Gift Cards – Why Retailers are Overlooking their share of a £7 Billion Industry by Adam Hobbs, Head of Retail Partnerships, Redu Group, Seaham
By Adam Hobbs, Head of Retail Partnerships, Redu Group, Seaham.
Having worked in the Gift Card Industry for 12 years now it still amazes me at the number of brands who aren’t benefiting from this market! On average a well-managed Gift Card program should be adding between 3% and 6% of your brand’s revenue. Which means that today our industry is currently valued at over £7 Billion per annum in the UK* alone and growing rapidly, which is, arguably, one of only a handful of industries that has managed to achieve this over the last 18 months. However, when you take a moment to really understand the challenges that are out there for these brands it does start to make sense.
Redu Group have identified two recurring challenges. We’ve focused on how to best support our brand partners and ultimately overcome these challenges.
“Gift Cards are seen as just that, a gift.”
This is something I hear very often and it’s no surprise. One of the biggest challenges is the preconceptions of a Gift Card. Whilst it’s absolutely true that the Gift Card Market is founded on the nature of gift giving, over the last 5 years this has evolved significantly. With the inclusion of reloadable cards and eGift Cards, thousands of use cases across the B2B market sector have evolved and the humble Gift Card is now a versatile payment method. As this market continues to grow it now represents over 50% of the entire Gift Card Market and includes use cases such as:
- Employee Benefits
- Incentive Motivation
- Sales Promotions
- Staff Rewards and Recognition
Not only does this open up new markets to retailers, but a Gift Card also has other customer focused tools that are often underutilised:
- It acts as a customer loyalty tool, driving repeat customers, who will on average spend 30% more than the value of their Gift Card.*
- Customer acquisition tool, over 40% of customers were introduced to a new brand due to a Gift Card*
- Customer engagement tool, Gift Card programs can pave the way for further customer interaction and additional marketing opportunities.
When you couple these tools and new markets together, we can all agree that the Gift Card is far more than a gift in today’s world.
Internal Resource Constraints and the Ease of Entering a New Market
Launching a new product can be daunting at the best of times however, when this sits outside of a business-as-usual strategy it can turn into a monumental task. The key areas that need to be considered when launching a Gift Card are:
- Gift Card Processing – the system that sits behind your Gift Card to manage the creation and management of Gift Cards, plus the redemption journey.
- Designs and Marketing – how are you going to make your customers aware of this new product.
- Internal Overhead – who or what department will this sit with and how will this be reported internally.
- Sales Channels – how can you capitalise on the channels I’ve already mentioned plus your in store and online customer experiences.
- Reconciliation – understanding your Gift Card financial process is a key aspect of launching and running a successful program.
When you put these points together it’s easy to understand why a new Gift Card program can seem overwhelming. However, there are two very clear ways to enter this market:
Set up your own Gift Card Program in-house
If there is the internal resource to create a dedicated team, however small, there may be the appetite to appoint a lead who has the bandwidth to dedicate the time required to either outsource certain aspects of a Gift Card Program or, alternatively, look to build the infrastructure internally. That being said, completely inbuilt Gift Card Programs are few and far between as the technology required to enter the market does exist. This coupled with the introduction of furlough schemes over the last 18 months is likely to make internal resources even more scarce than it was before.
Get a helping hand with your Gift Card Program
More realistically however, the quickest, most efficient and painless way to seek a return on investment is to outsource your Gift Card Program. There are specialists and market leaders who can support the setup, management and reconciliation of a Gift Card program. This includes providing dedicated human and tech resources and has most certainly the lowest internal resource requirements and the easiest route to market.
By understanding these two challenges and focusing on delivering a well-rounded Gift Card Program, brands can unlock the full potential of their Gift Card program. Not only does it open new markets, but it also attracts new customers, retains loyal customers and drives new incremental revenue into your brand. What’s not to love about the humble Gift Card? If you’d like to understand more about this fantastic opportunity and market, please feel free to get in touch with me directly and I’d be more than happy to assist with some free and friendly advice.