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Dec 02, 2015

Gifting Trends at Holiday Time

Digital Gift Cards Fastest Growing Segment

Arlene Hauben

For the ninth straight year, consumers place gift cards at the top of their list of the most requested items during the holiday season, according to National Retail Federation’s (NRF) annual Holiday Spending Survey. The survey predicts that digital buying and browsing will take up more than half of consumers’ time spent shopping – underscoring the importance for brands to get the digital gifting experience right in order to have a successful holiday season.

“There is no question that gift card usage will be incredibly high this holiday season,” said CashStar CEO Ben Kaplan, who talked about why gift cards continue to be popular and the importance for retailers to have digital gift cards in their arsenal. “The overall gift card market is the largest it has been, and digital gift cards represent the fastest growing segment. CashStar is forecasting record-breaking sales for our clients this year.”

Why Retailers Need to Integrate Digital Gifting

Seven out of 10 consumers plan to buy gift cards for the holidays and the average shopper will spend about $170 on gift cards, reported gobankingrates.com. Meanwhile, with consumers attached to their mobile phones, the demand for digital and mobile gift cards increases. Progress being made in mobile payments services, such as Apple Pay, Samsung Pay, and Android Pay, adds fuel to the fire.

According to First Data Prepaid Solutions, consumers want gift cards to be available via digital and mobile channels, making their acquisition, distribution, and redemption as quick and convenient as paying with their tried-and-true debit and credit cards. The benefits are simple: digital gift cards are easier to buy, easier to give, easier to keep track of, and are an easier form in which to earn loyalty rewards.

For retailers and restaurants, the primary benefits are the additional new channels through which they can sell gift cards, reaching a younger demographic than they may have with traditional plastic cards.

Two-thirds of gift cards are available as e-cards, or electronic gift cards, which can be bought online and delivered by email, up from 59 percent last year, according to Bankrate.com.

“As digital gifting continues to grow in popularity, we are seeing more retailers customize and personalize the experience for consumers,” said Kaplan. “For instance, we recently helped Nordstrom launch an enhanced e-gifting experience in which consumers can choose from a range of faceplates and personalization options. The eGift card is delivered in a virtual Nordstrom silver envelope, an extension of Nordstrom’s signature silver box experience. All of which is reflective of consumer desire for rich, compelling digital experiences.”

Making the Most of Incentives

Gift cards have become an essential tool for rebate programs, satisfying rewards junkies.  Marketing experts say that the smallest incentive, even $5, can turn a lost sale into a satisfied customer that believes the brand they frequent recognizes their patronage.

When developing rewards and rebate programs, companies know that consumers want ease of use and instant rewards. If the consumer has to fill out paperwork, get out a stamp and envelope in order to redeem a reward—the program won’t be successful. This applies to rebate programs, especially.

Merial, a Sanofi Company, manufacturers of Heartgard, NexGard, and Frontline, works with veterinarians to provide rebates to pet owners that purchase pharmaceutical products. The vet’s office will do the paperwork for the dog and cat owner and send it in. Merial sends a Visa prepaid card directly to the consumer, boosting good will and ensuring future purchase.

As gift cards become a key component in driving loyalty and building brand awareness, retailers need to ensure they communicate the value of their gift card programs using in-store signage in as many places as possible. This is critical for program participation as new mobile options like apps and mobile-ready websites are added.

Deliver Cards in an App Format

One key to any successful virtual program is participation in a mobile app or wallet. According to the First Data Consumer Insights Study, 55 percent of shoppers said they are interested in using a mobile app to store their gift card information. This demand for app-based gift card programs is an opportunity for retailers to gain key analytics about consumers by promoting the registration of gift cards in mobile apps.

In the mobile app format, gift cards are no longer anonymous but become rich, powerful marketing tools with the ability to capture customer identities, preferences, purchase behavior and information, and even offer the ability to manage a loyalty program via the mobile app-based gift card platform.

CashStar recently announced product enhancements to CashStar commerce, including the In-App plastic gift card purchase. CashStar’s mobile SDK has expanded to include the plastic gift card purchase experience. Merchants can now easily extend their mobile apps to allow consumers to purchase both digital and plastic gift cards through the CashStar platform.

Retailers can even distribute inactive gift cards for customers to activate any time a gifting occasion arises. Cards are activated through a simplified purchasing process protected and indemnified by CashStar’s revenue-optimized risk management capabilities.

Gift Cards that Reload

One blurry area for consumers is the difference between store branded gift cards and prepaid cards. Reloadable gift cards, such as those issued by Walmart, allow customers to register their gift cards and reload them when funds run out or are low. The most common value loaded on any gift card is between $25 and $50.

Tony H. Cui, associate professor of marketing with the University of Minnesota’s Carlson School of Management, told CardHub.com: “One effect of gift giving (and why retailers love it) is the lock-in effect that gift cards bring to firms. Once a consumer has a card for a retailer, it is hard for another retailer to steal the consumer for her next trip. Making a gift card registrable and reloadable by consumers is not surprising as retailers would like to take advantage of such a lock-in effect.”

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