By Michael Hursta
Vice President of First Data Prepaid Solutions
As temperatures drop, shopping season heats up, making now a critical time for small businesses to ensure they leave no stone unturned when planning their business strategy for the holiday season. According to First Data’s 2012 U.S. Gift Card Consumer Insights Study, more than 88 percent of consumers purchase or receive a gift card annually. This represents a crucial opportunity for small business owners to reach new customers, improve customer retention and drive revenue.
Implementing a Holiday Gift Card Program
The practice of giving gift cards as holiday presents is on the rise, with more than half of gift card givers having bought at least one closed-loop gift card during the 2012 holiday season, and this trend shows no sign of stopping in 2013. For small business owners, implementing a successful holiday gift card program starts with assessing program objectives: Is the program goal to simply drive revenue? Increase brand awareness? Drive foot traffic? Capture customer data? Each of these goals will require a focused implementation strategy.
The next steps for small businesses are to consider their customer base, identify which particular customer group they are targeting and determine that group’s preferences, so that the program meets their needs. Finally, small business owners need to develop a plan, which should include strategic card and carrier design, marketing and promotion both in- and out-of-store and employee education and involvement. As small businesses may have fewer employees, it’s imperative that all involved are on board and understand the goals of the holiday gift card program.
Innovating Your Gift Card Program
The gift card business is highly competitive, making it increasingly important for small business owners to focus on continuous improvement and differentiation in order to succeed. As every holiday season is different, a necessary element of all successful holiday gift card programs is taking a systematic approach to experimentation. That means consistently testing new ideas, evaluating what’s working, refining the plan and continuing to repeat these steps.
A trend for small business owners to consider in 2013 is the growth of e-gift cards. In 2012, 21 percent of consumers bought at least one e-gift card, up from 19 percent in 2011 and continuing a multi-year upward trend. Additionally, the Consumer Insights Study found that the average number of e-gift cards purchased by these consumers rose from 1.8 to 2.5 year-over-year. Small business owners shouldn’t overlook this convenient, environmentally friendly gift card strategy as a way to improve brand awareness and ultimately drive sales this holiday season.
The value of gift cards extends beyond the high perceived value they provide to customers. Two-thirds of consumers who received a gift card spent more than the card’s value, according to the Consumer Insights Study, bringing in additional revenue for merchants. Holiday gift cards can also provide influential customer data, increase store traffic and build brand awareness. As the demand for gift card options continue to grow, it is clear that a holiday gift card program is an essential part of every small business sales strategy.
About The Author:
Michael Hursta, Vice President of First Data Prepaid Solutions, serves as the Closed Loop Prepaid category manager at First Data Corporation. Hursta is responsible for the product strategy and financial performance of the company’s gift card processing business. With five years of experience in the payments industry, Hursta has been involved in developing and launching prepaid programs for merchants around the globe as well as integrating loyalty and mobile components to create innovative solutions. Prior to First Data, Hursta served as a software development manager and business analyst at Qwest Communications. He also served as an officer in the U.S. Coast Guard for six years, with assignments in both operational and project staff capacities.