According to a 2017 study by the Incentive Research Foundation, one of the trends that is greatly affecting rewards in 2017 is the expansion of gift card programs, with 70% of retailers using gift cards as an incentive.
And it's no surprise; gift cards seem to hold great popularity among shoppers as well. In a study from InComm, a prepaid product and transition service provider, 100% of consumers said they gave at least one gift card in 2016 and 92% said they gave two or more. And as the holiday season is upon us, an NRF survey reveals that gift cards are the most popular item on wish lists this year, requested by 61% of respondents.
"The continued demand of gift cards comes down to their versatility, flexibility and accessibility. In general, there are a few channels where the growth has been sharper in recent years. The most obvious channel where we have seen significant growth is online with retailers. As consumer shopping trends evolve and expand, like more shopping being done online, their gift card purchases also tend to follow suit," Claude Ricks, VP, general and mass merchandising at InComm, told FierceRetail. "With that said, all gift card categories continue to be strong and we continue to expand our gift card programs in new brick-and-mortar retailers as well. Recently, we have seen tremendous growth in the value channel. These retailers have become a new destination for our gift card programs and they are performing extremely well."
And while physical gift cards are still popular, the demand for digital cards continues to climb. In an InComm study, 61% of consumers said they prefer to have the choice between digital and physical gift cards, rather than one or the other. The choice often comes down to whom—or what— the card is for, according to Ricks.
Clearly a hot commodity, retailers can use gift cards as a way to boost online and in-store traffic. Ricks said that gift cards can be used as a value-add incentive for other purchases. For example, if a consumer spends more than $50, she gets a $10 gift card for the store. This often sets up a higher purchase decision right off the bat and a return to the store at a later date.
Gift cards can also be used as a way to connect customers to loyalty programs.
"For example, a retailer can encourage consumers to register for its loyalty program by offering them points for purchases that ultimately lead to gift cards. Or they can offer loyalty members additional points for purchasing gift cards. These kinds of promotions both help retailers bring in new members and retain current members by making the value of the program constant and obvious," Ricks said.
While retailers in all sectors are trying out innovative gift card tactics, the ones that stand out for Ricks are those that succeed in cross-selling gift cards with other products, like buying a gift card and receiving another product for free.
"These can be complicated transactions, so it takes an innovative partner like InComm to pull it off. Our Enhanced Payment Platform not only makes these transactions possible, but it also makes the payment experience seamless on both sides of the register," he added.
Moving forward, gift cards will continue to be tied to the intent of creating an experience.
"By tying the gift card to a related product or service, the retailer can customize the promotion to their products and customers while providing the consumer with an experience that goes beyond the gift card," Ricks said.
"No matter how the retailer uses them, gift cards will continue to drive traffic. Consumers typically spend 20-40% more when they have a gift card in their basket because they are in a different shopping mindset when in store. That is a clear, ongoing benefit to retailers—one that isn’t going anywhere."
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