How Retailers Can Optimize Gift Card Sales This Holiday Season
The gift-giving culture is turning personal this year as more shoppers look to create and send one-of-a-kind, intimate presents to their friends, family, colleagues and loved ones. Ranging from photo-tailored gifts to customized cards, the personalized gift market in the U.S is expected to grow at a CAGR of over 9 percent during the next four years.
And yet, while shoppers are eager to build a niche, personal experience around giving, recipients would rather choose for themselves what they desire. Over 86 percent of gift recipients say they would prefer to receive a gift card. Gift cards, however, rarely allow the giver to feel the satisfaction of gifting, nor do they always cater to our quirks and charms. And therein lies a new trend of personalization in the gift card space.
In order to capture these customers, increase sales and differentiate themselves in this increasingly crowded marketplace, retailers need to identify and cater to this trend and offer unique experiences in the giving and receiving of gift cards. Here’s how they can keep things personal for 2018's fast approaching holiday season.
Product-Based Gift Cards
Gift card options on e-commerce sites are often found discarded at the bottom of the page or hidden in a drop-down menu next to the checkout cart. Even in stores, stacks of gift cards are mounted at the checkout desk with little enthusiasm thrown their way. With this year’s shoppers hoping to sprinkle a touch of personalization on gifts, opting for a gift card may appear a little impersonal and thoughtless.
One way to draw in shoppers to gift card options on e-commerce sites is through "e-gifting." Rather than sprucing up amount-based gift cards, build products around the gift card. This personalizes the gift card by allowing the giver to suggest an actual product instead of a monetary value. The recipient can then open their gift easily online and either redeem the suggested gift or exchange it for something else they prefer. A product-based gift card lets the shopper be satisfied with their purchase as it diverts the recipient's focus from "here’s $50" to "here's something I thought you would love and can benefit from." It shows the thought behind selecting the suggested gift and the ability to make it relevant to the recipient's hobbies, likes or personality, while maintaining the ease, efficiency and flexibility of a gift card.
Product-based gift cards have other benefits, such as the ability to deliver them via email or text message even after the shipping cut-off date. More importantly, it saves the retailer on needless shipping and returns as the gift will only be sent once the recipient accepts or modifies the gift card. The average retailer wastes 8.1 percent of total sales on reverse logistics, including unwanted gifts, according to Inbound Logistics. Unique e-gifting solutions eliminate these barriers and deliver a personal edge to the standard gift card.
Product-based gift cards don't necessarily have to be limited to products. They could be a ticket to an experience. According to Deloitte, last year only one-third of holiday spending went towards physical gifts, as 27 percent of people surveyed indicated they preferred giving experiences as presents. Retailers looking to expand or even introduce their brands to a new audience may even want to consider establishing partnerships with companies offering these experiences. For example, fitness clothing stores could benefit from partnering with a gym to offer a co-branded gift card package of yoga pants and a promotion to a yoga studio. Or similarly, a dinner and movie package between restaurants and cinemas. Customer satisfaction increases when opting for these activity gifts as it allows shoppers to feel connected to their receiver, overall fostering a personal gift-giving experience.
Giving consumers the built-in features and services to create their own customized messages alongside gifts is a perfect way to prepare for this year's personalization trend. With a large majority of Generation Z now over the age of 18, five generations of shoppers and recipients will be giving and receiving gifts this holiday season. Therefore, ensuring that customers can construct their own words to target each demographic should be a top priority for retailers.
Gift cards usually fall short in this area. Typically, the most a buyer adds to a gift card is a name, if anything at all. Many are designed with their own greeting and packaging, leaving little room for creativity or personalization. Retailers should therefore unwrap the possibility of attaching customizable greeting cards to gift cards to offer the customer a more personalized giving experience.
At Jifiti we partnered with American Greetings to give customers the flexibility and individuality to play around with a digital greeting card and message when sending a gift card or voucher. This adds an extra layer on top of the gift card, improving optimal gift card fulfillment for both the receiver and the sender. Personalization could also be achieved through a photo or video attached to the gift card. Nitecrest, for example, has launched video gift cards which enable the purchaser to record a personal greeting which is viewed via a QR code or a URL printed on the physical card.
Gift card personalization accommodates for senders to create a more relevant gift for the recipient. A Barnes & Noble gift card, for example, can be a great present idea for a child or an adult. However, by adding a suggested product or a greeting card for a child vs. for an adult makes the exact same gift card relevant, thoughtful and meaningful for that specific recipient.
Physical, digital and mobile gift cards are never going to go out of fashion. However, with more demand for personalization this year, retailers need to redefine their gift card platforms and solutions to give customers that experience and satisfaction they're looking for. Retailers have the chance to change the gift card reputation as a "second choice" or "last resort" present into a sentimental and original holiday gift.
Yaacov Martin is co-founder and CEO of Jifiti, a leader in branded gifting solutions for retailers and brands.
Yaacov Martin is the CEO and Co-Founder of Jifiti, a global fintech company. He is a thought-leader, panelist, and active contributor to leading payments and fintech publications. Bylined on TechCrunch, Payments Journal, The Fintech Times, and The Paypers, among others.