Gift cards are important in designing modern retail strategies. They help businesses enhance customer engagement by driving sales and building brand loyalty. This guide explores all aspects of gift cards, from promotional strategies to optimization techniques to help consumers. ( If you’re a consumer, read this guide. )
What Are Gift Cards?
Gift cards, also known as gift certificates, gift vouchers, or gift tokens, are prepaid stored-value money cards issued by retailers or banks. They serve as an alternative to cash for purchases within the issuing store. Gift card campaigns involve giving gift cards to customers as incentives, such as offering $5 gift cards to new customers to encourage their first purchase. These campaigns can be tailored for special occasions, loyalty programs, referral programs, or giveaways.
Corporate Gift Cards
Corporate gift cards are a popular trend where companies order branded gift cards as presents for employees or clients. This trend offers an opportunity for businesses to market their gift cards to the B2B segment.
Group Gifting
Group gifting is a relatively new trend where multiple contributors can chip in for higher-value gift cards. For example, Home Depot allows customers to contribute to a gift card, and the recipient receives the final gift via email.
Why Invest in Gift Card Campaigns?
Gift card campaigns often outperform other sales promotions because they make customers feel special, unlike traditional discounts. The endowment effect makes customers more likely to use a gift card, as it feels like free money. From a retailer’s perspective, gift cards can be a cost-effective incentive since many expire before being redeemed. In 2019, almost $3 billion in gift card cash went unused, highlighting their potential profitability.
Benefits of Gift Cards
Increase Cash Flow
Gift cards are paid for in advance, providing immediate cash flow until the card is redeemed. This defers the actual cost for the business.
Higher Margin Sales
Customers using gift cards are more likely to purchase full-price items rather than discounted ones.
Promote Impulse Purchases & Increase Order Size
Gift cards encourage shoppers to invest in additional goods or services, increasing the average cart size, especially if a minimum order value is required.
Decrease Returns
Gift cards reduce return rates since recipients choose their own gifts, lowering the costs associated with returns.
Reduce Fraud
Gift cards are personalized and trackable, reducing the risk of fraud compared to publicly available promotions.
How to Use Gift Cards
Gift cards can be sold as standalone products or used as incentives in various promotional campaigns:
Acquisition Campaigns
Offering gift cards to new customers can increase the chances of their first purchase.
Sorry Campaigns
Gift cards can be used to apologize to customers, offering more value than a simple apology.
Win-Back Campaigns
Gift cards are effective for re-engaging customers who haven’t visited the store in a while.
Referral or Loyalty Incentives
Combining gift card campaigns with loyalty and referral programs ensures continuous revenue and steady cash flow.
Customer Milestones Campaigns
Personalized birthday and anniversary emails with gift cards can generate more revenue.
Digital Versus Paper Gift Cards
Digital gift cards offer several advantages, including easy tracking, reduced risk of loss or theft, and multiple delivery options (email, SMS, push notifications, PDF). However, some customers prefer paper gift cards, especially those unfamiliar with technology. A mixed strategy, offering both paper and digital gift cards, is recommended.
How to Build a Marketing Plan for Your Gift Card Campaign
To build a gift card campaign marketing plan, follow these steps:
- Set Your Goals:
- Determine how many gift cards you want to sell per day, week, or year.
- Define your overall goals (e.g., increase revenue, raise brand awareness, attract new customers).
- Establish how you will measure success.
- Identify Your Target Audience:
- Specify the type of customer you are targeting.
- Understand how your gift cards can solve an issue for this customer.
- Identify where they spend their time (both in-person and online).
- Focus on What Makes Your Business Stand Out:
- Highlight what customers love about your product or service.
- Identify traits, products, or services that differentiate you from competitors.
- Use positive customer feedback to your advantage.
- Create a Gift Card that Aligns with Your Branding:
- Design your gift card to reflect your brand.
- Consider what design elements would encourage customers to give your card as a gift.
- Choose Your Marketing Channels:
- In-Store: Place displays in high-traffic areas and train employees to mention gift cards.
- Email Marketing: Send regular emails to your list about gift card sales and promotions.
- Social media: Post regularly about gift card sales and promotions, using creative content like videos and graphics.
- Website: Promote gift cards prominently on your website with banners or pop-ups and ensure your site is enabled to sell gift cards.
- Leverage Marketing Tips:
- Use email marketing tools, create engaging subject lines, and review campaign results.
- Choose the best social media platforms, create timely content, and set a budget for ads.
- Ensure your website is user-friendly and mobile-optimized.
- Train employees to promote gift cards and use in-store signage.
- Implement Gift Card Promotions:
- Create irresistible sales (e.g., offer a $20 gift card for every $100 gift card purchased).
- Spread the word through all available platforms and train employees to share the promotion.
- Analyze the promotion’s performance and adjust for future campaigns.
- Track and Measure Performance:
- Use a revenue tracker to monitor gift card sales quarterly.
- Adjust your strategy based on what works and what doesn’t.
By following these steps, you can create a comprehensive and effective gift card marketing campaign.
How to Personalize Gift Cards
Personalization can enhance the appeal of gift cards. Options include adding the recipient’s name, personalizing the gift card code, adding wishes to the message, enabling custom designs, and specifying delivery channels and dates. Collecting customer data through a CDP or CRM is essential for effective personalization.
Setting Limits on Gift Cards
To prevent fraud and abuse, consider setting limits on gift cards:
Expiration Dates
Set an expiration date, but be aware of local regulations that may prohibit this.
Number of Redemptions Per Customer
Define how many times a customer can use the card, especially if using rechargeable gift cards.
Excluded Products
Specify which products or categories the gift card can be used for.
Order Value & Volume
Set minimum order values for gift card usage.
Stacking
Determine if gift cards can be combined with other promotions.
Overall Limits
Set campaign budgets and limits on the number of gift cards issued.
Promoting Gift Card Sales
Promote gift cards to loyal customers and through various channels:
Special Promotions
Offer deals like “pay $50, get a $60 gift card” or “buy one, get one free.”
Seasonal Promotions
Run campaigns around major holidays with special designs and advertisements.
Partner Stores
Expand sales by offering gift cards in partner stores with similar audiences.
Affiliates & Influencers
Use affiliates and influencers to sell gift cards, especially e-gift cards with tracking.
Emails
Inform customers about gift cards through onboarding emails, newsletters, and special promotions.
Social Media
Promote gift cards on social media platforms like Instagram and Facebook.
Separate Landing Page
Create a landing page showcasing gift card options, designs, and delivery methods.
Banners
Use website or mobile app banners to promote gift cards, especially during promotions.
Checkout
Offer gift cards at checkout in both physical and online stores to encourage impulse purchases.
Improving Gift Card UX
Enhance the user experience with gift cards by:
Designing a Separate Path-to-Purchase
Create a distinct customer journey for purchasing gift cards.
Providing a Section to Check Gift Card Status
Allow customers to verify card validity, balance, and recharge options.
Letting Customers Choose the Gift Card Amount
Offer suggested values and custom input fields for gift card amounts.
Allowing Users to Choose the Delivery Date
Enable customers to select when the gift card should be sent.
Personalizing the Gift Card Code
Customize gift card codes to match the recipient’s name or occasion.
Letting Users Upload Their Own Designs
Allow customers to upload photos for personalized gift cards.
Designing the Gift Card Input Field
Ensure the input field is easily accessible and properly displayed in the checkout process.
Gift Cards Toolbox
To run successful gift card campaigns, you need:
A gift codes generator for unique and secure codes.
Tools for creating restrictions and limits.
Tools for automatically assigning codes to customers.
Infrastructure for sending out gift vouchers or integrating with third-party services.
Efficient redemption handling methods.
Analytical tools for tracking redemption rates and campaign ROI.
Consider using SaaS providers or API-first solutions for flexibility and ease of implementation.
Measuring Success
Track the following metrics to measure the success of your gift card campaigns:
Number of sold cards.
Number of customers who have used their gift cards.
Successful and failed redemptions.
Amount left to spend (current liability).
Most desired products among gift card orders.
Additional sales generated by gift cards.
Average basket value and size of transactions with gift cards.
Order details for each gift card transaction.
Distribution reports for all channels used.
Per-channel sales results of gift card sales.
Optimizing Your Strategy
Optimize your gift card strategy through:
Smaller Campaign Experiments
Test different parameters with smaller segments to determine the most effective strategies.
If you want to create a gift card campaign for your business, we here at Somerville Bank encourage you to take advantage of some of the services we offer for businesses. For more information, contact one of our branches today. To find one near you, click on the following link: https://somervillebank.net/locations/
Somerville Bank has 8 Locations