Any retailer can benefit from the Christmas sales season, and as it is also one of the busiest times of the year, it makes sense to combine it with both incentive programs and relationship marketing opportunities.
In order to benefit from this synergy between sales and marketing, it is important to understand:
- what a gift card is
- how incentive programs work
- using CRM to generate sales
While this technique can be used online and offline, this article looks at the process in the bricks and mortar retail world, for the sake of simplicity.
What is a Christmas Gift Card?
A Christmas gift card is an important alternative to making customers choose what kind of gift they should by for the recipient. It lets the recipient choose their gift in a convenient fashion. The gift card can take several forms:
- a paper card with redeemable vouchers
- a plastic 'credit card' style gift card
- etc.
Important considerations in choosing the kind of gift card include forgery detection (i.e. it would be unwise to use photocopied 'vouchers'), value tracking and redemption items.
Value tracking is interesting because the retailer might prefer to let the customer spend amounts off the card rather than giving them change. To do this, a specific number should be allocated to the gift card, and the value tracked manually, via a spreadsheet, or through the retailer's own POS system.
There are two important pieces of business intelligence that can be garnered from accurate value tracking:
- the total spend
- what the value is redeemed for
These are important because they let the retailer know if the entire value is redeemed, and what kind of gifts were purchased by the customer with the gift card. This information can be fed into future Christmas gift card and incentive programs.
However, in order to leverage the full benefits, it is important to link relationship marketing and incentive programs with the gift cards.
Incentive Programs and CRM
An incentive program is used to offer the customer additional value (real or perceived) in return for a higher spend. A simple program might be a 'buy one get one free' offer, resulting in a perceived 50% discount. However, if the deal is limited to the cheaper item being free, then clearly the actual discount will be less than 50%, and as such can be used to move dead stock, that is taking up space by incentivising the customer.
More complex incentive programs involve the awarding and spending of points. The purpose of these kinds of incentive programs is to give the customer value in return for the possibility to market to them, whilst also persuading them to spend more. Retailers often attach big point bonuses to items that they sell, knowing full well that it will increase sales of the item, and get the customer back into the shop to spend the points.
At the same time, since the retailer holds the customers details, ostensibly to be in a position to communicate with the customer more effectively, they can also use the points system as part of the relationship management or relationship marketing process.
So, how do incentivised customer loyalty programs tie in with Christmas gift cards?
Tying Together Christmas Gift Cards and Incentive Programs
The gift card can be seen as a prepaid points card. Depending on the value, and depending on the average value of items in the store, the holder will return at least once to make a purchase. Since the most expensive customer to obtain is usually the first, using gift cards can help to spread the word without expensive marketing plans.
After all, the person giving the gift card is doing the hard work of selling to a new customer!
The trick is to apply the same conditions to the gift card as to a regular loyalty card - the retailer should take contact details, assign a unique ID, and track the spending as closely as possible, as well as contacting the customer on a regular basis to remind or incentivise them to spend the value on the card.
Like all incentive programs, the gift card should be treated as the start of a customer relationship which can be leveraged to provide value to the customer at the same time as it boots the profitability of the retail outlet.
Guy Lecky-Thompson - Guy W. Lecky-Thompson is the author of several technical and non-technical books, and writer at large. He has written for Dr. Dobbs ...
