Retail TouchPoints: Digital Gift Card Services Increase Loyalty, Create Seamless Exchange and Redemption Process

If I have this right, the idea is to attach a gift card when you wish your friends on Facebook Happy Birthday. Whoohoo! I can hardly wait. If I got a gift card along with every birthday wish on Facebook I could retire to my yacht currently moored in Monaco. Oh wait, 90% of my "friends" on Facebook I wouldn't recognize if they were standing in a phone booth. I don't think they're going to go for it.

And again this loyalty thing. Mr. Winbladh is right about coupons not building loyalty but dead wrong in thinking that somehow gift cards do. "Loyalty" has its roots in Old French: "an oath of faithfulness." Gift cards can do that? I don't think so. It's pretty hard to find "faithfulness" anywhere these days!

Loyalty (faithfulness) is a spiritual, ecological commitment based on relationships. Anything short of that is just a gimmick.

Ian Percy, President, The Ian Percy Corporation

Digital gift cards are a good idea, because they are easy to send and use. Retailers that offer them should see higher traffic in-store and online as they are redeemed. I'm not sure they will build loyalty, unless a consumer uses a card at a retailer that he/she has not visited before and comes away with a positive experience.

Max Goldberg, Founding Partner, The Radical Clarity Group

In a word -- brilliant. Gift cards are the perfect gift, giving the recipient choice and avoiding the hassles of returns. In U.S. alone $6B in gift card value goes unredeemed. New rules in recent years on escheat prevent the seller from recouping those funds as readily as they once were able to. Wrapp is at the cutting edge of mobile commerce with this service, but I look forward to devices that have a mag strip for ease of browsing and checkout in a secure way. The comments shared in the article about discounts and pricing not building loyalty are "bunk." I doubt giving a friend a gift card to celebrate their birthday triggered from a Facebook post is all that effective at engendering loyalty. Nice to be thought of, though!

David Slavick, VP, Retail Consulting, Customer Communications Group

I guess where I get hung up on this is, why would a retailer want a third party to be an intermediary in this? Why not just offer digital gift cards directly? I agree that gift cards are an increasingly important part of gifting. NRF said more people are going to buy gift cards this year over last year, and I'll be one of those. But the element that gets overlooked isn't the loyalty aspect of it, it's the gifting aspect! It's the ability to turn something that is relatively impersonal into something that feels much more personal -- through customization and personalization of the card. The purchase channel and the delivery channel will be irrelevant, eventually. The hard part will be letting consumers redeem cards via their mobile phones -- then we'll be getting somewhere.

Nikki Baird, Managing Partner, RSR Research

Gift cards may get consumers into a store. Building loyalty depends upon what happens next. The credit card size gift cards are easy to purchase, easy to wrap or send, and easy to put in your wallet. However, if the mail service gets more restrictive maybe the digital gift cards will become even more popular.

Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Hmmm, let's see: I want to get someone something, but I don't have the time and/or ambition to get them a real present, and I think cash looks too much like I don't have time and/or ambition, so...I know! I'll give them something that's less useful than cash, and requires them to troop to a specific store -- which may or may not be convenient -- and pick out their own gift; and now I don't even need to leave my chair to either buy it or send it...perfect!

Of course this QOD is from the perspective of the merchant, and with plenty of clueless and "busy, busy, busy" people around, I'm sure it will find a ready market.

'notcom'

Max Goldberg read my mind with his comments. I couldn't have said it better nor more concisely.

Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

As the smartphone becomes more ubiquitous, more and more capabilities are being transferred to this single device. Those capabilities provide consumers with convenience and improved features vs. paper or plastic. Simply put, providing gift cards on smartphones reduces the number of things the consumer must carry, and makes it easier to use.

One key issue is "breakage," which is the percent of gift cards purchased that are not redeemed at all, or not redeemed in part. Breakage provides retailers with additional revenue. I am not sure that retailers will flock to digital gift cards that can be redeemed at retail for this reason.

However, integrating gift cards into Facebook is a natural.

Mark Price, Managing Partner, M Squared Group, Inc.