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!