Are retailers missing marketing opportunities with gift cards?

Photo: Wikipedia, AlbertHerring
Aug 01, 2016
Tom Ryan

While confirming past studies about the popularity of gift cards, research from Listrak finds one major shortcoming for retailers is that they’re failing to collect the information necessary to contact gift card buyers and recipients.

According to an online survey of 2,069 adult consumers last December by Harris Poll on behalf of Listrak:

  • Thirty-six percent would find it helpful if the person who gives them a gift card provides the retailer with the recipient’s e-mail address so they can learn more about the brand, receive news of discounts and new products, etc.;
  • Sixty-six percent would find it helpful (29 percent very helpful) to receive a reminder from a retailer that they have not yet spent a gift card they received;
  • Forty-three percent would find it helpful to receive an e-mail or text from a retailer when a recipient spends a gift card they gave.

However, according to the study, only 14 percent of those surveyed have been asked to give the recipient’s e-mail address and only seven percent the recipient’s mobile number when purchasing a gift card.

The study also suggests that gift cards can be used more widely as a marketing vehicle. Of those who have ever purchased a gift card, 26 percent have taken advantage of a “gift card with purchase” incentive to get a gift card for someone else, and even more — 34 percent — have taken advantage of the same incentive to get a gift card for themselves.

Gift card recipients are also often new customers to a store that could receive special messaging or treatment when they come in. In the survey, 58 percent agreed (23 percent strongly agree) that they like to seek out new retailers to purchase gift cards from based on the recipient’s interests and/or tastes. Some use gift cards to introduce their favorite stores to recipients.

Finally, the study identified the opportunity to make gift cards more of a year-round event. More than three quarters (77 percent) of respondents who have ever purchased a gift card agreed (35 percent strongly) that they like to purchase gift cards for occasions other than the winter holidays.

DISCUSSION QUESTIONS: Are retailers falling short when it comes to promoting and improving the gift card experience for customers? Where do you see the greatest opportunities for retailers to use gift cards to drive incremental sales?

"The followup of the gift card purchase transaction is one of those murky voids that only a few surveys truly expose."
"Maybe I’m missing something here and the whole gift card idea has been transformed while I was away."
"You bet I would promote the use of gift cards if I am a retailer. What is not to like?"

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13 Comments on "Are retailers missing marketing opportunities with gift cards?"

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Kim Garretson

When I was at Best Buy we found that gift card recipients typically spent 150 percent of the face value of their gift cards on store visits because of the “free money” burning a hole in their pocketbook. Capturing emails and sending reminders are great tactics to improve the customer experience. I also think that incentivizing purchases above the face value could be a great tactic. Perhaps a sliding scale discount on the “over” purchases, or a way for the recipient to get another gift card based on their “over” purchases?

Ralph Jacobson

This is a great topic that hasn’t gotten the attention it deserves. With gift cards as popular as they are, I cannot believe there isn’t a huge opportunity, not just for retailers with e-nurture programs such as those suggested in the article, but also for CPG brands to leverage the reach these gift cards have. The followup of the gift card purchase transaction is one of those murky voids that only a few surveys truly expose. Retailers could also send promotional offers to drive upsell revenue to both the purchaser and the recipient.

Ian Percy
Maybe I’m missing something here and the whole gift card idea has been transformed while I was away. First, it’s a “gift” one person gives another. Usually it’s because “I don’t know what to get you and this is an easy way to assuage my guilt.” Really it’s a gift of money though often with restrictions. It has a different psychology than buying someone you care about an actual gift. If I give a useful referral to someone and they give me an Amazon gift card that is fine with me. But I think my wife would prefer me to choose the necklace (even if she has to take it back) than for me to give her a gift card from the jewelry store. It’s amusing to see that cards are printed with various pictures to make them look more gift-y. By the way, has anyone made it possible to put one’s own picture on a gift card? If not, that is a great idea — please remember where you got it. And let’s face… Read more »
Steve Montgomery

One of the reasons that people might not provide the recipient’s email address is their concern that the person will be bombarded with emails from the store. Another is they may not know the recipient’s email address.

In other cases, the gift card is being purchased from a display such as shown in the discussion where the card is being purchased from a retailer selling multiple cards. This makes it impossible to provide the recipient’s email. One way to possibly get around this is to ask that recipient to register the card to ensure that if lost the retailer has the value recorded.

Camille P. Schuster, PhD.

If I had to fill out a form to give my email address and the email address of the person receiving the gift card, I would look for a retailer that did not require that form. If I buy a gift card for someone whose email address I do not know, would I not be allowed to buy the gift card? I thought shopping was being made easier for the consumer.

Bob Amster

The retailer that requires an email address is being too slick. There is no need for the retailer to request an email address in order to sell a gift card like there is — for example — to email you your receipt.

Ryan Mathews

First, a gift shouldn’t come with strings attached — like the recipient’s email.

Second, this is an issue that ought to be thought out from the recipient’s point of view. I’m with Ian. A gift card says, “I’m clueless what to get you. Oh, and if you forget about my gift for a while it may not be redeemable anyway.”

Want to make them more popular? Create special offers around them — say a discount when you use a gift card for a purchase.

Gene Detroyer

You bet I would promote the use of gift cards if I am a retailer. What is not to like?

  1. It brings recipients into the store (or maybe online).
  2. They spend more than is the face value of the gift card.
  3. There are no returns of gifts.

I like them so much, I would give every customer who makes a purchase of substance a gift card when they check out.

Bob Amster

The gift card is a multi-purpose vehicle for maintaining a nice customer experience, driving incremental sales with existing customers and gaining new customers. The gift card is used to provide merchandise credits, insuring that any refunds are spent with the retailer. Additionally, the gift card can be used with loyal customers by converting accumulated value to dollars spendable only at the retailer. Furthermore, gift cards purchased by an advocate of the retailer as true gifts for others can entice the recipient of the gift to become a new customer or, at least, spend more than just the value of the gift card on the purchase. Retailers would be wise to exploit all of these potential avenues to drive incremental sales.

Ross Ely

Retailers could definitely be doing more to promote gift cards and integrate them into the shopping experience. Shoppers have demonstrated an affinity for gift cards and value them as a reward for their loyalty or specific purchases. The economics also work great for retailers because of both breakage and shoppers’ tendency to overspend beyond the value of the gift card. Retailers should strive to make greater use of gift cards in their promotions and regular marketing programs.

Larry Negrich

A gift card seen as a “generic present” is quickly becoming a generational perception. In fact, gift cards can be the vehicle that can further facilitate a personalized, experiential shopping experience desirable to Millennials and younger. As an example, my teenage daughter sees it like this: I enjoy spending time with my friend over her favorite drink: Pumpkin Spice Lattes from Starbucks. For her birthday, I’ll buy a Starbucks gift card so that my friend can share the experience again whenever she wishes to enjoys another pumpkin latte. It’s personal and thoughtful, it’s not an avenue to getting out of shopping.

To the point of this string, and to tie in my commentary, retailers marketing the gift card as an experiential gift seems like a largely under-used option.

Brenda Gilpatrick
1 year 5 months ago

It’s a logical question you are asking, but the reason that retailers aren’t acquiring personal information (particularly for recipients) is escheat laws. Many states require parties managing unclaimed property to contact the property holder prior to escheat, sometimes multiple times. It’s not as much of a factor with the purchaser, but it can be. Furthermore, it can impact gift card breakage recognition.

This is one of the reasons why retailers outsource fulfillment for both plastic and digital cards.

This is a terrific opportunity for third parties to manage this type of marketing on behalf of retailers.

Arie Shpanya

Retailers could better capture emails for future marketing opportunities at the time the recipient uses the card (or having them register it as Steve Montgomery suggested) vs. at the time the card is purchased. While capturing emails then would be great, I’m sure most people would be reluctant to give out the recipient’s personal information to a retailer up front.

"The followup of the gift card purchase transaction is one of those murky voids that only a few surveys truly expose."
"Maybe I’m missing something here and the whole gift card idea has been transformed while I was away."
"You bet I would promote the use of gift cards if I am a retailer. What is not to like?"

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