According to the First Data study, "The Evolution of Branded Currency: 2017 Prepaid Consumer Insights Study," reported by Alex Palmer, when people use gift cards, most of them end up spending more than the full value of that card -- almost $40 more.
Drawing on the responses of more than 2,000 U.S. consumers, the study also found that for 44% of consumers a gift card leads them to visit a store they would not otherwise have visited. Additionally, 53% said they are likely to visit a store more often because they received a gift card. This was even more pronounced among Millennials, 55% of whom said they would visit a store they would not otherwise, due to a gift card, and 64% of who are likely to visit a store more often.
Overall, the findings from the report illustrate how effective gift cards are as a consumer incentive. 75% of respondents reported overspending when using their gift card, and those who overspent did so at an average of $38. This was $10 more than the average overspend by consumers last year.
The research found that gift cards can also be a potent employee incentive, with 69% of respondents saying they would be interested in receiving a gift card as an employee reward.
"Self-gifting" continues to be big among gift card users, particularly among younger generations. 62% of Millennials reported self-purchasing gift cards, with 37% of consumers across age groups pointing to loyalty/rewards programs (35%), and online shopping (27%), as their biggest motivations for doing so.
Dom Morea, senior vice president and head of gift solutions at First Data, concludes "… there is a tremendous opportunity for businesses to… build brand loyalty by implementing gift card strategies… from employee rewards and customer service programs… to social media promotions and marketing campaigns… gift cards are their own form of currency… offering convenient solutions for gift card purchasers, and receivers alike…"
The study found a few other points of note, says the report. Consumers purchased an average of 6.5 physical gift cards on an annual basis, an increase from the 5.9 average purchased in 2016, 5.5 in 2015, and 4.7 in 2014. Digital gift cards were just behind, with consumers purchasing an average of 6.1 digital cards over the year, a big jump from the average of 4.0 purchased in 2016. Mobile gift card apps may be helping to drive this digital gift card use, with 52% of consumers saying they have used an app, and 65% of Millennials saying the same.
For the full report from Incentive Magazine, please visit here.