Why Are Gift Cards So Popular?

Gift cards have been a huge hit in the United States since their introduction. In 2010 alone, and people spent over 100 billion dollars on gift cards. According to a 2011 survey by CEB TowerGroup, 29% of shoppers prefer giving gift cards over other holiday gifts. This article looks at what is behind this success and how marketers can take advantage of this trend.

For retailers, the advantages of selling gift cards are many: they promote customer loyalty, increase average transactions per customer, and allow customers to make impulse purchases that would not influence buying decisions if cash were involved. You can check how to set up a gift card in Shopify to gift a love one.

Sales Benefits of Gift Cards

Boosts Sales: Although gift cards do not guarantee a sale, retailers have reported that customers with gift cards spend more per transaction than those who pay in cash. For eCommerce businesses, this is especially important as transaction costs can be twice as high for these types of stores.

Encourages Customers to Spend More: If you’ve ever had a $20 bill burning a hole in your pocket and couldn’t resist buying something you didn’t really need at the moment – then you know exactly how powerful gift cards can be. The feeling of having money on hand and no restrictions can lead to impulse buying behavior, which benefits retailers immensely.

Retailers also benefit from increased customer retention thanks to gift card sales. If you have a loyal customer who cannot use the entire balance of their gift card, they may choose to spend it with your store next time they visit.

Increases Average Transaction Size: In addition to increasing total sales, many retailers have reported that gift card shoppers tend to make more individual transactions during their shopping trips. This can be attributed partly to the feeling of impulse buying mentioned above, which might convince some customers that they need “one more thing” after purchasing without cash on hand.

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However, another reason for this phenomenon has been suggested by the University of Tennessee’s Center for Retail & Consumer Studies, which concluded that when people pay in cash, they often divide up into multiple transactions. Still, they are more likely to spend in a single transaction when paying with a gift card.

Increased customer loyalty and strengthened the average American face an astounding 2,292 shopping choices every day, meaning that retailers need to work harder than ever before to earn their business. It has been suggested that if you can get your customers to make three purchases from your store within one year, they will become your loyal followers for years to come.

Another reason for this is that after giving someone a gift card, you might end up seeing them again sooner than expected when it comes time for them to use all of the credit on the card and return for more! · Establishes Customer Loyalty: Gift cards have increased customer loyalty and strengthened the bond between retailer and customer.

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