To maintain strong, cross-channel relationships with their customers, drive sales and stay afloat during the pandemic, many retailers are investing in their prepaid strategies, which include coupons, loyalty points and closed-loop gift cards redeemable only with an individual business.
The closed-loop gift card, in particular, has always been a valuable part of businesses' tool kits, but it's gaining new value as retailers look to acquire new customers and keep current clientele coming back.
Every transaction matters in this highly competitive, difficult environment. A gift card's monetary value is merchant-issued branded currency that can unlock additional benefits for retailers and supplement customer loyalty strategies. Some marquee retailers have already applied that mindset, transforming their approaches to gift cards into new strategies that are allowing them to push sales and bottom-line results across mobile, digital and physical channels.
A sound gift card strategy will be pivotal as retailers plan for 2021. Here's why.
Digital Payments Will Remain a Staple
Closed-loop gift card processing and use have seen a significant boost due in large part to the accelerated adoption of contactless payments and new incentives from retailers in 2020.
Integrating closed-loop gift cards into a mobile application and leveraging retailers' loyalty or reward programs can have immediate benefits, including increased digital engagement and customer retention. It's a trend that will likely continue for the foreseeable future as digital adoption continues to surge. However, that has also led retailers to rethink how they leverage gift cards, develop broader marketing plans and implement promotional initiatives.
Retailers typically focused on running seasonal gift card promotions but that approach isn't applicable in this retail environment and with the purchasing mindset of today's consumer. A methodical, year-round promotional strategy encourages repeat business and additional spend over the value of the gift card amount.
A gift card's monetary value is merchant-issued branded currency that can unlock additional benefits for retailers and supplement customer loyalty strategies.
Year-Round Promotions Drive Sales
Consumers, especially those who now have less disposable income, want more value. Promotions tied to gift cards can help consistently drive increased foot traffic and sales, both in-store and online.
Early in the pandemic, a leading QSR Fiserv client experienced a significant decline in sales and foot traffic. The restaurant re-evaluated its online and digital promotions strategy and adjusted its approach. The new strategy focused on allowing consumers to purchase gift cards to unlock larger discounts at the time of purchase. In just one month, the QSR experienced a 1,703% year-over-year increase in closed-loop gift card sales.
Enabling Greater Digital Convenience
Amid greater demand for contactless payments, retailers are tweaking digital storefronts for a more consistent payment experience. That may mean enabling customers to load physical gift cards onto digital apps or convert loyalty rewards to digital gift cards. Providing a seamless experience when customers reload monetary value to a card, for example, can lead to increased use and increased sales.
Through its mobile application, one of the largest convenience store brands in the U.S. will enable the ability to convert change from a customer's physical transaction into digital currency, making the funds readily available for the next purchase through the consumer's mobile app. Creating those experiences increases loyalty, drives customer frequency and spend, builds brand market share, and improves speed of service and operational processes.
The pandemic has demonstrated that sound gift card strategies can accelerate cross-channel sales. Retailers are making gift cards a more strategic and efficient component of their businesses this year and beyond.
Learn more about gift solutions strategies, expertise and innovation from Fiserv.