rate of expenditure of cards (are the cards being used?) The total amount of gift cards sold (is marketing the program effective?) The breakdown in gift card value/denominations (what values are most popular? Perhaps bonus gift money could be adjusted to encourage sales) Where the cards are being spent (are they all in certain business categories, or distributed throughout the community?) Total cash infusion into the local economy
Although the purchase amount of the gift cards does not expire, staff also recommends that to expeditiously circulate the funds into the local economy, the bonus gift cards expire after six months (120 days) of the initial purchase. Expired bonus gift card funds then can be recirculated to the community.
Attachments
Yiftee’s Gift Card Program Summary Presentation
Hercules Community Gift Card Program
Resolution