Nuts & Bolts - Gift Card: Six Tips to Reel in Unused Gift Cards
For the fourth straight year, gift cards were expected to be the top gift purchase this holiday season, with 69 percent of consumers planning to buy them, according to the Deloitte & Touche 2007 Annual Holiday Survey.
But as consumers spend more on gift cards—an average of $199 per card—not all recipients are cashing in. According to the report, 49 percent of consumers have at least one partially or completely unused card.
What does this mean for retailers? Other than losing out on the additional sales that often accompany gift card redemption, the report cites more than half of U.S. states have escheat laws governing what stores can do with unredeemed cards. Some laws require all or part of the money be given to the government. In the last five years, most states also have enacted laws preventing retailers from wiping out unused cards, says Stacy Janiak, Deloitte’s retail sector leader.
How can companies avoid getting trapped in the black hole of gift cards? Here, three direct marketing experts detail tips for encouraging redemption.
1. “Consider a ‘redeem your gift card and get a bonus gift’ idea,” suggests Black Forrest, Colo.–based IER Partners’ Andrea Syverson. “Pull them into your brand with something extra—either a small gift or trial size of another item.”
2. “Consider a ‘one-day gift card sale’ promotional strategy,” Syverson says. “Everyone who buys something with their gift card gets an additional percentage off. Stores do this often for their credit card buyers; why not gift card holders?”
3. “Similar to what Best Buy is doing, package the gift card with another offer. Best Buy will place the card in a CD jewel [case], offering an additional coupon towards the purchase of a video game. This really worked for my son. He couldn’t wait to redeem it,” explains Lois Boyle, president of J. Schmid & Associates, in Mission, Kan.