To focus on retaining old customers or spend resources on customer acquisition? This is a question that modern companies have a hard time answering today. While the statistics suggest that retaining customers is five times more profitable than acquiring new ones, companies still need to work on both aspects to survive financially. Gift card programs have emerged as viable alternatives that help companies strike that balance between retention and acquisition. Currently, the global gift card market is worth $845 billion. This figure shows the commercial value of gift cards today.
WHAT IS THE DEFINITION OF A GIFT CARD AGAIN?
A gift card is a prepaid debit card that can be exchanged for items of a corresponding value. It is also known as a gift card. These cards are preloaded with a set amount of money and can be used as an alternative to cash at locations that accept them. A gift card can exist in physical or digital form, also known as an e-gift card. Although retailers often use them, gift card programs are now part of the marketing strategies of restaurants, airlines, streaming platforms and many other business models.
There can be no doubt about the popularity of gift cards worldwide. Currently, the compound annual growth rate (CAGR) of the global gift card market is growing at 19,05%. In addition, according to Fiserv's 2022 survey, 80% of consumers plan to buy more gift cards this year. Therefore, companies must respond to the trend appropriately by developing viable gift card programs.
WHY ARE GIFT CARD PROGRAMS SO POPULAR?
It is clear from the statistics above that gift cards have now become a huge part of ecommerce, and there are many reasons for this. Primarily, gift cards solve a unique problem for customers. Most people have a hard time choosing the perfect gift to give to their loved ones on special occasions. Even after choosing the gift items, one still has to decide on specifications such as size and color. However, gift cards offer a convenient solution to that problem. People can buy these cards and hand them out for the recipients to redeem for their chosen items. It also solves the problem of gifting friends or relatives who live in cities or continents.
Similarly, businesses benefit greatly from gift card issuance. Approximately 10% of the gift cards are never used, while 20% of the credits are never redeemed. In addition, a recent survey shows that almost 47% of people have one or more unused gift cards. Hence, many companies make a profit by adopting this strategy. Even when used, gift cards are still a major driver of increased revenue. This is because 60-70% of the people spend more than the value of the card when buying. They're also great for brand awareness and customer acquisition, as many cards end up with people new to a business. Likewise, they help prevent customer churn. Gift card programs are therefore a win-win situation for all parties.
HOW TO USE GIFT CARD PROGRAMS TO INCREASE SALES
Running gift card programs requires creativity and innovation. A well-executed program can help small businesses grow and help large companies maintain their market dominance. Gift cards are flexible enough to be used in a variety of ways, but here are five effective strategies to try:
MAKE GIFT VOUCHERS VISIBLE AND ATTRACTIVE
Gift card programs can only be successful if there is sufficient awareness of their existence. Companies should make an effort to increase awareness of their gift cards. This means strategic advertising for them on every possible platform. Since physical gift cards are more popular, make sure they are easy to find at your physical locations. Similarly, leverage your online marketing channels — websites, social media pages, gift card marketplaces — to showcase your physical and digital cards. Also, the design of the gift card is an aspect that most brands overlook. Differentiate your business by creating visually appealing designs that grab customers' attention.
FOCUS ON THE HOLIDAYS
People are often most generous during Christmas, Easter and other holidays. According to Blackhawk Network's research spanning ten countries, 45% went from holiday spending in 2021 to gift cards. That's why the holiday season presents a remarkable opportunity for companies to accelerate their gift card programs. Design unique gift cards for the respective holidays and offer time-bound offers to get things flying off the shelf.
USE AS STIMULATION
Your company can use gift cards as a strategic solution to various problems, for example return product and refunds. Instead of offering cashback when customers request a refund, gift cards of the same value can be given instead. As a result, returns and refunds are processed faster. It also ensures that those customers have to return to your business to use the money. This way you prevent customer turnover. Similarly, you can incentivize and improve employee performance through gift card programs. Reward outstanding employees with gift cards to boost competition and productivity in the workplace.
OFFERS ON GIFT VOUCHERS
Another great way to create successful gift card programs is to offer attractive deals. For example, offer free gift cards when customers buy cards of a certain value. Discounts on gift card purchases up to a certain value are also a good idea. While it may seem like the company is losing money, such deals ultimately yield profits. This is because most people will spend more than the value of the gift cards when they move to redeem them.
INTEGRATE IN LOYALTY PROGRAMS
Companies that loyalty programs can include gift cards in their reward system. These gift vouchers can supplement or replace discounts and loyalty points. In addition, your company can send participants free gift cards on their birthdays or anniversaries of their first purchase. Integrating loyalty and gift card programs in this way is a surefire way to improve customer retention.
Finally, gift card programs offer significant potential for increased sales and business growth. The results the program generates depend on the strategies driving the campaign. Therefore, use the five excellent methods suggested above to generate excellent results for your business today.