It is the time of year to be thinking of gifts so this study from Comdata Stored Value Solutions is perfect timing. According to the results of Comdata’s 802 Internet surveys collected during September 12-18, 2007, consumers will spend an average of $203 on gift cards during the 2007 holiday season, up from $186 in 2006.
Why do people buy gift cards?
- 85 percent purchase gift cards because they want the recipient to be able to select their own gift, while 57 percent don’t know what to buy.
- Consumers purchased an average of 4.83 gift cards in the past 12 months.
Why are gift cards so attractive to retailers?
- 53 percent of card users often or always spend more than the amount originally loaded onto their cards.
- They are also most likely to redeem their cards over two visits, increasing store traffic and the potential for sales over the value of the card.
- Two in five say they bought something they had wanted to buy, but did not have the money to do so.
- One in five say they pay retailers to reload their cards. On average, they reload cards with $47, up from $32 in 2006.
- 74% are redeemed within 2 months
What are the most popular gift cards?
- Department stores are still the most popular place to purchase a card, followed by clothing and book stores, then restaurants.
- he two most popular occasions for gift cards are Christmas/Chanukah/Kwanzaa and birthdays at 75 and 73% respectively with Mother’s Day being third at 19%.
Gift Cards as an Incentive or for Client Appreciation
An article published on Motivation Strategies website written by William Keenan highlighted 5 uses for a Starbucks gift card:
The San Francisco Chronicle used a $10 Starbucks card to motivate cash-paying subscribers to convert to credit card payment. The paper’s market research indicated that customers who paid by credit card are retained seven times longer than cash-paying customers. The goal of a three-month promotion included in subscribers’ invoices was to convert at least 500 to credit card payment. The promotion resulted in more than 1,300 conversions.
A recruiting company for registered nurses on travel assignments wanted to boost response to a questionnaire and to reward the nurses for their hard work, so it offered a $5 Starbucks card to those who answered the questionnaire. The result was a 19 percent response to the poll – far exceeding expectations. The company also received letters of praise and thanks from the nurses. It plans to use the card again.
A national home inspection franchise uses a $5 Starbucks gift card to show customer appreciation and to generate referrals. In a regional test, the company used the program to boost referrals to 10 percent, about ten times more than before the program. The company is now looking to expand the reward program to its entire network.
A mortgage/financial company wanted to improve employee satisfaction by rewarding employee effort and contributions on a spot basis. To do so, it used Starbucks cards in $5, $10, and $25 denominations. The results: Employees have expressed appreciation for the cards, and managers have a nice incentive while still keeping their budgets under control.
A large accounting firm presented attendees at a national accounting conference with a box of chocolate and a $10 Starbucks card in a card carrier with the company logo and a customized gift message. Feedback from the conference on the gift from both clients and firm partners was very positive, and the company plans to use the card at other functions, including client meetings and in-house meetings.
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