Gift Cards as Tiny Revenue Powerhouses
Today’s tech-hungry consumers are continually on the hunt for the most of-the-moment and hottest toys and content. As an electronics retailer, it’s vital that you keep your physical and digital shelves fully stocked with the latest gadgets to meet their insatiable appetite. But while you’re preoccupied managing your electronics inventory and sales, you might be overlooking another type of merchandise that can be a consistent, year-round revenue generator.
The Increasing Demand for Gift Cards
Gift cards are an integral part of the payments landscape and have evolved far beyond last-minute gift options into go-to forms of branded payments. A solid gift card program is essential for consumer electronics retailers for a variety of reasons:
- People like buying, receiving and using gift cards. A lot. Blackhawk research found that 87 percent of consumers surveyed have purchased a gift card for someone else—and a separate Blackhawk study found that 33 percent of U.S. shoppers surveyed bought a gift card for themselves last year. And gift card sales are on the rise; Mercator projects more than $171 billion will be spent on gift cards this year—a steady increase from last year and the year prior. Seventy-six percent of consumers surveyed view gift cards as an opportunity to treat themselves and that same number of shoppers also completely uses up gift cards within one month of receiving them.
- Younger generations demand them. Blackhawk Network research found that nearly one in three Gen Z shoppers surveyed buys gift cards for themselves from entertainment and gaming retailers alone, and nearly three quarters of Millennials and Gen Zers surveyed have used digital gift cards as a form of payment. For example, kids who still live with Mom and Dad need credit cards, debit cards or another form of payment to play popular online video games, but parents are reluctant to give kids free reign on spending. Enter gift cards. They provide kids with a limited amount of funds to use and manage without racking up charges on their parents’ credit cards.
- Gift cards are entrenched in gaming. According to research from Electronic Entertainment Design and Research, nearly 70 percent of Americans—more than 210 million people—play video games on at least one type of device. And gaming isn’t exactly cheap. Players have to buy the games, equipment, online memberships, in-game add-ons, passes and more. Gift cards can touch all of these avenues to drive revenue. While receiving gift cards as gifts and buying them for self-use are two more straightforward applications for gamers, there are also code-to-content opportunities where players can pick up the latest gaming titles in-store and redeem the gift code included inside to access games or applications online—connecting them with your brand across several touchpoints as part of their gaming activities.
- Gift cards solve pain points. Consumers may not know what kind of electronic gadget they should buy someone else and a gaming system, laptop, or other expensive tech device might be out of their budget. Gift cards are an effective way to ensure recipients can buy—or put money toward—something they truly want. They can also help alleviate the frustration of returns. Say a consumer accidentally buys someone the wrong tablet, a wearable they have no intention of using or a video game for which the recipient doesn’t have a compatible system. It’s not the end of the world! Research found that 63 percent of consumers surveyed show interest in receiving a gift card in exchange for a returned retail item. This helps alleviate the frustration of a return, turn a potentially negative experience with your company into a positive one and encourage consumers to still buy from your store.
Supplying the Demand
So how can you make sure your gift card program is up to snuff and generating revenue ASAP? Here are a few ideas:
- Promote your gift card program all year. Physical and digital gift cards can generate revenue for your business long before the winter holidays—and long after they’re over. Plus, in addition to the sale of the gift card itself, studies have shown that 59 percent of consumers surveyed spend more than the amount of the gift card when redeeming it (15 percent do so every time, especially younger generations). Gift cards help funnel money back into your pocket and boost sales beyond their loaded value.
- Beef up your gift card ecommerce program. In case you haven’t heard, ecommerce is booming. According to Internet Retailer and the U.S. Commerce Department, U.S. shoppers spent more than $513 billion online in 2018—a 14 percent increase compared to 2017. Yet according to research from NAPCO, only 51 of the top 100 U.S. merchants sell both digital and physical gift cards in all available commerce channels. The majority of retailers are missing the opportunity to maximize their gift card program’s effectiveness by offering gift cards online. Doing so can create flexible buying experiences and provide shoppers with gift card options however they prefer to shop.
- Use gift cards in promotions. Gift card programs are a great way to boost customer engagement throughout the year because people love them no matter the occasion. Consumers report that gift cards make them feel valued and increase their loyalty to brands. Encourage shoppers to engage throughout the year by redeeming loyalty points for gift cards, participating in special promotions and so forth to create positive experiences with your brand, foster long-lasting brand loyalty, retain existing customers and attract new ones.
Unlike last year’s smartphones, TVs and other tech, gift cards will never go out of style. By thinking of them not just as gifting mechanisms, but instead as year-round, in-demand types of branded payments, you can create a gift card program that steadily contributes to and grows your bottom line, satisfies your customers and helps you keep shoppers happy—and coming back for more—over time.