How can Digital Gift Cards Help Your Business?

While Gift cards have been in existence for a period of over three decades now, Digital gift cards are their younger sibling. The acceptance and use of digital gift cards have been skyrocketing these past couple of years. As a result, the digital gift card market is expected to grow at a CAGR of 15,8% and reach a trillion-dollar market size by 2030. The reason for stating these figures is to showcase the speed of adoption and acceptance of digital gift cards. This is especially true for the millennial generation, where the Digital gift card adoption rate is almost 35%, per research.

How to Adapt Digital Gift Cards into your Marketing or Retention Strategy?

Gift cards are a method through which store/brand owners can ask potential customers to prepay for the services/products they offer. This is unique as it ensures long-term retention and provides funding for future services, resulting in guaranteed demand. This is a crucial aspect for founders and new businesses as they face the challenge of retaining customers and ensuring recent customer acquisition. Gift Cards can be a way of doing both while selling digital gift cards to existing customers at a discount which can be arrived at by analyzing the cost of retention, and providing future customers with to experience the services by using the same methodology can ensure that the company can reach out to more and more customers at zero cost.

It can also leverage price discounting without providing direct discounts to current and future customers, as customers can perceive deals as the organization needs to do better. But, again, this may differ from the perception the brand or the business would like to create in customers' minds.

Leveraging Digital Gift Cards to drive Engagement or Use

Many digital platforms are driven not by customer purchases but by how much the customer is engaging with the platform. Say, for example, a company is providing a service of content viewing or monetization. These platforms aim to motivate their current users to use the platform more and engage.

The challenge is that multiple similar platforms are vying for the same attention space as they are. While people may be different regarding wealth, everyone has the same limited time. Content and gaming platforms are all vying for a space in the 24 hours you and I have.

Many new platforms have built solutions where that work based on providing the user an opportunity to earn via the platform itself. This has acted as a great differentiator for many of them, but the challenge sometimes arises when distributing the earnings. For example, many may be in different legal boundaries than the company and need a bank account (25% are unbanked globally). A simple way these platforms are tackling this is through Open Loop Digital Gift cards. Open-loop digital gift cards are similar to prepaid debit cards. The only difference is that there is no physical or plastic card; every detail is stored digitally. This makes even cross-border payment disbursement pretty easy.

Leveraging Digital Gift Cards as a way to do associative branding

Associative branding is a method that small-scale organizations popularly use to drive brand recognition. This is a kind of guerrilla marketing tactic for smaller brands to gain traction quickly. The process is as follows:

1) Identify the segment you are catering to

2) Define your positioning.

3) Identify popular brands that are popular in the same segment that you wish to operate in.

4) Create a Campaign where you say that people can win a Gift Card from the famous brand that you have identified if they use your services/product.

It has been proven effective by many brands or Organisations in the early phase of their journey. It can also be done later, but you may have to get approvals from the other brand/organization.

One such example that I know of is a mobile store that had recently opened; in its promotion, it was giving away 500 rupee value Starbucks gift cards to 100 lucky customers who purchased in the next ten days. Although the value is small, loads of Starbucks fans thronged the shop, selfies were taken, and the shop was tagged in social media posts. This resulted in the shop gaining popularity in the locality pretty quickly.

These are some examples I am citing; Digital Gift cards have multiple other uses in Marketing, HR, Operations, and Retail. The use of this Tool is limited just by our imagination.

Do share your thoughts and Ideas!