Gift Card Category is a Winner
From Traditional to e-Gifting to Mobile Options
Innovation has upped the promise of e-gifting and mobile app gift card programs. For the retailer, gift cards serve to drive sales and highlight the brand. Merchants are capitalizing on the gift card to promote their products and services and drive traffic to a store and website.
The consumer is responding favorably to new forms of gift cards. First Data, in a recent white paper, refers to the recent years of gift card sales as “the gift card renaissance.” In “Holiday 2014 Gift Card Trends: Lessons Learned and How to Drive Sales in 2015 and Beyond,” A First Data White Paper, the experts state, “Gone are the days when your gift card program was relegated to a spot behind the counter… gift cards are revolutionizing the way today’s most innovative retailers are achieving demonstrable results.”
More than 70 percent of shoppers will be giving gift cards this spring and summer during gift-giving holidays, according to the Retail Gift Card Association (RGCA), which confirms that the gifts remain popular with recipients as well, with 95 percent of consumers hoping to receive gift cards during this time.
The most requested gift for the last eight years, for special occasions and holidays, has been the gift card, according to Jenny Parris, vice president of global marketing and product, Stored Value Solutions (SVS), a company that works with top retail brands to optimize stored value gift card programs, both physical and digital.
“Performance is doing really well, up four percent over 2014 for all our merchants,” said Parris. “Gift cards are gaining strength and popularity.”
One of the key trends is the continued desire to personalize gift cards, which have gone from being a distressed purchase (last minute) to a thoughtful purchase, Parris said. People also tend to add a gift card to a scarf, for example, from a favorite retailer.
There is also the desire to digitize the gift card. The giver wants the recipient to have the option to digitize the physical gift card, by storing it in a mobile wallet. “Recipients can choose to put the physical gift card into a mobile wallet,” noted Parris.
For example, you can put the gift card into Passbook on your iPhone 6 and use it with Apple Pay. The physical card and the gift card on a mobile wallet is more and more important to the retailer, from a brand and marketing perspective, according to Parris.
The Starbucks gift card acts as a gentle reminder when you are driving down the road and are near a Starbucks. It will pop up from your mobile wallet.
Gift Cards as a Promotional Tool
Marketers originally suggested the use of gift cards as a billboard for branding. Retailers continue to capitalize on the gift card in new ways to keep that billboard alive, according to Parris.
Gift cards perform brilliantly as a marketing tactic to support sales and new product launches. For example, AT&T is fond of sending out reward notices to their customers with vouchers entitling you to a $400 reward card when you bundle qualifying AT&T U-verse TV, high speed internet, digital home phone and wireless service.
Starbucks gift cards are legendary for expanding their brand. The company is a master at getting customers to try something new. In a TV spot, Starbucks introduced Blonde Roast and supported the campaign in store by using gift cards to drive a trial run of their Blonde Roast coffee and Via Ready brew. The gift card promotion was to receive a $5 gift card with the purchase of one pound of Starbucks Blonde Roast coffee.
According to a post by Geoff Hardman on Sparkbase, by using a gift card reward instead of a straight discount on a product, Starbucks is not only encouraging another visit, but also spreading the discount over two sales, instead of one.
To keep the traffic and sales going in stores following the holiday season, some smart retailers distribute gift cards like coupons during the holiday season, which are valid for a specific time frame in January. H&M, a trendy apparel chain, uses this tactic rather than a regular coupon. Customers view gift card cash as free money and are more likely to use it than to redeem a coupon.
Another marketing strategy is to increase the number of gift cards with incremental visits to a store. After 12 visits into a store, you get a gift card.
Flash sales, also known as daily deals, can take place using gift cards. For example, a week before Mother’s day, you can purchase a gift card for Mom during a six-hour window. At holiday season, Tanger Outlets ran a Merry Flash Sale during two days when you could purchase a $50 Tanger Outlets Gift Card for $25.Bottom of Form
Unique Gift Cards for Specific Purposes
Birthdays are the #1 occasion for giving a gift card, but givers want the card to represent the occasion. The Happy Birthday Gift Card mobile app is a simple way to send money instantly and securely just by pressing a few buttons on your mobile phone.
With the Happy Birthday Gift Card Mobile App, all you need is a mobile phone to send the gift of cash, anywhere, anytime, said CEO Brett Hudson.
“We have a marketing initiative specifically using social media. We market to the birthday honorees’ friends, family and co-workers,” said Hudson.
An example would be: Forgot Arlene’s birthday, send the perfect gift, the gift of cash. This would appear on Facebook, Instagram, Google+, Twitter, Pinterest, and Periscope.
Barnes & Noble has a special card just for Mother’s Day. Parris said that a lot of research has been done for design and messaging of gift cards for specific occasions. “Strong retailers concentrate on this trend,” said Parris. “During the last two years, this has been a key way to increase gift card sales.”
Some of the most important occasions are Mother’s Day, Birthday, Graduation, Thank You, Congratulations, and Father’s Day.
Bigger and bigger spaces are allotted to gift cards on the retail floor. Retailers have found that gift cards are one of the most profitable products they sell. “They have become more prominent as a store presence,” said Parris.
Consumers Drawn to Appealing Design
In a Gift Card Attribute Study completed by First Data in early 2015, consumers noted that a card that is visually appealing is an important feature in selecting a card. They stated a card with attributes had a higher perceived value and was therefore more appealing as a gift and increased the likelihood of purchase. A number of merchants noted that multiple card designs and attributes increased their gift card sales. As significant competition exists in the gift card space for consumer dollars, especially when your cards are located in gift card malls with multiple competing brands, branded cards with special features are one way to make your cards stand out.
“Large-scale retail trends, like movement towards omnichannel and increasing awareness of digital offerings, continue to be reflected in consumers’ use of gift cards,” said Timm Walsh, RGCA chairman of the board. “And our biannual research has confirmed again that shoppers still consider gift cards to be safe, preferred gift choices. This spring and summer season should bring increased sales of this favored gift product.”
Those who follow the industry say to expect more digital use of the gift card. Also on the rise is self-use of the gift card, using it as a budgeting tool, like a prepaid debit card. Rewards and other benefits go along with that.