Gift cards are a tried-and-true strategy for influencing purchase decisions and, as such, have proven to be a lucrative revenue stream for small and big-box retailers alike. Today, gift cards take many forms and represent more than $110 billion in sales. Tomorrow, however, holds something much bigger for retailers with gifting programs. There's a "branded currency" revolution on the horizon; those retailers that can make the transition from a traditional gift card program to a comprehensive branded currency strategy will have the opportunity to increase online and in-store sales, drive new customer acquisition and grow loyalty.
What's Branded Currency?
Economists define currency as a store of value and a medium of exchange. For shoppers, gift cards are a form of currency, but also payments, loyalty points, coupons, credits or anything that allows a shopper to exchange with a retailer for its goods. Branded currency is all of these forms of payment under one branded umbrella.
Retailers that effectively combine these forms of currency can actually influence purchase decisions and use it as a competitive advantage. With the rapid consumer adoption of digital and mobile, retailers have a new opportunity to deliver this currency in a more convenient and effective way.
Take Starbucks, for example. The coffee shop has harnessed the power of branded currency by transforming its gift cards into mobile payment/loyalty cards that are reloadable through its branded mobile app. The mobile experience it's created is seamless and convenient for users. Today, more than 7 million people use Starbucks’ mobile app to make 4.5 million payments a week, accounting for at least 10 percent of the coffee chain's total U.S. revenue.
Tips for Retailers
Here are three tips to keep in mind when developing a strategy for branded currency that works for your brand:
1. Don't work in silos. Chances are, depending on the size of your company, the coupon team works separately from your gift card team — and both are separate from the loyalty program managers. In order for branded currency to be successful, all of these groups must work together so that consumers receive a consistent experience with each. In that same vein, as mobile, digital and plastic converge in the minds of consumers, retailers need to begin to break down these walls internally and adopt an omnichannel approach to commerce.