13th Sep, 2019
, , Designation
20 gift cards!
The number I accumulated as Christmas gift â mental note for me with Christmas in the offing.
While I truly appreciate the thought behind the gift cards, in more ways than one it kind of limits my rights as consumer. Must buy only certain type of products, must buy only at certain places, must buy only by a specified time-periodâ¦are not really helpful, rather doesnât even entice you into a shopping spree! Come to think of it amount of unspent gift cards lying in the drawer totals to about $1 billion a year in US â called the âbreakageâ money.
However, just like that, my inbox and my walls on the most active social pages started getting flooded with things that I once checked on the net or something I liked somewhere. Yes, âremarketingâ in full form, youâd say.
Surely though, it led me to think about gift card industry and the increasing role of data analytics underneath this entire sales tactic.
The Gold Mine
Ease of purchasing and using and being flexible at the same time has lent to its popularity. For retailers it means, more value upfront even before the gift card is redeemed. More so, most of the buyers top-up on the value of gift cards at the time of purchase, around 72%. Succinctly it means, locking future business in the present.
Source: Global Opportunity Analysis and Industry Forecast, 2016-2023
Most cards have lock-in period of five years, which mostly are extendable, however chance of redemption goes down after first nine months. The breakage money that showed up as liability in earlier financial audit is then calculated under profit column!
Let us look at the Gift card market segmentation and some interesting predictions around the market.
Open loop cards are those that frees the customer to use the card at any merchant store which is part of the issuing carâs network.Â Closed loop cards on the other hand can be redeemed only at the issuing merchant.
- The gift card market size will grow by USD 9.34 billion during 2018-2022.
- The evolving gifting landscape will drive the global gift card market to register a CAGR of close to 15% during the period 2018-2022.
- At the present, North America and Europe ranks the first position with approximate 65% of the global mobile gift cards market, while the Latin America, Middle East, and Africa markets remain as new-born markets.
- Among emerging markets, India is among one of the potential markets for future digital gift card industry. The overall segment of Indiaâs gift card has reached to USD 1 billion annually in the last consecutive years according to Paynxt 360.
- In terms of consumer segments, both B2C and B2B segments share a growing trend.
No denying that both globally and in terms of numbers, the gift card industry is on rise. But have retailers woken up to realize its full potential?
Gift cards as financial instruments churn out a lot of data. Lot of actionable insights that can be leveraged for further boosting sales.Â Pertinent among them are:
Profiling customers: it is easy to ascertain the purchase behaviour, preferences, demographic. This can be used to better the retailersâ own understanding of product relevance, parameters of making a purchase decision, better target mechanism and customer engagement plans to develop mutually beneficial business outcome.
Cross-selling and new opportunities: once the retailers have customer profiling, Data Analytics come into play. Basis customerâs preference, transaction history, et all retailers can optimize their offers and cross-sell relevant and appropriate products. You boost sales and at the same time engage customers.
Targeted Marketing efforts: Needless to say, Data analytics help in identifying hot leads from warm and cold leads. Marketing communications then can be directly targeted to them with an aim to increase engagement level.
Predictive Analytics: Advanced Data Analytics and Predictive Analytics are helping to garner crucial business insights, market intelligence and business forecasts.Â Retailers can take help from expert partners in the field of Data Analyst to perform Data discovery to deliver insights through Visuals, Insights and Consulting Services.
Â The Underlying Current
The opportunities can be built upon only if scientifically derived data of gift card purchase can be linked to its redemption analysis. Insights into the right product placement, compliance leading to standardization and corrective measures, assessing strengths and opportunities of the gift cards help beef up retailersâ revenue and lessen revenue leakage. Specifically, it helps them prioritize their investment to achieve desired customer engagement levels.
As for me, I am persuaded enough to start listing what I want to fast use-up my gift card lest they form part of breakage money!