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The Evolution of Gift Cards

evolution of gift cards

It all started with paper gift certificates. These certificates were given to employees, customers, and partners for meeting goals, recognition on a job well-done, or just as a simple thank you. Gift certificates were often mailed and could take weeks to reach their recipients.

Along comes plastic

In late 1994, the first plastic gift card was created. Blockbuster Entertainment created gift cards that had no value until activated. There is some debate as to who was next, but it was believed to either be Mobil Oil Company or Neiman Marcus. Mobil introduced a plastic card that could be used for gas fill-ups and phone calls. Using the same technology that was available with prepaid phone cards, a customer’s balance information was obtained within a magnetic strip. While Neiman Marcus had created a card, they did not market them properly in stores: placing the gift cards out of site behind the cashiers.

Other retailers to follow suit:

  • 1996: JC Penney shook things up by offering designs on their cards
  • 1997: Kmart partnered with AT&T to create a store card that could also be used as a calling card
  • 2001: Starbucks introduced reloadable cards

Plastic was clearly an upgrade on the traditional paper certificates. More convenient and not as easy as paper to replicate, plastic helped reduce fraud and loss. In some instances, to this day, recipients still have to wait weeks to get their plastic gift card reward.

Introducing electronic

Gift cards have evolved into a top choice for incentive & rewards programs.  E-gift cards (sometimes referred to as digital gift cards or eCerts) have been a complete game changer in the incentive world. Using barcodes and QR codes, e-gift cards can be printed and scanned or even redeemed straight from the recipient’s mobile device. With the ability to now send an employee, customer, or program member a gift card to an email address or smartphone within 30 minutes or less, rewards are more instant and gratifying.

Gift cards as rewards and incentives

While the speed of delivery is the most recent gift card breakthrough, this is not the only reason gift cards are so popular for recognition, rewards, or incentives. Gift cards are a flexible, customizable option, that allows the recipient to purchase something for themselves that they may not have if they received a different reward, such as cash.

In 2014, The Incentive Gift Card Council (IGCC), a strategic industry group that is part of the Incentive Marketing Association, surveyed over 1,000 people – 222 of which manage gift card programs and here is what they discovered:

  • Approximately 50% of U.S. businesses used gift cards to reward or recognize employees, partners, and customers
  • The most common application for gift cards was employee recognition programs, followed by sales and customer recognition programs
  • Dining was by far the most popular merchant category, followed by department stores
  • Large companies were more likely to also buy from the corporate sales group of a retail brand or from a gift card reseller. (B2B gift card management companies, like our team at GiftCard Partners, handle these types of sales for retailers)
  • Of those ordering online from a retail corporate sales group or a reseller, 86% are highly satisfied with the online ordering experience

The evolution of gift cards is fascinating, to say the least.  The IGCC is gearing up to conduct this survey again this year, so keep an eye out for more on how the industry has grown in the last 2 years!


You may also be interested in The Evolving B2B Gift Card Channel white paper, which takes the evolution of gift cards and their use as incentives a step further.

The Evolving B2B Gift Card Channel

evolution of gift cards

Jennifer DiPietro has been managing B2B gift card programs since 2010. A lover of social media, she has recently decided to get back into blogging as well as delve deeper into the world of marketing. Native to New England, she enjoys the beauty of the coast, but also loves the cold, snowy winters. She is obsessed with Boston sports and the Denver Broncos.

Gift Card Insights: Gift Card Usage Grows

Gift Card Insights

Over 3,300 U.S. consumers over the age of 18 were surveyed for this year’s Consumer Insights Study from First Data. The Consumer Insights study provides a comprehensive gift card insights on consumer usage. This year’s study shows how vital gift card programs are to a retailer’s marketing strategy. The popularity of online shopping and usage of mobile wallets have been embraced by consumers, as the desire grows for faster and more personalized shopping experiences.

Gift Cards Drive Revenue

We know that gift cards can drive traffic to your store, but how are they increasing retailers’ bottom line?

  • 70% of consumers have purchased or received closed-loop plastic or e-gift cards in the past 12 months
  • 52% of consumers say that receiving a gift card prompted them to visit a store more frequently while 40% say they wouldn’t even have visited the location if it weren’t for receiving the gift card
  • A whopping 69% of gift card recipients spend more than the value of their gift card
  • $27.29 was the average overspend, also known as lift

Virtual Gift Cards

Virtual gift cards, sometimes known as digital gift cards, eGift cards, and eCertificates continue to grow in popularity. While virtual gift cards are trending upwards, they are not taking market share away from plastic gift cards. Offering the right mix of both plastic and virtual gift cards is important.

Plastic gift cards

  • 25% of consumers are purchasing more plastic gift cards than last year
  • 58% of consumers purchased the same amount of plastic as last year
  • Consumers are spending an average of $58.95 on plastic gift cards, which is up 2.3% from 2014

Virtual gift cards

  • 48% of consumers purchased the same amount of virtual gift cards as last year
  • 41% of consumers purchased more virtual gift cards than last year
  • Virtual gift card spending was $56.98, up 3.8%

Mobile Wallets and Online Shopping

Mobile wallets and online shopping continue to grow along with the desire for perks and the overall “customer experience”.  Gift cards are becoming the ideal tool for customers who desire to be incentivized, rewarded, and recognized.  64% of shoppers would prefer to receive a $10 gift card as a reward for using retailer loyalty apps and mobile wallet programs (with 16% preferring the reward in the form of a coupon).

Other Interesting Gift Card Insights

In the last three years gift card self-purchasing has more than doubled. 45% of consumers purchased gift cards for themselves in 2015.  Self-purchasing gift cards are also popular across all generations: 49% of millennials, 44% of generation x, and 42% of baby boomers all reported self-purchasing gift cards in 2015. Gift cards aren’t just for giving!

Jennifer DiPietro has been managing B2B gift card programs since 2010. A lover of social media, she has recently decided to get back into blogging as well as delve deeper into the world of marketing. Native to New England, she enjoys the beauty of the coast, but also loves the cold, snowy winters. She is obsessed with Boston sports and the Denver Broncos.

2014 Holiday Gift Card Spending to Top $31 Billion

This year holiday gift card spending on both plastic and digital gift cards will top all previous records with sales expecting to reach over $31 billion!  Gift cards have shed their reputation of being impersonal and have emerged as the perfect practical gift item for millions of holiday shoppers and are the most requested holiday gift for the 8th year in a row.

Shoppers are expected to spend an average of $47.87 a card, up 6% over last year.  Since the National Retail Federation began tracking customers holiday purchasing intentions in 2003, the total spend on gift cards has increased 83%. “Consumers young and old want to find the best way possible to create a happy holiday experience for their loved ones, and gift cards are a great option every time.”  Gift cards are a go-to gift for consumers of all ages; adults 65+ will spend the most on gift cards, while young adults will spend the least.  In addition, men will spend almost 10% more than women on gift card purchases.

The following charts provide more insight into the 2014 NRF survey results, check out more here.

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About the Survey

The NRF 2014 Gift Card Spending Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey polled 6,593 consumers and was conducted for NRF by Prosper Insights & Analytics, November 3-10, 2014. The consumer poll has a margin of error of plus or minus 1.2 percentage points. Download complete survey results here!

Jennifer DiPietro has been managing B2B gift card programs since 2010. A lover of social media, she has recently decided to get back into blogging as well as delve deeper into the world of marketing. Native to New England, she enjoys the beauty of the coast, but also loves the cold, snowy winters. She is obsessed with Boston sports and the Denver Broncos.

eGift Cards: On the Rise, But How are They Perceived by B2B Buyers?

eGift and mobile gift cards are a popular topic as excitement grows around digital technologies. CreditCards.com reports that one half of the major gift card brands that offer eGift cards only started offering them this year. Retailers and merchants are ramping up to take advantage of growing mobile and tablet buying segments, as they are quickly becoming some of the most valuable online shoppers.

Interestingly, when GCP recently surveyed B2B gift card buyers; we found that the B2B market still prefers to purchase physical plastic cards over

do you prefer egift cards or plastic

GCP's Survey Finds Plastic Most Favorable

digital. 86.5% of B2B gift card buyers surveyed are still more comfortable with traditional plastic. We know that trophy value plays a part in the B2B buyers’ strategy, but perhaps eGift cards are still somewhat too mystical for buyers.

CreditCards.com breaks it down simply and clearly with 3 Digital Gift Card Varieties

  • Email gifting is the most widespread, accounting for about 95% of the digital gifting market, recipients receiving the gift card in their
  • Mobile gifting lets consumers use a smartphone app to send a gift card or have a gift card sent to a mobile
  • Social gifting lets consumers send gift cards via social media sites. For example, Amazon.com lets customers send friends gift cards by posting the cards on their Facebook walls. CashStar’s CEO David Stone states that “Social gifting is growing at a rate of about 400 percent”

Are you ready to buy digital or are you still a fan of plastic? Why or Why NOT? Click here for the full CreditCards.com E-gift cards take center stage story

Source: CreditCards.com

Established in 2004, GiftCard Partners is an award-winning leader and outsourced solution provider for merchant B2B gift card programs through key distribution channels.

The Sky is NOT Falling on Plastic Gift Cards

With all the hub bub about prepaid technologies like mobile wallets, mCerts and virtual gift cards, Ben Jackson from Mercator Advisory Group, offers us his calming and factual perspective in “The future form of closed-loop gift cards – Reports of plastic’s demise are greatly exaggerated”.

Ben examines 3 great lessons of history to temper the overstated destiny of plastic gift cards and advises “that new technologies do not always completely distance old ones”. The history lessons offer great perspective that “There will always be a place for plastic, but (the) day will soon arrive where virtual cards and mobile cards will be a necessary part of every issuer’s prepaid strategy. The task for issuers is to figure out what needs each form factor fills and tailor their program to make each work towards the best results”, states Jackson.

This is great advice for issuers, retailers and merchants as they look to grow their businesses with diversity versus alienating parties via the next big technology.

Source: Payments Journal, Mercator Perspectives

 

 

 

Established in 2004, GiftCard Partners is an award-winning leader and outsourced solution provider for merchant B2B gift card programs through key distribution channels.