Do Gift Cards Lead to Better Customer Engagement and Brand Loyalty?

Gift Cards and Customer engagementRetailers are incorporating plastic and digital gift cards into their 2015 holiday strategies to boost customer engagement and, hopefully, brand loyalty.

Loyalty360 caught up with Euphemia Erikson, Director of Client Services, First Data to find out more about this interesting topic.

How can brands incorporate digital and physical gift cards into their holiday business strategies?

Incentivizing the consumer to a brick and mortar location. Plastic and eGift cards can be used as promotions to incent consumers to come into a store during the all-important holiday season, e.g. BOGO (Buy one get one) Come in on Black Friday, receive a $XX gift card with every purchase. These types of incentives were incredibly successful during the holiday period in 2014. Retailers are looking for key ways to drive consumers from their homes and into brick and mortar locations and a gift card incentive can go a long way to drive a consumer into a store.

In First Data’s 2014 US Prepaid Consumer Insights study, not only did 32% of consumers say they made an unplanned purchase at a store that offered an incentive, 40% spent more than they planned to because of it.  Additionally consumers who received a gift card are likely to visit the store after the holiday season.

Incentivizing Virtual Basket Redemption.  As consumers increasingly utilize multiple channels to view and purchase goods and services, online retailers and traditional retailers with omni-channel marketing programs can take advantage of virtual solutions to drive engagement. For example, a retailer may have a consumer that didn’t complete an online purchase, leaving items in their virtual basket. The retailer now has the ability to send an instant gift card to entice them to complete the transaction. A small incentive can offer the retailer the ability to reap the reward of a sale and a gratified consumer engaged with their brand. 

Banner Ads Promoting Gift Cards when Shipping Days End. Once retailers can no longer ship merchandise, they should shift to promoting gift cards with banner ads, emails and on social media sites. Last minute shoppers will take advantage of the opportunity to purchase a gift that reflects their friend/family tastes and desires. App-based gift card programs

E-Gifting Options to Attract Millennial & Mobile Savvy Consumers. Brands big and small are looking for new ways to engage consumers on their mobile devices and we are seeing greater consumer interest in virtual or e-gifting. One of the key attractions to e-gifts is that redemption can be done in multiple ways:  online, via mobile or in-store. By adding a virtual e-gift store on your website or app, younger, mobile savvy consumers are likely to frequent your brand.

Be Part of Gift Card Mobile Wallets. Consumers are increasingly turning to mobile options as well to purchase, receive and manage their cards. First Data’s most recent US Prepaid Consumer Insights tracking study shows that a large segment of the population (over 51%), have purchased or received an e-gift card in the past year and 81% said they intended to purchase the same amount of, or more, gift cards in 2015 than they did the previous year. Gyft, a mobile gift card platform from First Data, enables consumers to not only store their plastic gift cards via a mobile app, but also gives them access to purchase gift cards from over 200 leading national retailers, enabling them to instantly send e-gift cards to others via text or email, or budget spending for themselves by reloading cards from their favorite restaurants or retailers.

Last Minute Holiday Ideas. Last year, a large number of our retailers promoted digital gift cards on social media sites including Instagram, Twitter & Facebook through Dec. 26One called this the “Uh Oh.” Forgot someone? You can send them a digital gift card instantly. We have seen a marked increase of gift card purchasing on December 25 and 26. The beauty of digital gift cards is that they are instant, and personalization enables the consumer to add a video or message to make the e-gift card more meaningful.

B2B. Gift card incentives and rewards have not only become the most popular gift among consumers shopping for themselves, friends and relatives, they have become an increasingly preferred tool of choice for businesses hoping to motivate employees, customers and partners. A strong B2B gift card strategy can be not only an additional channel to drive gift card sales for retailers; it can be a channel to expand their customer base.

Why are these gift cards a good way to achieve greater customer engagement and brand differentiation?

Giving them what they want.  In First Data’s 2014 US Prepaid Consumer Insights study, consumers overwhelmingly expressed their preference—68%—for one type of incentive: a gift card, with preference for rewards of coupons or bonus bucks coming in at 14% and 8% respectively.  When you give consumers a “reward” they desire, it builds brand “stickiness” and loyalty.

Engagement with Mobile Consumers. According to First Data’s 2014 US Prepaid Consumer Insights study, 55% of consumers 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 these consumers by promoting the registration of gift cards in mobile apps.  In the mobile app format, gift cards are no longer anonymous, but rather are rich, powerful marketing tools with the ability to capture customer identities and preferences, purchase behavior and information, and even offer the ability to manage a loyalty program using information collected via the mobile app-based gift card platform.

What does this strategy do for brands from a customer loyalty standpoint?

More Frequent Visits. On average, consumers with gift cards go back to the business 3+ times to spend the balance of the card. Each additional time a customer enters a store, it is an additional opportunity for the retailer to pitch them complimentary products, sale items only available in-store, and more. Couple those with additional opportunities to give them an exceptional customer service experience, and suddenly the retailer has another source of new, loyal customers that will love visiting their business. As First Data’s most recent US Prepaid Consumer Insights results highlight, a consumer with a gift card in hand spends, on average, $23.41 over and above the original value of the gift card they receive—give a consumer the incentive of a gift card and they will reward you in spades.  And, we know that consumers value gift cards over any other reward.

New consumers. Given the fact that 80% of consumers have given or received a gift card in the last year, logic states that half of those are receivers, and that a certain portion of those are persons who’ve never visited the retailer’s store before. The “giver” either already frequents and loves the store or believes the recipient will.  While many gift card givers might not know exactly what the receiver wants, they know the store is a good place for that person to choose a gift. Consider gift cards as a source of recommendations retailers can use, already paid for, and the small investment a retailer makes in maintaining a gift card program starts paying off big.

Ease of Use for Consumers and Retailers. Today, consumers want ease of use and instant rewards, and if brands are to stay relevant, they need to provide mobile savvy consumers of every demographic ilk ways to engage and earn rewards where they are—on their mobile device. Virtual incentives offer brands a level of efficiency and customer service not possible with other types of incentives or rewards. Today’s technology gives brands the ability to “touch” customers multiple times in an economically feasible way while providing an immediate value-add at the same time giving brands the ability to build a personal relationship with them that could last a lifetime.   

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