If your business has a gift card program, the odds are good that you’ve heard about the benefits of using gift cards as part of a rewards program. Whether you’re looking to show your employees that you care or trying to encourage loyal customers to keep coming back, gift cards are a versatile tool in any retailer’s arsenal.
Yet some of the savviest shoppers purchase gift cards because of their participation in a different kind of rewards program: the ‘bonus points’ they earn when they use their credit card.
Credit cards that earn customers cash back or rewards on qualifying purchases are a favorite among cost-conscious consumers everywhere. Since most of us are going to spend money on gas, groceries, and restaurants every month anyway, why not earn a little cash back in the process?
As is so often the case, consumers have found a work-around to make these credit card incentives even more rewarding: by buying third-party gift cards at grocery stores, gas stations, and restaurants, thus earning extra cash back on everything from running shoes to iTunes downloads.
Say, for example, that you were planning on ordering a new lawn mower on Amazon. Your credit card gives you bonus points for purchases you make at grocery stores. So why wouldn’t you buy an Amazon gift card at the grocery store (thus earning you additional cash back) and then redeem that card online for the lawn-mowing apparatus of your choice?
Third-party gift card distribution has long been a staple of major retailers’ gift card programs; BlackHawk Network became a giant of the payments industry on the back of its grocery store gift card malls, and it’s increasingly difficult to find a store that doesn’t offer other merchants’ gift cards.
Still, this new trend in third-party gift card buying with the intention of cashing in on credit card incentives should have businesses of all sizes thinking about their third-party gift card distribution:
First, consumers whose credit cards reward them for purchases at grocery stores, gas stations, and restaurants have an incentive to buy your gift cards at those locations, rather than buying them directly from your physical locations or website.
Secondly, if you operate a grocery store, gas station, or restaurant, it’s imperative that you offer and prominently display gift cards for other businesses. You won’t have to worry about redeeming them, but you’ll improve your cash flow anyway.
If you’re interested in improving your business’s third-party gift card distribution, drop us a line - we would be happy to hear from you!
A new report from Allied Market Research projects that the global gift card market will grow at a CAGR (compound annual growth rate) of 24% from 2017 to 2023.
The report’s findings suggest that the gift card industry is still in its growth stage, and that the retailers who stand to gain the most from their gift card program over the next five years will be those who best adapt to changes in technology and consumer behavior.
While no-one can say for sure what a thriving gift card program will look like five years from now, one area of focus for retailers looking to stay ahead of the game jumps out of every report and study regarding the future of gift cards: mobile payments technology.
It’s probably not news to you that consumer adoption of smartphone technology has completely changed the way that businesses engage with and advertise to their customers. What is worth noting, however, is that even if it feels like everyone you know has the newest iPhone offering, nearly a quarter of Americans don’t own a smartphone. If that number surprises you, consider this: in 2011, 65% of Americans didn’t have a smartphone.
That means that improvements in mobile integration and technology will have an even more substantial impact on gift card sales as more and more Americans have access to smartphone technology. And make no mistake: changes to the way that Americans use their phones are crucial to the future of the gift card industry.
According to a report from Forrester Research, mobile payments are expected to grow at a CAGR of 20% through 2021. And don’t think your business needs a fancy, branded mobile app to experience a real profit boost from mobile payment offerings: In-person mobile payments, which allow consumers to use a mobile app to pay at a conventional point-of-sale in place of cash or a credit card, are expected to be the fastest-growing variety of mobile payment, with Forrester anticipating that in-person mobile payments will increase “almost sevenfold” by 2021.
And then there’s the millennials. As we’ve written about previously, the millennial generation has its unique set of spending habits and consumer behaviors. While their motivations may seem inscrutable to merchants, their wants and needs don’t have to: millennials make up the largest customer base in the country, dislike credit cards, would prefer to not use cash, and are passionate about technology.
Who’s driving sky-high expectations for mobile payments? Millennials are, and for good reason. Nearly half of millennials have used a mobile wallet, while Apple Pay (the most-utilized mobile wallet platform) has an average usage rate under 6%. As millennial consumers’ impact on the economy (as well as their expendable income) continues to grow, so too will digital wallet spending.
Retailers looking to ready themselves for the mobile payments revolution find themselves in a strange position. On the one hand, the writing appears to be on the wall with regards to the future of of mobile payments. Report after report indicates that demand for mobile payment options is on the rise, and yet, as we’ve written about previously, retailers seem hesitant to invest time and money into technologies whose popularity has been predicted but not sufficiently demonstrated.
With that said, any company that can at least lay the foundation for future mobile payment processing would be well-advised to do so, and soon. Retailers that offer digital wallet compatibility will be on the frontlines for the slew of marketing, targeting, and customer engagement innovations to come.
Having a branded-presence on your customers’ phones sounds like a marketer’s dream, but all signs are pointing to it becoming a reality very soon; if your gift card processor doesn’t offer mobile wallet compatibility, it may be time to comparison shop.
If you have any questions or would like to learn more about nthCard’s suite of eGift and mobile wallet offerings, please let us know!
Food trucks are a billion dollar industry, and America’s love affair with mobile dining looks poised to keep on rolling for the foreseeable future. Food trucks, which generated an estimated $650 million in revenue in 2012, are expected to generate as much as $2.7 billion in revenue in 2017, per an Emergent Research study.
These kitchens on wheels rose to prominence in great part because of what makes them different from conventional restaurants; convenient, local, and experiential in nature, food trucks sound, in retrospect, as if they were designed to cater to emerging consumer trends.
But if food trucks are to grow from a viable market segment into a legitimate counterpart to the restaurant industry, they’ll have to take strides toward solving some of the logistical difficulties that their brick-and-mortar competition dealt with years ago.
One key area where food trucks can grow revenue, increase customer loyalty, and improve branding and cash flow is gift card sales.
Gift cards, much like food trucks, rose to prominence in great part because of their convenience and their ability to meet a need that was previously without a satisfactory solution. Gift cards are a $100 billion industry, but the cost of plastic gift cards and the point-of-sale systems that activate and accept said gift cards has kept many food trucks out of the gift card game.
Fortunately for mobile restaurateurs, gift card processors haven’t taken the rise of the food truck sitting down. Digital gift card programs and web-based apps that facilitate the activation and redemption of gift cards, like our groundbreaking nthPOS system, mean that food truck gift card sales are likely to boom in the years to come.
Food trucks and gift cards feel like a natural fit. Food trucks provide a product that locals adore, keep coming back for, and tell their friends about, but their mobility is a hurdle on the road to winning over “regulars” and becoming a habitual part of customers’ meal routines. If your branded gift cards or loyalty cards live in your customers’ wallets or, perhaps better still, on their phones, your business can stay front-of-mind even when your truck is on the other side of town.
You might not see your favorite food truck’s gift cards at regional grocery stores this holiday season, but with food truck owners and gift card processors alike working to solve the great food truck gift card conundrum, it’s only a matter of time. The fastest-growing segment in the foodservice industry is chipping away at the remaining advantages of brick-and-mortar restaurants, and food truck gift cards may be the next domino to drop.
If you own a food truck and would like to learn more about our innovative suite of gift card processing solutions, please let us know; we would be happy to hear from you!
If businesses weren’t focused on improving their network security prior to last week’s bombshell disclosure from Equifax, they certainly are now. There’s a good chance, though, that many businesses aren’t even aware of a potentially massive vulnerability in their network: the plastic gift cards that they keep on display in their brick-and-mortar stores.
It’s easy to forget that gift cards as we know them are a fairly novel concept. Despite holding dominion over retail kiosks, grocery store check-out lines, and holiday shopping lists for years, gift cards are a newer invention than the world wide web.
It’s not surprising, then, that each passing year sees changes to the ways that gift cards are offered and redeemed. What is rather surprising, however, is that despite having come so far technologically, the infrastructure surrounding gift card sales and redemption, from brick-and-mortar displays to merchant websites, remains so vulnerable to fraud and theft.
It was that surprising realization that first led William Caput, a California-based technical adviser and network security expert, to research gift card hacking. While assessing the vulnerability of a restaurant chain’s website in 2015, Caput discovered that a combination of factors made gift cards an easy target for hackers. It didn’t take long for Caput’s warnings to retailers to be backed by evidence: a recent report from security firm Flashpoint found that gift card fraud is big business on the dark web, with one user racking up $400,000 in sales in under a year.
In recent months, Caput has been interviewed by numerous publications about his research (including in this excellent piece from Wired) and recently presented his findings at the ToorCon hacker conference in San Diego.
We spoke to William about his research and the steps that businesses of all sizes should take to minimize the risk of gift card hacking.
The good news? With just a few adjustments, businesses can make it much more difficult for hackers to steal gift card balances.
The bad news? Many retailers are still susceptible to the methods Caput warned businesses about in 2015.
Many businesses leave unactivated gift cards in areas where customers can pick them up and look at them. In theory, this is a perfectly acceptable and even beneficial practice; since the cards don’t hold any monetary value until they’re activated, it makes sense to let customers acquaint themselves with your business’s branded currency while they shop.
In practice, however, displaying unactivated gift cards could give hackers the only information they need to help themselves to an unlimited supply of your merchandise. Many businesses that offer gift cards also allow customers to check the balance of their gift cards on the company website.
A hacker could pick up a pile of gift cards in-store, record the numbers on the back of the gift cards, and determine which numbers in the sequence are generated randomly and which change predictably from card to card. Caput, for example, found that the restaurant chain he was auditing issued gift cards whose first 8 digits increased by one from card to card and whose last 4 digits appeared to be randomly generated. With only 4 numbers left to chance, Caput found he was able to use a bruteforcing software to determine the card number and load value of any gift card from the chain in around 10 minutes.
When we asked Caput, fresh off of his presentation titled ‘Cash in the aisles: How gift cards are easily exploited’, what steps businesses can take to prevent gift card hacking, his response was pleasantly straightforward: “Don’t leave unactivated gift cards out and implement a CAPTCHA on the page where customers check their gift card balance”.
One of the most alarming pieces of Caput’s saga is also one that presents the easiest fix for retailers; as if it wasn’t bad enough that Caput was able to obtain all the information necessary to steal gift card loads online, with the purchase of a $120 magnetic strip writing tool, Caput was able to load those stolen funds onto a physical card and redeem them at the point of sale.
As a law-abiding security researcher, Caput only checked the balances of these cards in-store, but he was met by no objections from employees. It’s essential that businesses train their employees to recognize the difference between a branded gift card and a homemade one, or else hackers may soon be able to eat for free at the restaurant of their choice.
The weaknesses that Caput’s research identified all have at least two things in common: they can easily be prevented, and they don’t immediately hurt the merchant’s bottom line.
“It’s just laziness,” Caput told us, remarking that the gulf in security between most payment methods and gift cards is dramatic. And that’s referring to the biggest players; Caput says that smaller businesses’ gift card security “is much worse” because smaller brands’ cards often use a completely linear numbering system.
There can be no doubt that the fallout from a stolen gift card pales in comparison to the fallout from the exposure of 143 million Americans’ private data, but the Equifax breach serves as a valuable lesson to the many companies still not heeding Caput’s warnings: when preventable fraud occurs and customers are left hurting, consumers lose confidence in the companies and systems that burned them. If gift card sales are to keep booming for the foreseeable future, companies will have to take the necessary steps to ensure that America’s most requested gift doesn’t also become its most vulnerable product.
If you have concerns about the security of your gift card program, we recommend you contact your gift card processor. If you would like to hear about the ways that nthCard protects our clients, we would be happy to hear from you.
Building and maintaining a following on Facebook has never been more important to the success of your business, and it’s not hard to see why. With over 2-billion monthly users and 5 new profiles being created every second, Facebook has more than separated itself from its competition.
Facebook and Google now account for almost 80% of all referral traffic, and with Google’s algorithm increasingly rewarding a strong social media presence, an expertly cultivated Facebook page is now an essential element of any company’s marketing strategy.
But where’s an already-busy entrepreneur to start? Facebook is rolling out new features and policies all the time, and even with a built-in audience in the billions, getting and keeping the attention of potential customers on Facebook can be a challenge.
Your company’s Facebook posts will be competing for screen time with babies, puppies, and wedding photos, so dry product pitches and hard-sell tactics aren’t likely to move the needle for your social presence.
As a gift card processor, we’re naturally inclined to see gift cards as a good solution to a number of problems. With that said, gift cards and social media are a match made in heaven. The same things that already make gift cards so beneficial to your bottom line make them ideal drivers for social media engagement. Between the lift (spending in excess of the card’s initial load) that you experience at redemption and the breakage you can expect to recognize from every card, gift cards are the rare product that could end up making you money even if you give them away.
Here are 7 ideas for Facebook promotions that will wow your fans and turn curious observers into loyal customers. Some of these promotions involve giveaways while others focus more on branding, but all of these ideas will get your Facebook followers liking, sharing, and engaging with your business.
1. The Gift of Choice
It has never been easier to determine what your customers want. If your business has a Facebook page, all you have to do is ask!
Turning to your fans and customers to help determine interest in products and services offers at least two big benefits to you, the merchant.
For one thing, gauging the market potential for a product without spending a dime in the process is a pretty slick deal. Better still, this approach can do wonders for the way your customers perceive your business. People like to feel heard and catered to, and those are itches Facebook was designed to scratch.
If you have any product or service you’re considering - or that you want your customers to know you’re considering - try using a gift card giveaway as a carrot. By asking a question on social media and then offering up a $10 or $20 gift card to a randomly-chosen commenter, you can make a lucky customer’s day and show all your followers you really care in one fell swoop. You might consider asking the winner to share a photo of their winnings with their friends for even more exposure!
2. Design Contest
As anyone who’s ever received a bouquet of flowers at work or come home to a surprise party can attest, you don’t have to be selfish to appreciate feeling special every once in awhile.
Facebook gives savvy marketers the opportunity to make consumers feel special, which in turn gives their business something in common with the friends and family who send flowers and plan surprise parties.
One way to accomplish this and sell more gift cards in the process is to invite your Facebook fans (or their children) to design a special batch of gift cards for your business. Encourage your followers to submit designs via email, then post your favorite contenders over the course of a week, tag the follower who submitted the design in the post, and have users like, share, and comment to choose a winner.
Your fans will love that you trusted your community to help with your branding, your customers will enjoy seeing local art on a local business’s gift cards, and the winning designer will probably be sending out a lot of gift cards over the holidays.
Plastic gift cards aren’t free (unless your gift card processor offers free gift cards), but with a majority of gift card recipients spending 38% more than the value of the card, it’s possible to reap all the positive exposure of a gift card design contest without breaking the bank. You could also only offer this run of gift cards for loads of $20 and up to further offset the cost of plastic. Alternatively, you could have customers compete to design the decorative holders that your gift cards come in.
3. Turn Followers into Storytellers
Your potential customers are more concerned with what their peers think of you than with what you say about yourself. You can run the most trustworthy, philanthropic, generous company in town, but if enough people talk about having a bad experience with you, the goodwill you built for your brand can start to erode.
As luck would have it, Facebook makes it simple to take advantage of your customers’ instinct to trust their peers. All you have to do is get your customers talking, and there may be no better incentive for this particular play than a gift card.
The beauty of a gift card is in the possibilities it presents. You may have come to see gift cards as pieces of plastic, but to a gift card recipient they feel like free money, an invitation to enjoy something special without considering the financial ramifications.
Every week, offer a free gift card to the Facebook follower with the best story about your brand. You can ask people to share the way they fell in love with your company, the best memory they had at your store, or the reason they think they’re your biggest fan - anything that gets people writing and sharing stories that spell out how much they appreciate your business and how eager they are to enjoy your products again.
Is exposing a few thousand people in your area to stories about how much the community loves your company worth $20 from your marketing budget? It couldn’t hurt to try.
4. Gift Cards that Give Back
A 2015 Cone Communications/Ebiquity Global CSR study found that consumers have a more positive image (93%), are more likely to trust (90%) and are more loyal to (88%) companies that support social and environmental issues. A different study found that 71% of consumers have donated to charity at a cash register.
GAP and Nordstrom have received a good deal of press for their practice of donating a portion of all gift card sales to charity, and the beauty of tying charitable donations to gift card sales is that companies of all sizes can find a way to make this promotion work.
Between breakage, lift, and the goodwill that accompanies charitable giving, it’s entirely possible to donate a portion of every gift card load and still come out ahead. Since 65% of gift card holders will spend 38% more than the value of their card and not all cards will be redeemed in full, there can be ample wiggle room to knock this idea out of the park. Local charities are an especially good candidate for this promotion; your customers will like that their money is helping the community they live in, and the charity in question is more likely to amplify your messaging through their own channels.
5. Video Contest
Marketers may end up remembering 2017 as the year that video really, truly took over. 45% of Americans watch more than an hour of Facebook and Youtube videos weekly, and one-third of all online activity is spent watching videos. But with more video content uploaded every 30 days than major U.S. television networks have aired in the last 30 years, how can you cut through the noise and engage your customers?
One way is by turning your customers into your video marketing team. Similar to the other suggestions on this list, gift cards serve as an ideal incentive to drive engagement due to the fact that they hold real value to your fans and also offer lift and breakage to ease the sting of giving away products and services. Where this promotion really differentiates itself is that you could potentially receive evergreen content that you know speaks to your customer base (because they made it!) without breaking the bank; video content may be king online, but it doesn’t typically come cheap.
Think of the viral videos that you’ve seen in the last year. Were they immaculately produced? Did you get the sense that a boom mic and director’s chair were just off-screen? If you’re thinking of the same videos we are, they’re videos that garnered millions of views and were filmed with smartphones. Whether you ask for a testimonial or a creative advertisement, your fans will go gaga for a chance to win a free gift card and become a piece of your brand’s story in the process.
6. Discounted Gift Cards
If there’s one thing consumers like more than gift cards, it’s discounted gift cards. A Blackhawk Network survey found that 78% of consumers would purchase an egift for self-use if it was offered at a discount, and it stands to reason that discounted gift cards would be at least as appealing to consumers interested in buying physical gift cards for others.
If you want to improve cash flow quickly, discounting gift cards - which typically net merchants more money than the card’s initial value anyway - is a great tactic, and if you want to advertise discounted gift cards, Facebook is an ideal medium. The companies that do the best on social media are those that focus on providing value and utility to their customers, and it just doesn’t get much more valuable than offering your Facebook fans free money.
Better still, individual Facebook users also enjoy providing value to their friends. If your product has a following, you better believe that a post advertising discounted gift cards accompanied by a eye-catching image and snappy copy will be shared, discussed, and sincerely appreciated.
7. Grow Your Email List
To (badly) paraphrase Mark Twain, reports of the death of email marketing are greatly exaggerated. While social media is a remarkably powerful tool to engage with your customers and build your brand, email marketing is still a key driver for sales and lead generation. Your Facebook posts and tweets will reach customers where they spend their free time, but having access to your biggest fans’ inboxes yields its own rewards. For one thing, Facebook feeds tend to be much more cluttered than the average inbox, and unlike posts to your company’s social media pages, emails pop up as phone notifications.
One reason for the recent mistrust of email marketing is that people are more cautious than ever about handing out their contact information. If you want to build an email list, you’ll need to have a compelling offer, and the odds are good that your Facebook fans would willingly trade their email address for a shot at a free gift card.
There you have it: 7 ideas to help your gift card program and Facebook presence thrive and grow.
As the social media landscape continues to evolve to meet the needs of consumers and retailers alike, it will become even more critical that your business engages with your base and converts curious observers into satisfied customers. Gift cards are just one tool in your social media arsenal, and we hope this article helps you to come up with even more ways to take your Facebook game to the next level.
If you have any questions about this list or would like to share a promotion that has worked especially well for you, we would love to hear from you in the comments!
If your business’ gift card program isn’t everything you had hoped it would be, or if you want to learn more about the tools and services that the biggest companies are using to boost their gift card sales, please take a moment to get in touch.
Thank you for reading, and we hope to hear from you.
If a gift card is purchased but never given to anyone, is it still a gift?
That’s not a prepaid industry Zen Koan; it’s the question that numerous articles asked following the release of an eye-opening Mercator Advisory Group study last year.
The study, titled “Self-Use of Gift Cards in the United States”, led some publications to ruminate on the very nature of gifting and what the study’s findings say about consumers as people. PYMNTS.com, for example, posited that “maybe millennials really are a self-centered bunch”.
Yet for retailers, the key takeaway from this study should be very simple: consumer interest in purchasing gift cards for self-use presents an exciting new opportunity for companies that sell gift cards.
Amazon recently demonstrated its mastery of this concept during its annual Prime Day sales event. Massively-discounted gadgets and appliances flew off the shelves as expected during Amazon’s yearly answer to Black Friday, but one of the most sought-after offers from Prime Day 2017 was a humble gift card promotion: while supplies lasted, every $25 in Amazon gift cards purchased came with an additional $5 promotional credit.
That’s how easy it can be to capitalize on consumers’ recognition of gift cards as branded currency. By offering $30 of credit for $25, Amazon offered consumers savings like they might find on a coupon or promotional code. Yet unlike traditional coupons, Amazon’s offer necessitated the loading of funds into an Amazon gift card (a boon to the company) and offered consumers a discount on everything Amazon sells, not just on select items (a boon to the consumer).
You don’t have to be a publicly-traded company to take a page out of Amazon’s playbook. If your company has the proper bookkeeping in place to determine how much customers tend to spend in excess of the value of their gift cards (“lift”) and what portion of the gift cards you sell goes unused (“breakage”), you can come up with your own promotion to scratch shoppers’ self-use gift card itch.
Here are three of the factors that recent studies have pointed to as causes for the growth of self-use gift card spending, as well as some ways that your company might use those instincts to your advantage.
A recent First Data study found that consumers between the ages of 35 and 54 years of age are most likely to purchase gift cards for personal use.
Businesses can market their gift cards to this group by understanding what about this demographic lends itself to self-use gift cards. First Data found that these consumers value striking a balance between their professional and personal lives, are very brand-loyal, and are especially inclined to research and comparison shop before making a purchase.
If your company sells a product that people enjoy and keep coming back for, you’ve already laid the foundation for marketing to the 35-54 demographic. All that’s left is making sure you have a gift card promotion in place that represents a clear bargain, and your loyal fans will do the rest.
As we’ve discussed in previous posts, mobile wallet technology, eGifts, and brand-specific apps are only going to grow in popularity. Brands that are able to sell their gift cards online and accept funds from mobile wallet apps can position themselves to satisfy the needs of younger shoppers.
Studies have found that millennials are purchasing gift cards for themselves both as a means of budgeting and as a way of earning rewards, often from both the retailer they are buying a card from and from the credit card they are using to fund the transaction.
By making your gift cards available digitally and incentivizing the purchase of gift cards with additional savings or rewards, you can sell more gift cards while also putting your brand in the one place that many people can’t seem to take their eyes off of: their phone.
“Treat Yourself” Mentality
Even budget conscious shoppers need to treat themselves to something special from time to time. With more and more businesses offering rewards, incentives, and discounts with the purchase of branded gift cards, it’s no wonder the frugal consumers are turning to gift cards when it’s time to indulge a little.
Capitalizing on this mindset can be as simple as floating a suggestion; you probably won’t have to tell someone in need of a little R&R to treat themselves to something special twice. By advertising special gift card promotions through the channels you currently use and framing your offers as a treat that your target audience deserves, you can give anyone on the fence about your gift cards the nudge they need to make a purchase.
The gift card industry is constantly growing and changing, and the emergence of gift cards as a means of sticking to a budget, accumulating rewards, and stacking discounts demonstrates just how far the industry has come since the age of the gift check.
Yet no matter how they’re marketed or what form they take, gift cards still serve the same essential purchase: making customers happy. As new trends and technologies take hold, merchants will find themselves with even more ways to delight their customers, so long as they are willing to think outside the box.
If you have any question about this article or if you would like to find out what nthCard can do to help your gift card program reach its full potential, please leave us a comment or get in touch!
In its never-ending quest to replace everything we carry in our pockets, the smartphone looks poised to claim yet another victim: our wallets.
Digital wallets, also known as mobile wallets or e-wallets, allow consumers to store funds, credit and debit cards, gift cards, and more on their smartphone or tablet and make payments using their mobile device. Digital wallet compatibility has been a hot-button topic in the payments world for a few years now, but businesses and consumers alike are still getting acquainted with this evolving technology.
Businesses have a lot of questions about digital wallets, but whether or not consumers want to pay using their phones shouldn’t be one of them: a recent study found that mobile payments are the single most sought-after technology in 2017, easily outpacing up-and-coming innovations like virtual reality and voice search.
So why aren’t more merchants accepting digital wallet payments? For one thing, some of the biggest players in the digital wallet game, like Apple’s Apple Pay, require retailers to have Near Field Communication (NFC) technology at their point-of-sale.
Restaurants like fast-casual chain Sweetgreen are seeing 5-15% increases in productivity when cash is eliminated from transactions, and digital wallets’ ability to store branded gift cards makes smartphones yet another channel through which retailers can improve cashflow and build customer loyalty.
The hesitation to invest in a technology that is still developing is understandable, but it seems to have contributed to a chicken-or-the-egg situation: merchants are reluctant to adopt a technology that hasn’t seen widespread consumer adoption, and consumers are likewise hesitant to adopt a payment method that isn’t accepted by their favorite retailers.
If consumer confidence in digital wallet technology is any indicator, though, that hesitant holding pattern is coming to an end soon. More than 32% of U.S. consumers surveyed ranked mobile payments as the way they would like to pay for goods in 2017, and a separate, global study by the Institute of Electrical and Electronics Engineers found that 70% of consumers expect mobile payments to overtake cash and credit card use by 2030.
So with consumer interest on the rise and industry juggernauts adjusting their strategy to incorporate digital wallet compatibility, when is the right time for your business to start accepting mobile payments?
At the National Restaurant Association’s March trade show in Chicago, Jim Steinberg of mobile customer loyalty platform Loyalty Plant didn’t pull any punches: “Get into this sooner rather than later because this is going to be a standard in the industry.”
The eGift revolution has arrived, and retailers of all shapes and sizes should be taking notice.
Consumers are spending more time (and money) online and on their phones than ever before. eGifts - digital gift cards that are transmitted via email or other electronic means - are booming as a result, with eGift sales expected to reach $15 billion this year. With an expected annual growth of over 200%, digital gift cards are the fastest-growing segment in the gift card industry.
Still not convinced that this should be the year your business takes its gift card game online? Here are 6 statistics that make the importance of adopting eGifts sooner rather than later crystal clear.
53% of gift card buyers surveyed purchased an eGift within the last year and 94% bought more or the same amount of eGifts in the last 12 months compared to a year ago
A 2015 Blackhawk Network study revealed that, for the first time, a majority of those surveyed had purchased an eGift in the last year. Of the 53% of respondents who had recently purchased an eGift, a whopping 94% had increased or maintained their eGift spending from the year prior. Retailers wondering where rapid growth is occurring in the gift card industry need look no further.
93% of eGift Recipients Were Happy to Receive an eGift
Setting aside the obvious appeal of a 93% approval rating, what really makes this number pop is the fact that it bucks one of the most common criticisms of gift cards: that they could feel impersonal to the recipient. 85% of eGift recipients surveyed felt that “it was a personal gesture and selected just for him/her”, per a 2016 Blackhawk Network study. If 9 out of 10 people who receive an eGift feel satisfied and cared for, it’s no wonder that digital gift cards are driving gift card growth.
82% of eGift recipients surveyed spend more than the eGift’s value
Lift - the amount of money that gift card holders spend in excess of the card’s value - has proven to be a powerful revenue driver for businesses that incorporate a gift card program. Around 70% of physical gift card recipients will spend more than the value of the card they received, with the average gift card recipient spending 20% more than their card’s value. Digital gift cards are providing the businesses that sell them with comparable lift, with 82% of those surveyed spending more than the value of their card and 75% stating that they tend to treat themselves when redeeming an eGift.
46% of eGift Recipients Redeem In-Store
One benefit of a traditional, physical gift card program is that, in theory, both the person buying the card and the person receiving the card will end up visiting the location from which the card was purchased. eGifts offer recipients the flexibility to complete their entire shopping journey from the comfort of their home, but nearly half of eGift recipients surveyed say they’ve redeemed a digital gift card in-store. That’s good news for businesses who want to adopt eGifts without sacrificing foot traffic.
56% Who Have Never Received an eGift Would be Interested in Getting One
A majority of gift card buyers have purchased an eGift, and a majority of consumers would like to receive an eGift, so what’s stopping digital gift cards from becoming a fixture of any successful gift card program? It could be that...
Under 3% of Local Businesses Sell Their Gift Cards Online
While 97% of top retailers and restaurants sell their gift cards online, the vast majority of local businesses still don’t have a digital offering for gift card shoppers. With ‘Buy Local’ campaigns driving sales and engaging communities nationwide, the time has never been better to find a way to sell locally by offering gift cards digitally.
Still on the fence about adopting an eGift program? We would be happy to answer any questions you might have about how digital gift cards can help improve cashflow and satisfy your customers for years to come.
How do you solve a problem like millennials?
The millennial generation is the largest in U.S. history, yet to many employers and retailers the wants and needs of the first generation to come of age in the internet era remain inscrutable.
As millennials approach their peak shopping and working years, authors and researchers have worked to glean as much information as possible about what makes members of the largest shopping demographic in the United States tick.
No matter where you look for insights into the millennial mindset, you’re bound to find variations of the same conclusion: millennials value convenience, flexibility, and value. That’s why it’s no surprise that millennials are crazy for gift cards. Here are 3 ways that your gift card program can win the hearts and minds of young consumers.
1. Phone is Where the Heart Is
It’s not altogether surprising that the first generation to grow up in the age of ubiquitous cell phone use loves their phones. A recent Blackhawk Engagement Solutions Study found that 89% of millennials use cell phones to access the internet, making cell phones a more popular means of web browsing than laptops, tablets, or desktop computers. Over half of millennials say they use their phone to compare prices while shopping in brick and mortar stores, and 25% of millennials say they use their phone to make at least one purchase daily.
That means it’s more important than ever for your gift card program to go digital. Mobile devices are rapidly becoming digital wallets for the millennials wielding them, and making gift cards as easy to use as possible across mobile and digital channels will help you delight millennial shoppers today and prepare your gift card program for long-term success in an increasingly digital future.
2. Social Butterflies
Millennials learn more about new products, sales, and shopping news on social media than through any other channel. 55% of millennials surveyed identified social media as a key driver for learning about products and services, making social media a considerably more efficient way to get in front of millennial shoppers than traditional marketing mediums like television (35%), newspapers (20%), and radio (12%).
Free to use and inexpensive to promote, social media sites like Facebook and Twitter should already be part of your business’s marketing strategy. Experienced social media users know about the 80/20 rule, which recommends dedicating just 20% of your company’s social media posts to sales-oriented calls to action, and the other 80% to interesting, “shareable” content. If you’re looking for an easy way to drum up some interest in your gift card program, consider focusing some of your more promotional posts on gifts cards - after all, the generation that is most interested in social media shopping is the same one that would rather receive a gift card than cash.
3. Loyalty Royalty
Millennials love loyalty programs. Almost 70% of millennials belong to a retail loyalty program, and 70% of those who currently belong to a loyalty program feel positively about the value they receive from it. Starbucks has made the retail world take notice with its app, which allows users to load funds into the app to pay for coffee and rewards spending with special offers and free cups of coffee. Put simply, Starbucks has gamified spending; by buying coffee, users accumulate points, and by accumulating enough points, users can acquire free coffee. By making each purchase a step towards an additional, free reward, a loyalty program has the potential to make the act of spending money feel like a means of earning value down the line.
With well over $1 billion in customer money currently loaded into the Starbucks app, Starbucks seems poised to keep a leg up on the coffee competition, but you don’t need a fancy app to leverage millennials’ fondness for rewards programs. How you use loyalty programs to fuel your gift card program depends upon your business model and the resources available to you, but one thing’s for sure: millennials value companies that reward their spending, and gift cards are an ideal way for a company to scratch that particular itch.
As challenging as marketing to a new generation of consumers can be, the benefits of understanding the needs of millennials can’t be overstated. We hope these tips help you get the most out of your gift card program, and feel free to get in touch if you have any questions!
How can a gift card program improve cash flow?
How do regulations affect my company’s gift card program?
What are the latest technological advancements in the prepaid industry?
These are the kinds of questions that we’ve heard time and time again from business owners. If medium-size businesses are under served by gift card processors (and they are - that’s why we founded nthCard!), medium-size businesses with questions about the prepaid industry are currently under served by industry experts and bloggers.
Few industries have grown as dramatically in recent years as the prepaid sector: a Mercator Advisory Group study found that gift card spending grew from $40 billion in 2003 to north of $100 billion in 2014. A recent study by Blackhawk Network found that gift cards accounted for a staggering ⅓ of all gifts purchased in 2015, when gift cards locked down the title of most-requested present for the 8th year running.
Yet in spite of a glowing decade for the prepaid industry, the future is shaping up to be even brighter. Millennials, America’s largest shopping demographic, love gift cards: a 2013 survey found that 89% of millennials wanted to receive a gift card, while 88% expected to give one as a gift. With digital gift card sales growing rapidly and nearly three-quarters of shoppers aged 18-24 expressing a preference for storing gift cards on their phone, the future is sure to bring big changes to the prepaid market.
As the gift card industry continues to evolve, it’s more important than ever for businesses to be able to find the answers they need online. We look forward to providing solutions, success stories, and industry insights in future posts, and hope you will get in touch if you have any questions about the world of prepaid cards - we would love to hear from you!