Over 70% of gift card users indicated that they would prefer a reloadable gift card with loyalty programs. This could emerge as a powerful tool for retailers to manage competition and strengthen their customer acquisition strategy. Retailers gain psychological benefits through loyalty programs and gift cards, as customers perceive these tools as money-saving options, and customers’ inclination towards retailers grows in line with the benefits these tools offer.
Moreover, the ongoing lockdown across the globe to fight against the pandemic is largely affecting the profitability of retailers. The pandemic is also affecting the global economy which makes consumers more concerned about their spending. Consequently, retailers who focus on gift cards and loyalty programs are likely to increase sales and retain more customers.
Long term customer relationship will turn into profit
Technological advancement has given consumers a wide range of opportunities to choose the best option from several retailers. However, it reduces customer loyalty particularly among millennials and Gen Z consumers. These demographic segments are keener towards offers and discounts and they usually do not hesitate to switch retailers. Maintaining long term relationships with these set of consumers is becoming a rising concern for retailers. As a result, gift cards are becoming core to the retailer’s strategy to gain market share.
Currently, gift cards typically are not designed to retain customers. Therefore, retailers are evaluating reloadable gift cards and loyalty card programs. The primary intention behind reloadable cards is to engage consumers by giving them periodical credits, adding bonus points, and insisting on reloading. For instance, Starbucks’ reloadable gift card and loyalty program allow consumers to reload the gift card and they can earn loyalty points for every recharge. Customers can redeem these loyalty points by opting for a free refill or even free next order. Additionally, this helps Starbucks not only to gain profit but also helps the company to build long term relationships with its customers.
A tool to stay afloat in the present socio-economic challenges
As the COVID-19 continues to spread across the world, the socio-economic challenges are getting deeper. This is also affecting consumers buying behavior, the whole supply chain, and retailers’ profitability. Consumers are becoming more conscious about spending due to the economic slowdown and the rising unemployment rate across key economies.
Reloadable gift cards and loyalty programs will be an essential tool for revenue generation and to mitigate financial loss.
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