How Gift Card Incentives Drive Sales and Loyalty

Gift cards offer businesses a variety of ways to build its customer base. They create additional foot traffic, both by the purchaser and the receiver, generate brand awareness and increase same store sales. And, consumers aren't giving up on the ever-evolving card -- the 2009 holiday season saw an increase of 2.1 percent of gift card activations this year, according to First Data.

We all know the traditional gift card story. Jane is looking for a birthday gift for her assistant and is not sure what to get because she's new to the company. To be safe, Jane goes to the local Bath and Body Works and purchases a gift card as well as some anti-bacterial soap for her home kitchen. Or, Jane decides it's better to buy a general purpose card so the assistant can use it at a grocery store, local mall or for small home improvements. While purchasing the card, she decides to get another one for her nephew's upcoming birthday. Jane picks out the card and the amount, pays for it and walks out of the store. The end. Or is it?

What if there's a way to add another chapter to this story by adding incentives to a gift card program to keep customers coming back for more? A gift card is a loyalty tool in itself, but adding additional perks can only enhance the customer's experience.

One way to incorporate loyalty to a gift card program is to include a gift card in a direct mail campaign sent to a specific audience. For instance, a local gas company wants more consumers in a metropolitan area to switch to its services. As an incentive, a gift card to a local bookstore is attached, but it can only be activated once the consumer signs up for the service. The consumer gets a perk and the gas company gets a new customer.

Another loyalty option is to offer timely rewards, like instant discounts at the point of sale using the gift card. First Data's "2009 Loyalty Study" found that 61 percent of consumers want coupons for discounts on total purchases. Adding discounts for future purchases at the moment of purchasing can build on brand loyalty as well as increase sales.

Turning a gift card into a rewards card that can be reloaded not only creates incentives for customers to return, but also provide insight into customer purchasing behavior. Targeted marketing efforts that cater to the exact interests of customers will undoubtedly improve the overall experience, increase marketing efficiencies and ultimately cut costs for the business owner.

Today, businesses of all sizes have access to gift cards and loyalty programs that are affordable and easy to implement. As businesses look to new strategies to boost their business in 2010, complimenting gift card programs with loyalty programs can increase sales, build brand awareness and reduce costs. That kind of business story ends happily ever after.

Stuart Kiefer is senior vice president of loyalty at First Data. For more information about First Data and its products, visit
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