In a world where consumers have an endless supply of online shopping options, loyalty is crucial in order for retailers to survive. And loyalty programs are proving to be successful in keeping shoppers coming back for more.
According to a late 2022 survey, seven out of 10 Americans considered loyalty programs a leading factor in securing their loyalty towards their favorite brands. The same poll revealed that over 50% of U.S. shoppers were likely to increase their participation in loyalty programs.
So how can retailers encourage consumers to join their rewards program?
Gift Cards are Driving Customer Loyalty
The 21st Annual U.S. Prepaid Consumer Insights Study from Fiserv found that gift cards are actually becoming the perfect way to drive customer loyalty. In fact, incentives and loyalty programs are the primary reason most shoppers buy gift cards.
“At the simplest level, the tried-and-true physical gift card is its own loyalty driver,” says Sam Lituchy, VP and Head of Gift Solutions at Fiserv. “By providing stored value on a card that markets a business brand, a consumer is prompted to visit that store’s physical location or website to make purchases.”
This is causing many brads to enhance the digital buying experiences that act as loyalty currency for consumers, explains Lituchy. These experiences can include:
- Creating digital stored value within a customer’s digital wallet via traditional use cases, such as gift cards.
- Facilitating consumer packaged goods (CPG) or product brand rebates.
Experiences such as these can drive shoppers to continue purchasing at your store or website.
Turning Gift Cards Customers Into Loyal Customers
Many retailers encourage their shoppers’ use of gift cards with incentives that are delivered as stored value via a brand’s loyalty program, according to Lituchy.
“For example, consider a leading coffee chain that provides double loyalty points when consumers pay with a gift card,” Lituchy says. “Doing so encourages their customers to reload gift cards, helping them earn more rewards, which brings value to the customer. With more points or rewards housed in the retailer’s digital wallet, customers then become more likely to engage with that brand again.”
Digital vs. Physical Gift Cards
The trend of using digital gift cards to drive digital engagement is part of the ongoing evolution of the gift card from a one-time-use plastic entity to an integrated part of the loyalty experience. While physical gift cards can still be great for those looking for a present, Lituchy explains that the digital age continues to influence purchasing behavior. So it’s vital for retailers to offer both options.
The Future of Loyalty Programs
Since the first retail-branded gift card program launched three decades ago, Lituchy says that he has seen consumer adoption of gift cards grow steadily, and he expects 2024 to be no different. Especially as businesses and shoppers continue to find new ways to put gift cards to use.
Lituchy notes some examples of these new uses that retailers can utilize for their own stores:
- Businesses are using gift cards to drive customer loyalty and engagement, augmenting digital rewards programs with stored value.
- Brands are partnering on multi-use gift cards that can be used at multiple destinations. A common example is a “Dinner and a Movie” gift card, which allows the consumer to spend a gift card at a restaurant, movie theater or both.
- Consumers are looking to gift cards to stretch their spending power, increasingly buying them for themselves to gain the financial benefit associated with gift card promotions such as discounts and bonus cards.
Inflation continues to impact customer spending, and many shoppers are turning to the incentives associated with gift cards to help keep them on budget. Use some of the strategies noted above to improve loyalty to your brand in 2024.