How to use Gift Cards Beyond the Holiday Season?
Christmas 2023 is approaching, and questions about consumer buying intentions are already flooding retailers and e-commerce businesses. What budget will the French have this year? Which channel will they use for gift shopping? What products will be purchased? Will gift cards still be among the top 3 most commonly given gifts this year?
Last year, due to the situation, e-commerce took the lead with a 30% increase in online purchases worldwide. The budget also saw an increase, with consumers having €568 in their pockets on average (€35 more than in 2021). Gift cards remained one of the most purchased gifts.
Therefore, having a gift card service is essential to stay in the game. However, to go further and potentially excel, one must think about a gift card program and open up to new behaviors and target audiences.
Gift card services are essential for Christmas…
Brands have understood this well, and now the vast majority offer gift card services for consumers.
With an increasingly digital purchasing process, brands are gradually investing in online gift card services. This means that consumers can purchase physical gift cards directly on the brands’ websites. Even better, they can now buy and gift a digital version.
E-gift cards come with a range of advantages: personalization, creation, instant delivery, and more. They allow brands to reach new types of people. For example, indecisive individuals who prefer to buy gift cards to avoid giving the wrong present. Or people who are geographically distant and still want to give something. And last-minute shoppers, particularly fond of digital cards that can be purchased and delivered at the very last moment.
As consumer demands are increasing, brands are working on developing their services with new practical and experiential features: omnichannel capabilities, mobile wallets, personalized photos and videos, and so on.
This is a good thing. However, to stay ahead of the global market, it is relevant to explore new opportunities such as self-use.
… but gift card programs offer more opportunities
Gift cards are a customer acquisition and retention tool, alongside promotional codes, referral programs, and more. They represent a new growth avenue in end-of-year strategies for marketing and e-commerce services.
Self-use or how to use the gift card for oneself
In recent years, a new trend has emerged in the gift card market: self-use. Instead of giving the gift card to someone else, the consumer will use it for themselves. The card then becomes a new means of payment and budget management.
Originating from the United States, this practice has spread to the United Kingdom and is gradually expanding to the rest of Europe. It’s an interesting new approach for brands and retailers that they can incorporate into their programs.
Let’s explore some new actions to take:
Promotion on the gift card
A technique that has already proven successful for some brands, gift card promotions allow you to target early buyers and encourage them to shop at the brand’s stores for Christmas.
This involves offering a discount directly on the gift card for a limited time. For example, a €50 gift card for a brand is valid for €40, and a €100 card is valid for €80 for two weeks. Consumers save €10 on the first card and €20 on the second.
Ideally, this campaign starts around October to mid-November to capture those who shop early.
Another aspect to consider is the expiration date. If the brand sets a one-year validity period, the card can be given as a gift. However, if they set the expiration date before the year-end holidays, say on December 23, then the use will be to visit the store to spend it and buy Christmas gifts.
The benefits of this second option include customer acquisition and increased average spending.
Attracting the unbanked for gift shopping
One of the consumer typologies using gift cards in self-use mode is the unbanked. Due to their situation, these consumers may find it difficult to shop online and access an unlimited catalog.
Two approaches can help reach this type of consumer:
- Implementing the purchase of gift cards in physical stores through cash registers.
- Distributing physical gift cards through third-party retailers, such as tobacco shops and newsstands. The unbanked can then purchase a gift card with cash, which allows them to access the e-commerce site and buy gifts.”
Reactivating Inactive Customers for Christmas Shopping
Regarding customer retention, all brands have a database of inactive customers. A database they try to reduce through reactivation techniques. The holiday season is an opportune time for this type of campaign.
One of the possible techniques to use in this type of campaign is, in fact, the gift card. One or two months before Christmas, a brand can run an email campaign inviting customers to revisit the brand experience and discover new products. As a motivating factor, a brand can offer a small-value gift card (€5 or even €15) based on the average basket size. And perhaps even play with the expiration date to entice them to come before Christmas, maybe even before the last-minute rush.
Encouraging Loyalty Program Customers to Shop for the Holidays
We all know very well that consumers are not loyal to just one brand. Today, each of us is enrolled in at least three loyalty programs. The upper range goes even beyond 10.
This means one thing. Just because a customer subscribes to a program doesn’t mean they will choose that brand for their holiday shopping.
However, some tools, like the gift card, can help consumers make a choice in favor of the brand. How?
Let’s take the example of the gift card. Imagine a loyalty program where each customer can earn points by making purchases or engaging in meaningful actions. They have the opportunity to convert these points into rewards, including the gift card, from a catalog offered by the brand.
For the holiday season, a brand can decide to temporarily lower the number of points required to access a €10 gift card. Instead of needing 5000 points, they would only need 3000 points. Once again, the expiration date will influence behavior.
Or the brand can simply decide to send an email campaign with a free gift card to a reworked list of loyal customers.
Reassuring Online Shopping Skeptics
Even though e-commerce is gaining an increasingly significant share of Christmas shopping, some consumers are still skeptical about making payments online or on a brand’s website.
Of course, most of their purchases will still be made in physical stores, but why not provide them with an initial reassurance element for buying online through gift cards?
Here, the gift card should be seen as a means of payment. A card with a certain amount of money on it, which can be spent later at the brand’s retail locations. For the skeptics, the gift card is considered more secure than their credit card. If a fraudster decides to steal it, they can only use the amount that’s loaded on the card.
So, in this case, the brand has every interest in offering its gift cards for sale in stores as a “secure” means of online payment. The ultimate goal is to introduce customers to the website, exclusive online product ranges, and more.
Distributing Gift Cards Beyond the Brand
A significant portion of the gift card programs of the most advanced brands on this subject is dedicated to distribution. Today, this represents between 20 and 50% of their gift card revenue.
Opening Up Your Gift Card Program to a Larger Network
The general idea is that the brand doesn’t restrict itself to its own sales channels to maximize gift card revenue but seeks to expand into new external sales channels.
These can be different types of actors: marketplaces, loyalty program solutions, cashbacks, CSE solutions, incentive programs for HR, and more.
Certain points are crucial for building a robust network of third-party distributors that align with the brand’s image. It’s essential to be clear about the target audience you want to reach: are you aiming for individuals or employees of companies? You also need to define the types of distributors you don’t want to work with.
In any case, multiplying the distribution channels for gift cards will be highly beneficial for Christmas, as the brand will significantly increase its brand awareness and customer acquisition through its gift card program.
Opening Your Gift Card Program to CSEs and Businesses
One of the significant benefits of opening up your gift card program to distribution is the reach it can offer the brand to businesses and employees.
Christmas is an occasion for all companies to bring their employees together around a tradition and strengthen team spirit. This also involves giving rewards or gifts that highlight the effort and dedication of each individual.
As a result, the management, HR teams, and CSEs (Employee Works Councils) are looking for new incentive rewards and gifts. This demand is increasing, especially during Christmas, and presents a great opportunity for brands that issue gift cards. Gift cards are ideal because they allow employees to choose what they want, giving managers the assurance that they won’t make the wrong choice.
Having a gift card service for Christmas and continuously improving it over time is crucial for the revenue generated by gift cards. However, if brands want to go further for Christmas, they should think of the gift card not just as a product but also as a tool for customer acquisition and loyalty.
