Beyond the Payment Play: Thinking of Gift Cards as a Product
February 28, 2017
When put to strategic use, gift cards have the power to acquire new customers and increase foot traffic while increasing revenue.
When I think of the evolution of the gift card I am reminded of my early days in online marketing and the advent of the banner ad—the concept which led to numerous new revenue streams for advertisers and launched several online media companies. The idea of online advertising was so new that while advertisers were envisioning what a banner ad would look like, they were simultaneously trying to figure out how these new ads would lead to conversions and increase engagement.
Today, we’re at a similar inflection point with gift cards. Retailers are creatively utilizing gift cards outside of the straightforward payment play. When put to strategic use, they have the power to acquire new customers and increase foot traffic while increasing revenue. Ben Jackson of Mercator Advisory Group notes that the average amount spent beyond a gift card’s face value has increased steadily over the past three years and industry data shows that customers spend 44 percent more than the face value of the gift card they receive.
At CashStar I work closely with our clients to develop gift card ecommerce strategies, share best practices and ultimately help them drive sales. What I hear most often from clients is that while they recognize the importance of gift card upspend, they are not set up to track and measure it. Oftentimes, gift card professionals lack the needed data resources, they simply don’t have the bandwidth, and they are challenged finding internal support across the organization. To combat this problem, brands can put the following practices to good use:
- Gift cards are merchandise — and should be treated as such. Look at buying behavior and lift associated with cards, segment your audience, merchandise gift cards and explore the difference in B2B purchases vs. B2C purchases, just like any other product.
- Get internal support — create a steering committee with key constituents from product, marketing, ecommerce, in-store and finance to help drive the overall business and ensure all parties are invested in your gift card program.
- Determine how to quantify incrementality — you can’t measure the success of your “out-of-the-box” gift card thinking without deciding how success is defined in your organization. In a recent study, the Retail Gift Card Association identified factors such as lift or overspend, additional visits, basket growth with the use of a gift card, additional buyer visits (to purchase the card) and buyer additions (where the purchaser comes in to buy a gift card and makes an incremental purchase for themselves), as potential ways to measure incrementality.
As an industry, we should look to capitalize on opportunities to not only grow revenue, but strengthen customer relationships and build brand equity. I am excited for the year ahead in which I expect to see more brands explore the many ways in which gift card programs can be leveraged to achieve company wide goals.