According to an RSR Research study, a surprising number of digital gift card programs are poorly executed among many U.S. retailers. The Annual Digital Gifting Benchmark Study examined 100 digital gift card programs of retailers from the Internet Retailer 100 and Nation’s Restaurant News, as well as leading airlines, from May–June 2016.
Retailers’ management of digital gift card programs and delivery of the final offering were assessed according to three measurement categories: discoverability, buyer experience and recipient experience. And the results are surprising.
Are Digital Gift Cards Worth The Bother?
A rather shocking finding from the survey was that the number of retailers who failed to follow through on the gift card offering had more than doubled since 2015 — there were 10 guilty this year compared to only four in 2015. According to the study, half of those 10 retailers had a digital gift card process that was so inadequate that a card could not even be delivered.
When it comes to someone buying a gift card, a break at the beginning of the transaction or at the end is equally devastating to the retailer’s reputation. Both the buyer and the receiver are depending on the retailer to follow through on the promise of the gift from the receiver to the buyer. What could be more awkward than sending a digital gift card to someone but, unbeknownst to you, they never receive it?
For the retailer, if well-executed, gift cards present a myriad of marketing opportunities and encourage brand loyalty. For consumers, digital gift cards are easy, convenient and highly desired, as NRF’s annual Holiday Consumer Spending Survey revealed that gift cards were the most requested holiday gift item in 2015 and have been for nine years running.
Star Performers
Among the star performers of digital gift card programs was Sephora, which scored 55 points in the rating; Starbucks followed with 50.5 points, and Home Depot scored 46.5 points. Dunkin’ Donuts was ranked fourth and Amazon fifth. It seems Amazon can be beaten in at least one aspect of eCommerce.
So, what is it that these high performers are doing right with digital gift cards and others are doing so wrong?
The digital gift card doyens are scoring high on the three measures of discoverability, buyer experience and recipient experience by having gift card selection front and center on a website, providing easy, clutter-free checkout, sending notification of receipt and accepting gift cards through all channels, not just online.
The more advanced digital gift card programs include personalization options, like messages, images and video. They also support broader payment options, such as private-label credit cards, reloading for loyalty and the use of gift cards as incentives.
The less-advanced, lower-scoring programs often made it difficult to even find digital gift cards, had confusing messaging and processes and did not support mobile web or app purchase experiences.
Weighing In
Gerry Gilbert, vice president of product for CashStar, offered his thoughts on the results of the study in a brief interview. Here’s what he had to say.
The number of retailers who could not deliver on their digital gift card offering in 2015 has more than doubled in 2016. Why do you think some retailers are failing to provide a quality digital gift card experience?
I suspect that many merchants are dealing with challenges that they likely never even considered when they first built their gift card offering. Delivering the high-quality gifting experiences that a digital-first customer base has come to expect and addressing the increased threat of card-not-present fraud takes more resources than one would likely have initially planned for. Keeping in mind that, for all of these merchants, the core focus of their business is something other than gift cards, retailers who have built their own solution have to balance investing in gift card innovation and preventing gift card fraud with all of their other strategic technology priorities.
Functionality, scalability and dependability can be both time-consuming and cost-prohibitive to achieve through a homegrown solution, as evidenced by the top five ranked programs by RSR — only one is a homegrown solution: Amazon.
What advice would you give to a retailer who wants to introduce/improve a digital gift card system?
For those retailers wanting to introduce a digital gift card program, I recommend that they first understand what their needs are and what types of gifting experiences will best suited for the brand. Assess what type of resources their own organization will be able to assemble to support the program and consider if this resourcing is sufficient to provide an ideal customer experience. Above all, they want to ensure that the offering — once built — will be accessible across all channels, flexible enough to scale as the program grows and adaptable as consumer expectations evolve.
For those looking to make enhancements to a basic program, I advise beginning by shopping their offering and conducting a self-evaluation with these criteria in mind:
If the answer is no to any of the above questions, they need to really focus on mastering the basics and harnessing the internal teams and/or vendors responsible for each aspect. If they are performing well on these dimensions, then start to look at how well they’re incorporating the latest innovations — mobile wallets, apps, additional payment types, like private-label credit cards, and advanced personalization. A recent CashStar research report found that 75 percent of gift card consumers surveyed are interested in digital gift card personalization. Adding a personalization option can be as simple as adding a personalized message. I advise doing this to enhance the consumer experience.
Retailers with a well-established program in place should begin to view gift cards in a multi-dimensional way. Digital gift and promotional cards are fantastic tools for engaging customers across the lifecycle. They can be used as marketing incentives to drive merchandise sales (e.g., spend $100 and get a $20 promotional card), customer actions (e.g., download the app and get a $10 promotional card) and as loyalty program rewards (e.g., receive a $25 promotional card for every 500 points earned). Some merchants use them to issue store credit or to pay warranty claims to appease unhappy customers, and others are using them to drive sales in the B2B channel by making cards available digitally to third parties.
What are the greatest challenges in providing a quality gift card experience for the customer? What should the retailer NOT do?
What retailers should NOT do is “set it and forget it.” Technology is constantly evolving and as such so are consumer expectations. Retailers need to routinely shop their website for gift cards to ensure they are providing the experience they set out to provide. But they shouldn’t stop there. They need to shop the top-rated brands to make sure they really are keeping pace with innovation.
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