The holiday season is a time when retailers try to give back and connect with their customers through festive deals and promotions. Whether it’s through incentives like discounts, specials, or loyalty rewards, the average customer expects to save around $150-$200. Gift cards are a great budgeting tool, gift, or reward for just about anyone. In fact, they’ve been increasingly requested during the holiday season and are expected to reach a whopping $160 billion in sales this year! Incentives may come and go, but one thing remains—The value of gift cards are continuing to grow and evolve as we increase their usage.
Not only are gift cards like free money for a recipient to explore your brand, there are several other benefits to offering them through your business. For starters, using gift cards reduce the cost of credit card fees you’d otherwise be paying to your processing company. At an average 2.75% per swipe, credit card fees add up quick, especially for businesses that tend to have smaller transactions like coffee shops. Processing gift cards are much more cost efficient and can be reloaded later for future use (think Starbucks). This is a huge consideration for businesses with small, rapid transactions because it has the potential to save you thousands in processing fees.
Gift cards are also good for business because it gets people in your store who weren’t aware of it previously. In a 2017 study by First Data, results indicated that 44% of consumers visited a store they wouldn’t have otherwise gone to because they received a gift card. On average, 75% of those customers overspent the amount on their gift card by $38 ($10 more than 2016). Not only do gift cards acquire new customers for your business, they’re spending more than originally allocated! This makes for a great holiday promotion as the benefits will continue way beyond the season.
If you have the ability to pair your gift card system with your loyalty program, you can actually motivate your customers’ purchasing behavior and visit frequency. Last year, 86% of customers said that they were most loyal to the brands where they participated in a rewards program. By connecting a gift card value to your program, you can motivate customers to spend more & earn more during exclusive campaigns and promotions. For example, businesses who switched to the umbrella loyalty program Loyal~n~Save actually saw a significant increase in their visit frequencies. By encouraging members to sign up and use their gift card during special campaigns, they saw an average 25% increase in their loyalty members’ total ticket amount.
When loyalty is paired with store value, gift cards can turn one-time customers into repeat customers. In 2017, 53% of recipients surveyed were more likely to return to a store after receiving a gift card. Increased visits and greater spending not only develop a stronger sense of brand loyalty, but they increase word-of-mouth referrals from your customers too. When someone is given a gift card it’s like receiving a personal recommendation to a store they’d enjoy. Our hope as retailers is that they’d come in with that gift card, enjoy their experience, and then tell their friends about it. Loyal~n~Save encourages this behavior by incentivizing members with extra points for referring their social circle, and additional points when those friends make purchases. These types of referrals work because the concept is simple; people trust people.
From a customer rewards program to marketing promotions, gift cards are their own form of store currency. They offer convenient and cost effective solutions to brand awareness, customer acquisition, retention, and loyalty. Often gift cards and loyalty program members become advocates for your brand, so combining them for a stronger connection can do wonders for your business beyond the holiday season.
This article was written by Loyal-n-Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.