Why Merchants Must Close the Gift Card Digital Transformation Gap
Digital transformation has impacted most every aspect of commerce, but have gift cards been passed by?
To see if the digital transformation wave had yet picked up gift cards along with every other facet of commerce, GiftNow commissioned Incisiv to assess the adoption of digital and physical gift card features across leading U.S. merchants.
That study, done in the first quarter of 2021, makes it clear: Many merchants are leaving a ton of gift card-powered value on the table as innovation and digital transformation have largely passed the gift card industry by.
The value that merchants are leaving behind isn’t being lost because of the basic nature of gift cards. It's happening because many merchants haven't yet made gift cards central to an integrated, omnichannel strategy.
Merchants that have done the work to evolve and better integrate gift card programs into an omnichannel strategy have addressed a few common challenges. Chief among these are four “pillars” that determine how much value a gift card program can unlock.
While there are many other factors that impact the value of these programs, the Incisiv study found that mature, high-value gift card programs are:
- Frictionless: Enabling quick and seamless purchase and redemption through better integration and user experience design.
- Highly personalized: Enabling deeper personalization of the gift card creation process.
- Equal players in an omnichannel strategy: Enabling the purchase, transfer, redemption and reload across all channels.
- Designed to leverage search and recommendation: Enabling smarter sales by recommending or curating gift card options and relevant products.
These four pillars can form the foundation of the new gift card shopping experience. Merchants must focus on and improve maturity across all four pillars. Incisiv recommends merchants pick a place to start and build a road map to build all four pillars.
Where We Stand
Many retailers have made discovery and purchase of gift cards easier, often making cards widely available across their store and partner locations.
However, gift card programs often remain poorly integrated into search and recommendation frameworks, limiting their value across multiple channels. And even though the traditional market for gift cards remains very healthy, with growth forecast at above 9 percent over the next 24 months to 36 months and, per Persistence Market Research analysis, the global gift card market is projected to expand at an impressive CAGR of over 12 percent over the next 10 years. Despite the growth, the experience of buying, sending and using gift cards can be anything but simple.
For a generation of consumers who conduct essentially every online and in-person transaction electronically, any commercial process that takes much time or attention feels broken.
Consumers expect to be able to buy a gift card when they think of it, give recipients access to along with visibility and control of the gift at the appropriate time, preferably by something as simple as sending a text message or an email.
And they expect both buyer and recipient to have card transactions integrated with and manageable from loyalty program accounts. Barely more than a sixth of merchants evaluated by Incisiv were found to be doing that.
Merchants should prioritize improving the gift card shopping and purchase experience. Many that haven’t yet done so note that the gift card business keeps growing, yet selling cards remains predominantly an in-store experience.
How to Unlock More Value From Your Gift Card Program
With COVID-19 forever changing how consumers and merchants conduct commerce, gift cards — especially electronic cards — can become a hub for omnichannel commerce. However, that’s only going to happen as sharper, more mature strategies take hold.
With the neck-wrenching pivot from physical commerce to heavily online as the preferred, or sometimes the only consumer shopping choice, the downside of carrying on with the gift card status quo is clear.
It makes little sense to design gift cards and gift card programs as static tools that only deliver value once each to buyer, user, and merchant — or are limited in the types of value they can deliver to merchants and card giftees.
Given the power and flexibility of modern back-end systems and immense value unleashed by the consumer insight that gift cards can deliver to merchants, it's getting easier to balance investments between efficient operations and creative development.
Merchants can find gifting solution partners who have proven skills creating unique, differentiated offerings and that can collaboratively help them build a flexible program that offers selection, curation, and marketing and revenue models that can evolve with target markets.
Often we think about personalization solely in the context of the recipient, especially as card programs put more choices in gift card recipients’ hands. However, flexibility and personalization should be part of the card purchaser’s experience as well.
As more people want to send gift cards, they still want to include sincere thoughts or even a photo or video along with their gift.
Less than half of merchants in the Incisiv study enable givers to attach a custom theme, picture or video to electronically delivered gift card greetings.
Recommendation is the Engine That Built E-Commerce
Every consumer now expects some level of curation from all commerce, but especially from e-commerce. The collections many find most interesting are often very specific. This means that when merchants create and share well-targeted collections, consumer interest is strong. To do this means harvesting greater data from gift card programs.
Additionally, gift cards can take a lesson from the greeting card industry. When looking for a greeting card, a shopper who wants to celebrate a wedding, reward a milestone or poke fun at a sibling’s birthday knows where to find the right section, if not the perfect card, every time. Gift card programs should offer the same level of flexibility and personalization.
As Incisiv notes in analyzing its survey results, “Expanding attributes to include things like occasion, [choice of] templates, etc., will improve the shopper social graph and lead to better segmentation and targeting.”
And both gift card providers and merchants have been expecting search engines to do their work for them — if they perceive search as part of their channel strategy at all. But this goes well beyond search engine optimization. More than three-quarters of merchants evaluated by Incisiv’s researchers didn’t include gift cards as possible search bar discoveries.
The Time to Start is Now
Digitally savvy merchants can make gift cards a centerpiece of the customer experience. The value of the customer and gift recipient data captured, the ability to personalize and build on the options each card buyer and user can enjoy, and increasingly seamless integration across customer loyalty programs integrated across multiple channels deepen and strengthen customer loyalty.
Working with the right partner can help to reduce the time it takes to improve a merchant’s gift card program. In fact, merchants that don’t have the resources to focus on their gift card program can rely on a solution provider to innovate, design, launch and refine a truly frictionless, personalized, omnichannel gift card program that's optimized for search and recommendation engines, including both on the web and within merchants’ own digital commerce sites.
Every day that passes during 2021 without beginning the process can limit a merchant’s chances to realize more potential value. But where should merchants start? We recommend working with a solution provider to evaluate back-end systems and determine what needs improvement or replacement. As the next step, they can help to identify potential linkages to existing merchant loyalty and rewards programs. Finally, they can help merchants implement best practices in developing deep personalization and maximum flexibility for gift card purchasers and users.
Now is the time to take a first step to unlocking the full value of your gift card program.
Dan Farrell is the general manager of gift cards for GiftNow, a holistic gift experience management (GXM) platform.
Related story: 2020 Merchant Gift Card Omnichannel Evaluation