Feature
Beyond Gifting: Harnessing the Power of Digital Gift Cards
By Ben Kaplan
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hile plastic gift cards have served as a tried and true gifting option since their debut in the 1990s, the emergence of digital gift cards in 2008 addressed many of the shortcomings of plastics. With this digital form factor, consumers gained an easy way to purchase, personalize, and send and redeem gift cards across channels while retailers benefitted from the opportunity to further influence consumer spending through personalized gifting experiences and gift cardbased marketing campaigns. However, the growth of mobile platforms and the evolving consumer shopping patterns in recent years have changed the playing field. In today’s increasingly omnichannel retail environment, the lines across channels have blurred and when channels blur, digital thrives and plastic fails. When a consumer is going in and out of channels, the flexible nature of a digital stored value product is vastly superior to “where’s my plastic gift card?”
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This results in a real opportunity for retailers and restaurants that take this asset and apply it in new and interesting ways – and already, savvy retailers and brands are realizing the increasing power of digital gift cards to boost marketing efforts – and they are reaping the benefits.
Digital gift cards as branded currencies Digital and mobile gift cards are presenting an entirely new opportunity for retailers and brands to enhance their marketing and promotions efforts and inspire purchases in new and creative ways. Since consumers perceive gift cards to have a real ‘cash’ value, leading retailers and restaurants are beginning to leverage digital gift cards as a value-add to purchase, a reward for loyalty, or an incentive to come back again. For example, a retailer may offer a $20 eGift card on a $100 transaction. This offer of currency to return to the brand has incentivized an additional purchase (versus a $20 discount that does nothing to encourage a future transaction). The digital gift card promotion is a strategic asset that allows brands to interact with customers in a promotional way without it feeling like a promotion, while the consumer feels good about the reward for purchasing with
a particular brand. Campaigns and rewards like this can help build loyalty where price reduction may not. For instance, consider The Cheesecake Factory’s annual ‘Slice of Joy’ promotion. For every $25 in gift cards purchased during the promotional time period, consumers received one complimentary slice of cheesecake, delivered in the form of a digital gift card for the amount of one slice (or eSlice). Customers feel rewarded for their gift card purchase and are incentivized to dine and enjoy free dessert. Another example is Sephora. The beauty brand offers a special ‘Beauty Studio Services’ digital gift card product priced at $50, which comes with the added value of a 45-minute in-store customer makeover (in addition to the $50 in product). By strategically packaging the gift card with an in-store service, Sephora is driving store visits and lift through personalized product recommendations. The digital form factor also means that gift cards are always with consumers, since they carry their mobile phones with them everywhere – and this is enabling retailers, if they haven’t already, to realize digital gifting’s true potential. For instance, take Starbucks. Last year, the coffee giant introduced its Tweet-aNovember/December 2014
coffee program, which allows customers in the U.S. and Canada to sync their Starbucks and Twitter accounts to enable spontaneous digital gifting. By tweeting to @tweetacoffee and including the handle of the gift recipient, consumers are able to send and redeem $5 Starbucks Card eGifts online or in-store. Through this initiative, Starbucks has made it very easy to give and receive a piece of branded currency through a social network for the evermobile consumer. What began as an industry centering on a simple piece of plastic has transformed into a branded digital currency that helps merchants connect with shoppers and influence purchasing behavior by enabling personalized incentives, rewards, and offers. Digital gifting is rapidly disrupting the $130 billon gift card market while also providing an entirely new opportunity for generating revenue. With almost limitless options, it is up to you to determine how creative you want to be with this strategic marketing asset. Ben, president and CEO, brings twenty years of experience to CashStar in senior operations, marketing, and product roles at software, e-commerce, loyalty marketing and payments companies. Most recently, he was chief operating officer at Cartera Commerce, a leading provider of card-linked marketing solutions for merchants, banks, and loyalty programs.