4 Lessons Retailers Learned About Digital Gifting in 2015
With the holiday season behind us, retailers are applying their observations about consumer and digital gift card purchase behaviors to 2016 and upcoming gifting occasions. Here are four observations merchants can put to use in the months ahead:
1. Gift cards remain in high demand: According to the National Retail Federation, gift cards were the most requested gift for the ninth year in a row in 2015, and spending on them was expected to reach $25.9 billion. Retailers that capitalized on the demand saw success. Starbucks, for example, reported record gift card sales.
The takeaway here is that retailers are leaving money on the table if they're not effectively marketing prepaid commerce offerings. These offers should be prominent on websites and promoted across all channels so consumers can easily find, purchase and send digital gift cards. Furthermore, prepaid commerce promotions are powerful, engaging and cost-effective methods of acquiring new customers and building loyalty.
2. Consumers increasingly desire mobile gift cards: Nearly half of all shopping already involves mobile usage, and that number is predicted to increase. A recent Facebook IQ GfK study of shoppers revealed that 60 percent will either begin purchasing or increase purchases on their smartphones in 2016.
When it comes to prepaid commerce, consumers preference for mobile doesn’t sway. According to CashStar’s annual survey of U.S. online shoppers, more than half (56 percent) of consumers were interested in storing gift cards on their mobile phone so their card is always with them and can’t easily be lost. Digitally savvy retailers have responded by offering a variety of digital storage options for gift cards, from email to mobile wallets to branded apps.
3. Prepaid commerce helps brands kick discounting habit: Retailers have traditionally engaged in heavy discounting throughout the holiday season to increase revenue, but there are other methods to consider as well. An increasingly popular strategy for driving holiday sales without overt discounting is to leverage prepaid commerce promotions. More than half of the respondents in CashStar’s survey indicated they would find a gift card-based offer from a brand they had never shopped before more compelling than a discount.
Creative prepaid commerce offers can drive in-store traffic and create experiences that surprise and delight shoppers. Retailers like Sephora focused on customer experience to drive revenue. Sephora offered shoppers who purchased gift cards at a minimum price point a complimentary in-store makeover. This strategy proved to be a great way to build a relationship with a (potentially new) customer, and incent them to purchase products just tested during the makeover.
Another example of a creative use of prepaid commerce to drive traffic was employed by The Cheesecake Factory. The hugely popular restaurant chain leveraged prepaid commerce promotions to drive foot traffic post-holidays, typically a slow period for the restaurant industry. The Cheesecake Factory rewarded holiday shoppers who met a minimum spend threshold on gift cards with a promotional card they could redeem for a slice of the restaurant’s signature dessert the following month.
4. Digital gifting capabilities have Improved, but there’s still room for growth: According to RSR Research’s Digital Gifting Benchmark Study, more retailers than ever were offering digital prepaid commerce in 2015. However, not all of them were maximizing their programs to drive revenue and customer loyalty.
Digital prepaid commerce programs can be technically challenging to implement, and a lack of consistency across all channels was a key struggle, according to the report. As retailers retool programs for 2016, they’ll need to prioritize a seamless customer experience from mobile to desktop and beyond. As omnichannel commerce and smartphone adoption continues to grow, a subpar digital gifting program is going to turn away consumers.
Ben Kaplan is the president and CEO of CashStar, a provider of prepaid commerce solutions to retailers and restaurants.