Viewpoint: Winning the Holiday Gift Card Season
Retailers understand why the holiday season seems to start a little earlier each year. And even though the consumer in all of us might cringe as retailers adorn Christmas trees right next to the Halloween costumes and Thanksgiving tableware, we know that a longer holiday season means more sales and a more profitable year. But are you really doing all you can with those extra weeks of holiday sales? The smartest and most strategically positioned retailers are leveraging their gift card strategies to reap the biggest return on this year’s holiday season.
According to the National Retail Federation, last year consumers spent nearly $626 billion on retail purchases during the holidays. And gift cards have been the top holiday gift choice for both givers and receivers for nine straight years, with consumers spending more than $25 billion in gift cards during the 2015 holiday season. The trend is expected to continue with gift cards in demand more than ever.
With a high consumer demand for gift cards, here are four ways that smart retailers will “win” the $25 billion holiday gift card season:
1 Give consumers (exactly) what they want. Whether you are a bank offering holiday-themed prepaid cards, or a retailer doing the same, some gift card designs and denominations will be inevitably more popular than others. Winning retailers that stay on top of consumer demand from before the first piece of Halloween candy is passed out through the post-holiday shopping season will maximize the profitability of their gift card programs.
And, smart retailers will never run out of the their most popular cards or overstock cards because they leverage a digital, on-demand card production model. On-demand card production is the most flexible and efficient way to get customized gift cards into consumers’ hands quickly. With on-demand, retailers can easily place gift card orders and instantly make changes to card programs to meet consumer demands as it evolves throughout the holiday season. With the unique ability to customize card programs, on-demand card production allows retailers to build customer affinity by delivering more personalized gift cards by occasion such as birthday, holiday, thank yous and more.
2 Get a bigger piece of the holiday pie: Mall traffic is down, but transaction value is up. And more than ever, millennial shoppers are plugged into online channels–like mobile and social–to enhance their buying experience. Winning retailers are sharing content about gift card options now to find their way into online searches as consumers plan their holiday shopping. And, they’re leveraging personalized, online card designs to close the deal – especially with millennials who are decisive purchasers once they start looking. It’s obvious that retailers will keep physical cards stocked for consumers to grab while waiting in the long holiday shopping lines, but winning retailers will make it easy for consumers to order physical – and digital – gift cards online, too.
Plastic remains popular, but deliver omni-channel solutions by integrating e-gift too. For nine straight years, the National Retail Federation has revealed that gift cards – and specifically physical cards – are the most popular holiday gift. But retailers shouldn’t forget about distributing gift cards in the e-commerce world, too. Physical and digital gift cards are a great option for last-minute gifts and extend the sales season to supplement a retailer’s holiday earnings.
3 Reward Givers and Receivers. Delivering loyalty-inducing rewards is a sure win for retailers looking to grab the largest stake of the holiday gift card season. A recent Mercator Advisory Group study reveals that consumers actually purchase and use gift cards for themselves, in addition to using them for gifts. Smart retailers use this knowledge to take a multi-pronged approach to the holidays. This can come to life through retailers offering a gift card if the shopper purchases a qualified physical item–a “purchase an item, get a gift” promotion, or an incentive for future gift card credit when your initial gift card is spent.
According to the Retail Gift Card Association, three-quarters of consumers will spend more than $20 in addition to the gift card. Gift cards are a great marketing tool to build customer loyalty and increase annual revenue.
4 Don’t forget that a gift card is still…a gift. According the Retail Gift Card Association (RGCA), about three in four consumers (73 percent) plan to give at least one gift card during the holiday season, but which cards they choose and how much they spend are driven, in part, by the overall gifting experience. Gift givers still want their gift to feel personal and thoughtful, and smart retailers are delivering on both of those elements by stepping up their gift card game. This can include personalized card designs, gift cards that are paired with greeting cards or other creative packaging or by pairing gift cards with other physical gifts. Retailers that let the gift giver express their own creativity when choosing gift cards will see a very positive consumer response over the next three months.
A recent consumer study shows that 40 percent buy more from retailers who personalize their shopping experience across channels. 40 percent! Another report notes that personalization has at least some impact on the purchasing decisions of nearly 86 percent of consumers.
As personalization becomes more common in the marketplace, consumers are seeing more integrated payment experiences online and at retail outlets, and they expect personalization across the entire purchasing lifecycle, from browsing, to product comparison, to the purchase transaction itself.
Businesses who have incorporated personalization strategies into their gift card marketing plan know that it drives results. Key metrics like brand affinity, customer retention, propensity to refer (net promoters), and revenue all go up when personalization is done right.
Tis’ the season to make a mark in the $25 billion-dollar holiday gift card season, and up your game in the competitive marketplace. Retailers leveraging on-demand card production, delivering omni-channel gift card solutions and offering personalized gift card products may just take the biggest piece of the pie.
Render Dahiya is CEO of Arroweye Solutions.
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.