Gift cards offer an easy way for businesses to generate sales and engage with customers
By Kipling Macartney, Director of Emerging Solutions & Value-Added Services at Moneris
From increasing revenue to retaining customers, businesses big and small can benefit from offering gift cards all year round. It’s a great way for businesses to stand out, offer flexibility and convenience to shoppers, and keep customers wanting more. And during uncertain times, giving customers different options to make a purchase is a must. 2020 saw a significant jump in merchants participating in various gift card programs via physical, digital, and promotional cards to adapt to the pandemic’s impact on the global marketplace. And since 2017, the rate of gift card users has remained steady, signifying that there is still a demand for gift cards amongst consumers.
Bottom line: gift cards aren’t going anywhere, and they’ll continue to serve and fulfill the needs of both merchants and shoppers. Here are a few reasons why businesses should take advantage.
Increased customer engagement
Gift cards are a great tool to leverage customer engagement—whether they’re used to promote business to prospective customers, or to thank loyal shoppers for their continued support. Providing free or promotional gift cards (think coupons or promo codes) can be a great way to entice new customers. Gift cards can also be used to reward customers who frequent a business, encouraging them to return and make another purchase in the future. Studies found that 70 per cent of Canadian shoppers were more likely to shop where they had some form of a promotional card. And with the return of in-store shopping, the use of promotional gift cards has soared since 2020, almost matching pre-pandemic levels.
Projected growth in the industry
The gift card industry is projected to grow by more than eight per cent from 2020 to 2024. This is, in part, driven by consumer confidence and spending trends in various sectors. Although rising interest rates and inflation have impacted the pace of consumer spending in Canada, the accumulative savings that many were able to build over the last three years might help to offset these challenging periods and make room for personal spending. We saw this in 2022, when pandemic restrictions slowly eased mid-way through the year, and shoppers returned to shopping in-store, dining at restaurants, travelling, and coming back together for in-person celebrations. As the economy slowly rebuilds, participating in gift card programs can encourage customers to return to their favourite businesses and, in turn, increase sales.
Flexibility for customers and merchants
From independent businesses to large-scale franchises, gift cards offer an abundance of options and flexibility to customers and merchants. Not only can gift cards be customized to your business needs, but they can be tailored to maximize an individual’s shopping experience. For instance, gift cards can be filled with almost any amount, encouraging large purchases or recurring visits. Sixty-three per cent of Canadians who receive a gift card will spend more than the value of the card, and 40 per cent will redeem the card’s full balance over several visits. Gift cards can also be accepted at multiple locations for either a single merchant or multiple merchants under the same brand, giving shoppers various options. The best part? Gift cards can be offered for almost any industry, from retail and restaurants to entertainment, trades, and professional services. From the merchant side, gift cards offer direct cash flow from customers, and are a great source of immediate income. Gift cards can also be designed so a merchant’s name, logo, and contact information are included, acting as ‘free’ advertising to prospective shoppers.
Keeping up with digital trends
The pandemic accelerated the need for merchants to diversify their payment options, making checkout easier and more convenient for shoppers. It also opened the floor for merchants to innovate how accept existing forms of payment, including gift cards. Today, e-gift cards can be saved on digital wallets and uploaded to gift-card-friendly apps. They can be reused, and customers now have the option to check their gift card balance online rather than going into a store to find out. While 70 per cent of Canadians are still buying gift cards in-store, millennials are increasingly purchasing digital gift cards. In 2020, the number of merchants who participated in gift card programs rose significantly, as many opted to roll out digital and online promotional gift cards in response to the rise of online shopping throughout the pandemic. Overall, digital gift card solutions are a method for businesses to offer an easy and seamless checkout experience for customers. Improving your business’ online shopping experience, which could include participating in a strong digital gift card program, will be an important way to cater to future shopping trends.
Gift cards are, ultimately, a versatile payment option that continues to evolve with the changing marketplace. Beyond holidays and birthday celebrations, gift cards have a unique role in giving customers the ability to support the business they love, while also being rewarded.
Moneris is Canada’s largest provider of innovative solutions for mobile, online, and in-store payments, processing more than one in three transactions. Serving businesses of every size and industry, Moneris offers hardware, software, and solutions to help transform the way businesses grow and operate, in payments and beyond. For more information, please visit www.moneris.com and follow @moneris.