Introduced in the mid-1990s, gift cards, now commonplace, deliver convenience and a range of other benefits not only for givers and recipients but also for the businesses that offer them. While gift cards have proven their value in driving revenue and loyalty, the addition of a rewards program tied to gift cards further incentivizes and solidly cements loyalty, long-term.
Here’s our list of top 13 benefits customers - and businesses - gain from a gift/loyalty and rewards program.
# 1. Revenue driver. Businesses that offer gift cards sell more goods and services and increase the spend amount. Studies show that gift cardholders spend up to 40% more than the amount on their gift card.  Also, nearly 90% of gift cards are redeemed within the first 60 days of purchase.

#2. Loyalty builder. Until the card is depleted, you can count on those dollars being spent in only one place: your business. But the gift can keep on giving when you add the option of stored value (which lets the cardholder, or in some cases the giver, replenish the card). Underscore the loyalty opportunity with a rewards program, and you can convert one-time customers into long-term repeat customers.
#3. Lower processing costs. Gift cards have lower per transaction fees than debit or credit cards.
#4. Great option for last-minute or indecisive gift givers. Need we say more?

#5. Brand awareness builder. Each physical card is a small billboard for your business. Use them to promote a grand opening, for example. Gift cards also help with word-of-mouth marketing as people who like your business help advertise it by giving a card to a friend or relative.

#6. Competitive advantage. For Quick Service Restaurants (QSR) and large retailers, gift cards are a necessity to stay competitive. In smaller and mid-sized markets, they can be a major differentiator.  More than half (55%) of gift cardholders return for an additional shopping trip to spend the balance, which is, of course, another opportunity for them to experience your brand and spend beyond the card balance!
#7. Beyond gifting. Some merchants use cards as a token of appreciation or as a way to make amends and apologize when something doesn’t go quite right.
#8. Budgeting tool. Some consumers use gift cards as a budgeting tool or payment card. For example, they may use a coffee shop gift card to budget a certain amount toward coffee each month, and replenish the card according to their coffee budget spending limit. Or they may give a gift card to their college student to buy coffee or other necessities such as groceries or gasoline.
#9. Word-of-mouth marketing. When you offer rewards as a bonus for customers who purchase, use, or replenish a gift card, you have the opportunity to delight customers beyond a simple monetary exchange for goods and services. Customers get warm fuzzies every time they earn rewards, and these loyal program members tend to become advocates for your brand who share their positive sentiment and experiences.

#10. Flexible way for individuals (or companies) to give gifts. Xenial helped a client that specializes in holiday foods develop gift cards that are good for specific items, rather than for a monetary value. This is a great fit for companies who want to give employees, say, an 8-pound ham or 5-pound cheese pack as a holiday gift. Lacking a dollar value, the cards do not have to be taxed the way gift cards assigned a dollar value do.

#11. Immediate gratification. With eGift cards, consumers don’t even have to wait for postal mail delivery. Send an electronic gift card to the recipient’s email inbox.

#12. Tack on rewards as a driver of sales. Offers such as “Buy a gift card worth $100 or more before Black Friday and we’ll give you an extra $10 card as a stocking stuffer” can generate the cash flow you need when you need it.
#13. Driver of visits and sales. Gift plus rewards has been proven to drive frequency of visits and higher sales. One Xenial client found that their rewards customers visit 71% more often than non-rewards customers, and they spend 63% more per customer, annually.
As we discussed in a previous post, gift cards can have more than a one-time-use benefit.  When combined with stored value/wallet, and rewards, gift/loyalty programs increase customer engagement and retention, long-term.
Gift cards are certainly are in high demand. In fact, 90% of customers received a gift card last year, and 89% of consumers surveyed expect gift cards to be available for purchase. If you haven’t rolled out your loyalty and rewards program, now could certainly be a great time to get started!

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