When it comes to gift cards, consumer behavior comes into play at different stages of the purchasing processspecifically when deciding whether to get a gift card over another gift, and when deciding on what type of gift card to get.
For issuers, that has implications for how gift cards are marketed and sold.
On the surface, it would appear there is little or nothing those of us in the gift card industry can do to convince more gift givers to select a gift card over another gift. Yet, there are things that can be addressed not only to increase gift card sales, but also to inject efficiencies into the system.
Some critics and consumer advocates often criticize the gift card industry for its inefficiency. The National Retail Federation, for example, reports overall merchandise returns at 8.6%, or $267 billion in lost sales larger than the GDP of Finland.
So what can Visa, MasterCard, Walmart or Home Depot do to ensure their gift cards are maximizing customer satisfaction, loyalty, repeat purchases, and referrals? Address consumers psychological drivers.
Psychologists and psychiatrists deal with patients and their profiles in order to help them reach a balance. None of these profiles are necessarily good or bad, except at their extremes. When in excess, it is the psychologists job to lean their patients over into opposing territories, to keep their patients balanced. An extreme obsessive will need to move into histrionic territory and vice-versa. And the same applies to other profiles.
Marketers and retailers are faced with similar challenges. To be sure, they are not treating patients at an individual level, but dealing with consumers at mass scale. What they can do, however, is communicate to the gift card giver the recipients inner needs and try to lead the givers into getting the right gift card for their recipients. This will maximize customer satisfaction at both ends (gift card giver and recipient), plus the overall lifetime value of a customer, and referrals from both giver and recipient.
Positioning is key. Positioning the brand, the product, the service and the unique selling proposition. But most importantly, a proper positioning, one that delivers on the promise.
For example, Walmart has what appears to be a valid positioning statement: Save money. Live better. There is no question that at Walmart, consumers can save money. It is also conceivable to think that saving money can help you live better, providing financial security. That said, living better means different things to different people. Walmart should position its gift cards not to the givers needs, but to their recipients needs. As an example Know others looking to save? Send them a Walmart gift card. Let them save and live better. If Walmart sells a gift card that wont satisfy the giver or the recipient, it will accomplish nothing but consumer dissatisfaction at both ends.
Visa, as another example, may want to communicate something like For those who want choice in life, give a Visa gift card. Again, not the actual message, but the idea of what should be communicated, appealing to the recipients need.
To be sure, consumers dont know the clinical definition of their friends and loved ones. But they are mostly smart enough to know if they are spenders, savers, sybarites, or frugal types. The key is to market not to their targets needs, but to guide their target customers into selecting the product based on their friends psychological traits.
Carlos Tribino is chief marketing officer at GiftCards.com.