Digital gift cards are one of the first thoughts you should have when crafting a comprehensive reward and gift card incentive strategy. Understanding the power of this type of reward is pivotal to effectively increasing customer acquisition, retention and loyalty. Particularly, as they’ve become very popular globally, especially with millennials and GenZs, with the global gift card market predicted to reach a value of $221 billion by 2024 and $1.4 trillion by 2026.
So, let’s dive into everything you need to know to make sure you’re using digital gift card incentives effectively and efficiently as part of your reward strategy.
What Are Gift Cards
In simple terms, gift cards are a type of digital reward; a card or token that can be exchanged for a specified cash value of goods or services from a particular business. It’s an easy and convenient way to give a gift or reward. And, as opposed to cash, which can be spent on anything, a gift card can only be used with identified and named businesses, although there are a few businesses that allow holders to trade or sell unused gift cards.
You might ask why would someone want a gift card incentive as opposed to cash? Particularly, as our recent Reward Revolution research found that cash, whether to a bank account, Paypal or debit card, was generally more popular compared to a gift card or digital subscription. Well the reason is that the gift or reward is more associated with a particular service or product (a form of mental accounting). Whereas, cash is fungible and can and is likely to be spent on anything, like groceries or an energy bill, and so is easily forgotten. So if you want your friend or relative to use the gift to get something specific that they’ll remember (particularly when it’s an experiential gift), then a gift card makes them use the money on that purchase or experience. And so the use of the gift card is more likely to be associated with the event that led to it being issued. If you think that’s illogical then you should consider US economist and 2017 Nobel Memorial Prize in Economic Sciences winner Richard Thaler’s theory of how our emotions, and not rational thinking, shape the way we view the financial value of a good or service.
Types of Gift Cards
There are basically two types of gift card and two formats.
The types are:
Own branded gift cards
Here brand X offers a gift card for a set value that can only be spent on the products or services of brand X. The brand in effect is getting an advance on future sales and knows that the future sale will happen with it, and so it will retain or gain a customer. This can also be considered a form of advertising as the brand is kept to the forefront of the recipient’s mind: gift card advertising if you like.
Third party gift cards
Third party gift cards are where brand X offers a gift card of a set value that can only be spent on the products or services of a third party brand like Amazon or Spotify. The reasons for offering third party gift cards are that the brand finds it difficult to offer attractive rewards based on its own services and believes that a gift card from another brand would appeal more to its audience. Of course, the disadvantage is that there’s an immediate cash cost and the cash value will be spent with another brand.
The two formats are:
Physical Gift Cards:
Physical gift cards are typically in the form of plastic or paper. These are typically used by older demographics who like to have the feel of something tangible in their hands.
Digital Gift Cards (e-Gift Cards):
The digital age’s answer to the physical gift card is e-Gift cards. These mirror the functionality of physical gift cards but in a digital form and can be sent swiftly via email or messaging platforms, eliminating many of the inconveniences and limitations with physical cards, including distribution, loss or damage and tracking.
Advantages of Using Digital Gift Cards
Digital gift cards redefine the very essence of incentivizing and engaging. Let’s explore some of the advantages that come with embracing e-gift cards as a pivotal element of your reward strategy.
Seamless Delivery
The beauty of electronic gifting platforms in distributing digital incentives lies in their flexibility. Sending out digital gifts through various channels like email, social media, or mobile phones, allows an efficient and immediate delivery experience, granting recipients the convenience of receiving and utilizing their cards through their preferred communication channels almost immediately.
Full Automation
The real value of an e-Gift card platform comes through its extensive automation capabilities. By integrating these platforms with back end systems, it’s possible to automate campaigns using triggers or rules. For instance, when offering sign-up bonuses for new customers, a good platform can identify eligible recipients, match them to the offer, and seamlessly initiate delivery — all without manual intervention. This not only saves substantial time but also slashes labor costs, making gift card advertising and distribution almost effortless.
Advanced Reporting Capabilities
An online gift card platform can also unlock a treasure trove of data insights. Good platforms offer robust reporting capabilities that allow you to visualize and analyze campaign data comprehensively and in real time, so you can optimize performance and improve future campaign outcomes by identifying actionable insights from ongoing campaigns, such as which gift card incentives are most popular with your audience and are best fit for your gift card marketing strategy.
Moreover, integrating your e-Gift card platform with other vital sales systems — such as marketing, accounting, and enterprise resource planning (ERP) platforms — allows a global view of financial performance. And don’t forget your employee reward strategy, distributing digital incentives to recognize outstanding achievements and motivate future performance.
Logistical Effortlessness
Embracing digital rewards, particularly eGift cards, eliminates concerns about postage, delivery times, or lost packages, bypassing the logistical challenges associated with physical gifting.
Versatility Across Business Dimensions
Digital gift cards can also transcend traditional B2C applications, expanding also into the realm of B2B. Their versatility means that they can be deployed for employee loyalty programs, digital marketing incentives, or to encourage participation in surveys or the giving of feedback or reviews and many other corporate needs.
Why are Digital Gift Cards so Successful
The reasons behind the success of digital gift cards include the following:
Flexibility
One of the key attractions of digital gift cards is their inherent flexibility. These cards offer recipients the freedom to choose when and how they want to utilize their gift, whether it’s for online shopping, in-store purchases, or a combination of both.
Security
Unlike traditional physical cards, they are less likely to be lost or stolen and won’t break. They can easily be retrieved from a mobile phone, email or app and, if you’ve deleted the email or code by accident, often the issuer can simply resend you a new one.
Instant Gratification
Unlike traditional physical cards, e-Gift cards offer immediate access and usability as the gift card can be in your inbox in seconds, whereas a physical card often has to be purchased in a store or sent by snail mail.
Accessibility
Accessibility marks another advantage of digital gift cards, granting users effortless access to their cards whenever and wherever they are as they can easily be accessed from smartphones, tablets, or laptops.
In essence, the appeal of digital gift cards lies in their adaptability, robust security measures, instant usability, and seamless accessibility.
Why You Need a Digital Rewards Platform
To run a cost efficient and scalable gift card distribution program, you need an advanced digital rewards platform. This will avoid human errors and the need for constant manual interventions, as gift cards can be sent automatically based on business rules and the distribution and redemption can be tracked and audited.
Here are some of the features of a top class distribution platform:
Access an Extensive E-gift Card Catalog
An enterprise digital rewards platform will offer an extensive array of digital gift cards, providing you with a broad spectrum of options without the complexities of negotiating with hundreds of individual suppliers. For example, Buyapowa’s partners have instant access to over 1,000 reward varieties accommodating the needs of different territories, languages and industries.
In addition to having access to a wide catalog of gift cards, your campaigns will be more successful if you can offer your customers and potential customers a choice of rewards from that catalog. Your distribution platform should allow the recipient to choose between, say, an Amazon gift or a Spotify gift card or a charity donation. Our recent Reward Revolution research found that the average respondent expected to be able to choose between 3 and 4 different rewards.
A Streamlined Distribution System
To ensure a seamless and efficient distribution of digital gift cards, you need automation across the all you operational tasks to ensure accuracy, scalability, and adaptability. This should encompass determining eligibility criteria, payout amounts or gift card options and allow distribution with any need for manual intervention. In this way, you can significantly reduce errors and free up business resources and reduce operating costs.
Advanced Analytics
If you don’t have access to data and analytics to drive data-driven decisions based on actionable insights you’ll struggle to improve your program. Your program should provide access to detailed and customizable reports that can be tailored to your needs, and ideally you’ll have expert help on hand to help interpret them.
Scalability
As your business expands, so should your rewards program. A digital rewards platform built for scalability ensures that your program can grow seamlessly with your business. Whether you’re catering to a handful of participants or a global audience, this ensures that the platform can handle increased demands without compromising performance or increasing operating costs.
How to Start Working with a Digital Rewards Platform
In essence, the transformative potential of digital gift cards, coupled with a robust enterprise digital rewards platform, can help your business drive engagement, loyalty-building, and revenue generation. Finding the right digital rewards platform and partner is a key part of that
We’d love to talk to you about how Buyapowa can help you on this journey. Reach out and let’s chat.