Should you outsource your gift card solution or develop it in-house?

by | 16 Mar, 2021 | INSIGHTS

After seeing the ever-growing number of demand and benefits for consumers, brands have been massively implementing gift card programs in order to integrate it to their development strategy. The next step is choosing the type of project itself. Is it better to develop an end-to-end solution in-house, or outsource it?

Starting and planning a project are always crucial parts of its success and efficient development. The biggest problem with IT projects such as gift card programs is their high failure rate. The French IT firm Codendi recorded that 7 out of 10 IT projects didn’t see the light of day in time, or at all. So, choosing to develop your program in-house or outsource it with a third-party provider is key to its success. Here are a few elements to look out for before making your decision.

A tailor-made gift card solution

In-house development: the freedom to design is also a risk

The obvious advantage when developing an in-house gift card solution is the freedom to manage the whole project. You decide the exact budget to allocate and when to inject money. You set the deadline, the workforce needed, … and all the other requirements. The best part of creating a tailor-made solution is that it will correspond exactly to the company’s vision and values. It is possible to thoroughly exchange with the assigned team to make sure there is a perfect understanding of the initial project idea.

However, it is still necessary to control the costs and timing to successfully carry it out. The freedom to design the solution can also quickly turn out to be a pitfall. What is the first thing that comes to mind when we mention gift cards? For most people, it is the customer or user interface. And yes, it is an important part of the solution, but in truth it is just the tip of the iceberg, and it is probably what most brands master best.

It is crucial to never forget that gift cards are much more than a simple product. They are also a new means of payment, with all its implications. This means that it has to be integrated to the brand’s e-commerce system and in all the physical stores. It has to be protected from fraud, the after sales service has to be managed – gift card losses, refunds, … – along with the flows, accounting and regulations…

All this involves different services within the company. Every team will have its say, its own expectations regarding the project and will have obligations to meet. This could create conflicts, resulting in additional costs and delays. Too many divergences could damage the whole solution: the customer journey and UX might be underdeveloped if the IT team controls the outcome, whereas there might be too many features to develop if the marketing team becomes too demanding, …

Outsourcing for a tailor-made solution: dedicated resources, but look out for hidden charges

Brands cannot be experts in every field. The main advantage when outsourcing your solution is to be able to call on professionals that have all the skills needed and stay focus on your core business. It leaves more time to reflect upon your goals and global strategy. And anticipate the integration of this new gift card program to the customer acquisition and loyalty scheme. Having it tailor-made also enables you to create a solution that matches the brand’s vision, while perfectly fitting in with the existing customer journey. However, the development time and launching costs will be high and must be considered from the outset.

And in the end, the delivered solution will not be scalable if the brand does not ask for an update. The marketing agency or IT firm will not add new features on their own initiative, the brand has to request them. So, the latter will have to stay alert, monitor the market all year long and closely listen to customers in order to keep up with the competition. Considering the gift card market is constantly evolving, the solution can quickly become obsolete.

However, remember that each change or new feature you will request from the service provider will come with an additional invoice. These costs will directly lead you to go over the initial budget. Finally, the brand will not have complete control over the project anymore. By letting a third-party in charge of the solution, the brand will necessarily depend on them. If, one day, you decide to take over the program entirely, you will have to start from scratch.

Choosing a SaaS gift card solution

Be competitive quickly and have access to the latest technology

Just like with tailor-made solutions by third-party providers, a SaaS solution allows a brand to stay focused on its core business while relying on industry experts. By using a SaaS software, a brand can quickly have access to a reliable gift card solution and compete with rivals who already have this type of service. It only takes a few weeks to implement, better than tailor-made development, which can take anywhere from a few months to a year.

SaaS also means that you don’t have to worry about hosting the solution, since it is on the provider’s servers. They manage many things such as maintenance, updates… In fact, the very nature of such a service is to daily assist brands in operating the system in order to achieve the best performance.

SaaS providers undertake a process of research and development in order to offer a solution that is always successful and adapted to the current market. New features are added as you go along, or are offered on demand. Everything is done to make the brand’s work easier and to bring real added value.

What to look out for…

However, SaaS is an “off-the-shelf solution”, it cannot exactly correspond to the brand’s vision. There is a single interface and customer path, both which are the best versions possible and are the result of carefully performed tests. The customization depends on the SaaS solution you will choose.

The one point you should look out for with this kind of solution is the economic model. Are there start-up costs? Is it a subscription or is it performance-based? Depending on the budget available, a specific economic model will suit you better than another.

Before making your decision, it is essential to ask yourself the right questions depending on your situation. A gift card project is not easily handled because it involves many different services and skills. For a tailor-made in-house development, be mindful of the various conflicts that may arise and burden the budget and planning. If you plan on outsourcing, be aware of the possible additional costs. And if you choose to opt for a SaaS solution, carefully choose a provider that you can trust. In all cases, you should not envision a static project, but a scalable solution that will constantly evolve in step with technological innovations.

Suggestions for further reading

How to choose the right gift card solution? (Comprehensive guide)

Digital gift card white paper

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