Blog: Online/Mobile Options Drive Gift Card Success

By Krista Lee, First Data

It doesn’t take a rocket scientist to see that the Internet has revolutionized how consumers are learning about, shopping for, and consuming goods and services. Terms have even popped up into our vocabulary to describe our new purchasing habits and behaviors, from “Googling” a product you saw on television, to “showrooming” in-store and then finding a lower price online, to “Shazaming” a song you hear in a movie montage so you can add it to your digital music collection.

The connected marketplace has changed the way  consumers learn about and acquire goods and services, so much so that if you’re not selling your goods or service online, you’ll be left in the dust, as many consumers are demanding the ability to find and purchase just about everything online—including gift cards.

In years past, gift card distribution points have grown steadily in the number and types of locations. First, consumers found gift cards at the checkout stand of their favorite department store or coffee shop chains, then at the giant multicard end-cap displays at the grocery store. Gift cards then worked their way into the grocery store aisle once dominated by other impulse purchases like tabloids and chewing gum. Now, they’ve made the jump online due to sheer consumer demand.

According to First Data’s most recent Prepaid Consumer Insights Study, online gift card purchases increased from 26 percent in 2013 to 34 percent in 2014.  And, it’s not just via the online Websites of consumers’ favorite physical, real-world businesses either.

Social media sites have proven to be a significant distribution point for virtual gift cards. Just in the past year, consumers making gift card purchases on social media sites increased from just 8 percent in 2013 to 13 percent in 2014 … and, based on a new category added to the 2014 Consumer Insights Study, 13 percent of respondents are now using an app to make gift card purchases.

The net of these growth statistics is that if retailers hope to grow the presence of their gift card/prepaid programs by reaching younger, tech-savvy consumers, creating a virtual outlet for those gift cards will be important in coming years.

Cost-effective social media channels can help retailers drive gift card-centric messaging, promote virtual and online loyalty programs or simply drive foot traffic back to brick-and-mortar locations to pick up a physical card. Establishing an omnichannel marketing presence for their gift card programs will help retailers appeal to the buying behaviors and expectations of a demographic with growing purchasing power.

No matter which channel customers use to acquire your cards—traditional, online or mobile app-based—redemptions are a key component to any successful gift card program for a number of reasons:

• First, redemptions drive additional purchases. Consumers said that they spent $23 dollars more than the original value of the gift card they received, according to the survey.
• Secondly, redemptions drive store visits:  51 percent of consumers said they were more likely to go visit a store because of a gift card—mobile, online or traditional.

The importance, however, of redemptions in a gift card distribution strategy can be a double edged-sword. Redemptions drive gift card program success, but in the case of traditional plastic cards, consumers can’t redeem cards they don’t have with them.

That’s why an omnichannel gift card strategy is so important: If consumers are able to retrieve card value via a mobile Website, branded app or a virtual gift card wallet, the ability to redeem is always with them—stored, then retrieved, right through the screen of their ubiquitous smartphones.

Whether you’re looking to expand the presence of your current gift card/prepaid program, or start an entirely new one, when it comes to consumers, the message is clear:  It’s imperative to have an omnichannel marketing and distribution strategy, including online/mobile purchase and redemption options to succeed in the age of connected commerce.

Krista Lee is a manager of prepaid product marketing at First Data, working on thought leadership and B2B marketing for gift cards to large retailers and SMBs, as well as Gyft, First Data’s mobile gift card app solution. You can find her on Twitter @knoelee.

In Blogs & Viewpoints, prepaid and emerging payments professionals share their perspectives on the industry. Paybefore endeavors to present many points of view to offer readers new insights and information. The opinions expressed are not necessarily those of Paybefore.