B-to-B, Promotions Offer Growth Opportunities for Merchants' Gift Card Programs

Gift cards continue to remain immensely popular with consumers. In fact, demand for digital gift cards spiked during the pandemic, as consumers sought out convenient, easy and safe ways to share gifts with their friends and families, even if they weren't getting together in person. This trend isn't expected to end with the pandemic, as consumers look to continue to find convenience in their shopping experiences.

GlobalData research forecasts that by 2025, the gift card market (both physical and digital) in the United Kingdom will have grown to £8.71 billion. Furthermore, Persistence Market Research analysis states that the global gift card market is expected to increase at a compound annual growth rate (CAGR) of above 12 percent over the coming decade. So what can merchants do to capture their share of this growing market opportunity?

To help answer that question with data, insights and real-world examples, NAPCO Research, in conjunction with Blackhawk Network, conducted a comprehensive evaluation of the state of merchants’ gift card e-commerce offerings. The assessment evaluated 50 brands across more than 100 unique criteria.

Two of the more interesting trends to emerge from the assessment were the criteria related to merchants' business-to-business (B-to-B) gift card programs, as well as their use of gift cards as a promotional tool to drive consumer behavior and/or action. The data revealed that the merchants have room for growth in each of these areas.

Don't Limit Gift Cards to Holiday Season Promotions

Gift card promotions can be beneficial for driving sales, customer loyalty and brand awareness, as well as engaging new markets. Brands failing to run gift card promotions miss out on an average of 37 percent of annual revenue, according to analysis from Blackhawk Network. Our assessment revealed that merchants are missing opportunities to utilise gift cards as a promotional tool, with the average score in the promotions criteria category just 5 percent. The use of gift card promotions was assessed across merchants’ websites, social media pages, Google search results, email marketing, and apps.

The promotions criteria category yielded some of the lowest scores, pipped to last place by brands offering e-gifting at 4 percent. As part of the promotions criteria evaluation process, brands were assessed on promotions across their websites (which produced an average score of 10 percent), social media (4 percent), Google search results (4 percent), email marketing (6 percent), and apps (0 percent). As the data shows, there's plenty of room for improvement here across all types of merchants.

It's important to note that the data reported on in this report was not collected during a peak promotional period (e.g., the Q4 holiday shopping season). However, utilising the periods outside of peak times can be valuable in driving sales when interest in gift cards may ease off. There's an opportunity for originality and creating niche promotional campaigns to boost engagement outside of seasonal/occasional promotions. Given today's digital retail landscape, ensuring your online gift card programme is supported by promotions will be an important asset for attracting customers in a hypercompetitive e-commerce market.

B-to-B Gift Card Sales Gaining Momentum

The merchants assessed in this report are broadly performing adequately when it comes to the gift card purchase experience for B-to-B buyers, with a B2B programme average score of 43 percent. Although B-to-B criteria accounted for less than 5 percent of total scores, it's important that retailers don't overlook this growing area. GlobalData’s forecast that the gift card market is set to grow nearly 25 percent over 2019–2025, is primarily driven by growth in B-to-B sales. Therefore, merchants would be wise to invest in improving their B-to-B gift card offerings to capitalise on this significant opportunity.

Merchants were evaluated on how easy it is to obtain information about how their corporate gift card programme works (earning an average score of 50 percent); how easy is it to find corporate gift cards on the merchant’s e-commerce site (45 percent); how easy is it to sign up for the corporate gift card programme (30 percent); and whether their B-to-B programme offers both physical and digital gift cards (47 percent). The findings indicate that despite opportunities in the B-to-B category, many merchants are leaving a significant amount of money on the table by not investing in growing their number of customers purchasing gift cards in bulk.

To highlight the positive, Amazon.com, Asda, ASOS, New Look, Primark, Costa, Boohoo, Sainsbury’s, Lastminute.com, Mitchells & Butlers, ODEON, and Tesco all have distinct B-to-B/corporate gift card homepages. The top three merchants in the overall rankings, Amazon, TK Maxx, and ODEON, all scored 100 percent for their B-to-B offerings.

In a follow-up article on the 2021 UK Merchant Gift Card E-Commerce Evaluation, I will present actionable tips/key takeaways for retailers based on the data in the report. You can download the full report, which includes the rankings of all 50 merchants (including by product category) as well as more valuable trends and tips gleaned from the data, here.