“Retailers Turning to Gift Cards as Promotional Tools” by Joe Keenan via Total Retail

“Retailers Turning to Gift Cards as Promotional Tools” by Joe Keenan via Total Retail

Gift cards, both physical and digital, have often been viewed (mistakenly) by retailers as strictly a transactional product — in most cases to be rolled out during the Q4 holiday shopping season. However, gift cards hold a lot more value to a retail organization than simply as a product that’s purchased in-store or on an e-commerce site. For example, they can be used as a tool to incentivize consumers to take other preferred actions, such as signing up for an email and/or loyalty program, downloading an app, submitting a customer review, among other actions.

As part of the 2019 Merchant Gift Card E-Commerce Evaluation, a comprehensive report produced by Blackhawk Network, a company that delivers branded payment solutions through the prepaid products, technologies and network that connect brands and people, in partnership with NAPCO Research (NAPCO Research and Total Retail both are brands of parent company NAPCO Media), a cross-platform evaluation was done to assess 150 leading brands across 108 unique criteria. How merchants are leveraging gift cards as a promotional tool was just one of those 108 unique criteria.

Related story: Report: Merchants’ Investments in Digital Gift Card Programs Paying Off

In the 2019 assessment, 40 percent of the 150 merchants evaluated were credited with points for the use of gift cards as a promotional tool. However, when looking more closely at the data, for the 95 brands that were analyzed in both 2018 and 2019 (the sample size increased from 100 in 2018 to 150 in 2019), 43 percent received points for their use of gift cards as a promotional tool. So while brands are beginning to use gift cards in new, creative ways, they’ve yet to fully tap into their potential as a promotional tool.

As noted above, retailers are most likely to promote their gift card offerings during the Q4 holiday shopping season (albeit when gift cards are the most popular). Consider the following from the 2109 report: data was collected on merchants’ gift card promotions on three separate occasions: late August, mid-October, and Black Friday weekend. The first two collection periods saw minimal promotion of gift cards by brands; however, there was a significant uptick in activity during the final collection period at the start of the holiday shopping season.

What this data is telling us is that merchants are missing an opportunity by not promoting their gift cards year-round. Below is an example of a brand that effectively used a gift card promotion outside of the Q4 holiday shopping season. Quick-serve restaurant chain Subway tied its brand to the massive back-to-school shopping season as a way to sell more gift cards.

Merchants should look to identify their own unique ways to promote gift cards, whether for sale or to incentivize some other consumer action, outside of the holiday shopping season. This will likely vary by vertical, even down to the individual merchant. Get creative — align your gift card promotions and marketing campaigns to holidays and times of year that make the most sense for your brand and its customers. For example, apparel brands could leverage launches of new product lines during the different seasons of the year to push gift card sales through unique promotions.

You can access the full report, 2019 Merchant Gift Card E-Commerce Evaluation, which includes the rankings of all 150 merchants (including broken down by product category) as well as more valuable trends and tips gleaned from the data. In addition, you can learn the full study methodology, including all the details on when and how the data was captured, in the full report.

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