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How to Use Gift Cards to Give an Experience This Holiday Season

It was my birthday recently (why thank you kindly for the well wishes!) and the night before official festivities were to take place my wife received a text from my sister asking for gift advice. Without looking up from her phone, she turned to me and asked for ideas to relay back. I rattled off a few of my favorite beers and ended with the caveat: “and if they don’t have those in stock you know I enjoy a good browse through the aisles.” What I didn’t put together until the next day when I opened my present to reveal a sleek little gift card (thanks sis!) was that what I had actually asked for was an experience.

With the overwhelming focus on millennials over the past few years, the term “experiences” has gotten a lot of play within the marketing and loyalty space. Numerous studies show that this key demographic holds an affinity for experiences, and often articles – like these from Forbes and Business.com – position this as a clash between the preference of material goods vs experiences, but that is not the full story. When reports quote that younger consumers “prefer” or “would rather spend money on” experiences it is misleading as this often paints the picture that these generations are primarily focused on accumulating cultural wealth instead of monetary wealth, flocking towards wildly unique happenings in an act of rebellion against consumerism.

This is false.

This type of presentation fails to acknowledge that you don’t need to mark your calendar and buy tickets to an event in order to have an “experience”.

Life is a constant experience.

And the goods we interact with in our daily lives have the potential to elevate each and every moment.  And that is what younger generations care about – creating memorable moments.

Yes, sometimes that means checking an item off the bucket list. Other times it could be hosting a backyard bonfire where laughs are shared a bit too loud and a bit too late into the night. Or simply capturing an image and sharing it with friends and family who will appreciate its contents. All are experiences.

And as I have been reminded recently by the gift card from my sister, merely the hunt for material goods can be a very enjoyable experience in of itself. A big reason for this is because when we purchase things, we imagine ourselves enjoying them in the most ideal of situations. It’s a similar phenomena as to why playing the lottery is actually worth it, even if you don’t win. We garner enjoyment from the thought of the experiences we will have in the future, allowing us to take greater pleasure in the now. So

So with the gift giving season nearly upon us, how do you ensure that the gift cards that you are giving will result in an experience not once, but twice for the end recipient? To take a deeper dive into the concept of having an experience, while prepping for an experience (where are Leo and Joseph Gordon-Levitt when you need them?) I want you to imagine yourself in 2 scenarios:

Scenario 1:

You open a birthday card with a decently funny punchline courtesy of Hallmark with a generically uplifting sentiment scribbled below from the sender, along with a $50 Target gift card.

Useful no doubt, but not very exciting or memorable. A likely scenario is that you slide the gift card into your wallet and forget about it until you are at the checkout aisle a month or two later (and let’s be honest, this isn’t even the first time you have been to Target since you received it – just the first time you actually remembered you had a gift card). It covers about half of your purchase and moves out of mind as soon as you pull out a credit card to cover the balance. There is no specific item that the gift card bought, it was essentially a great coupon. Furthermore – by the time it’s used you might not even remember who gave it to you (guilty).

Scenario 2:

You open a birthday card with a decently funny punchline courtesy of Hallmark, a $50 Target gift card, but this time a specifically tailored message from the gifter stating that they want you to use these funds to ‘revamp your board game collection’ for the next game night. Suddenly you aren’t just given a $50 catch-all, you are given a passport to adventure. (I realize not everyone will consider picking out a couple new board games as a “passport to adventure” but I do, so if you disagree simply replace the scenario with something you are passionate about.)

The key difference is that in Scenario 2 the presenter framed their gift in a particular manner, which in the case of a gift card causes 3 things to happen:

1. Clarity of focus. The focus has been shifted from the monetary value of the gift to the potential items that will be purchased which allows for a vision of the ideal state where those goods will be used. (i.e. the specific framing has created anticipation – one of the keys to a great experience).

2. Permission to spend irrationally. ‘Irrational’ might be a stretch but certainly the gifter has empowered the giftee to make a non-utilitarian decision. Let that sit. The delivery of the gift, not the gift itself, is what is impacts the end user’s ability to justify their spending behavior.

Scenarios 1 & 2 impart the same financial benefit, but because the second narrative includes commentary from the gifter stating: “I am giving a green light, nay a directive, to spend this on an activity of pleasure” there is an instant switch in the mental accounting of the recipient, stating that they can (and should) treat this pile of money differently than their usual expense budget. This is a vital piece of the puzzle.

3. Evoking a deeper emotional response. Gift cards are notorious for doing the opposite. But adding the personal touch of how the recipient could use the card improves the overall memory halo of the gift. No more forgetting who made your shopping adventure possible.

The bottom line? It is all about how the gift card is framed in the mind of the end user.

Prime the mind to pay attention to the experience that the gift card allows.

So this holiday season when you are checking names off the list, don’t feel bad by settling on a gift card. Quite the contrary! Know that based on how you present them, you have the potential to be giving millennials the thing they value most – an experience – regardless of the brand on the card.

 

Loyalty Program Design: Ignore Customers, Increase Returns

When speaking with brands on loyalty program strategy, it’s clear companies know they should be utilizing their data and personalizing the user experience, but there is often a barrier of hesitation to openly treat customers differently. This hesitancy is rooted in the fear of ostracizing a portion of their consumers who are deemed “less valuable”. Why can’t we simply strive to provide every customer the same high-end treatment that they deserve? Well, because they don’t deserve it.

Not all customers are created equal. A successful loyalty program design allows a brand to:

  1. Focus on Best Customers: New friends are great, but old friends are invaluable. Your brand’s best, loyal customers will celebrate triumphs and help carry the business through rough times. They are different from the impulse purchase crowd and should be revered with your attention.
  2. Make Customers Feel Important: Customers expect special treatment. Research conducted by Forrester indicates that 59% of US online adults who belong to a customer loyalty program say that getting special offers or treatment that isn’t available to other customers is important to them.
  1. Reward Good Behavior: When customers exhibit positive engagement behavior with your brand, recognize it. Furthermore, let them know they will be rewarded for being good. SWA’s “Companion Pass” and Sephora’s “Rouge” are examples of how implementing aspirational status tiers with meaningful rewards can drive fierce loyalty.
  2. Maximize Promotional Budget: Offering all customers the same discounts, rewards, and communications can get expensive – and boring. Segmenting customers within a loyalty program will allow you to track the types of products they buy, how often they redeem, and how well they respond to communications, allowing companies to track the progression of a consumer’s journey with their brand – ideally even leading to predictive analysis.

Of course, there are instances where treating every customer the same does work. Take Publix, for example. At the end of last year, Loyalty360 published a post about Publix & how their “treat every customer the same” mindset has helped them retain brand loyalty over many generations. The grocery-chain doesn’t necessarily have a traditional loyalty program, but they do have many loyal customers. Their belief is that every customer should be treated to the same superior customer service and they attribute their long-term brand loyalty to this consistent treatment of customers. So how has this strategy worked so well for Publix?

First, they emphasize their core principles – remaining true to providing competitive prices, quality products, and customer experience. This ties directly back to their slogan “Where Shopping is a Pleasure” – an easy to digest value prop which they ensure is carried out by their eager-to-help, positive associates.

Next, they deliver consistency while also adapting to the industry surrounding them.  Customers return week after week because their in-store experience is a positive, known commodity. For consumers with more evolving needs, Publix has several online ordering options, including the increasingly popular home delivery powered by Instacart.

While this informal loyalty approach has worked for Publix, this wouldn’t work for every company seeking to achieve brand loyalty. Publix has the distinct advantage of being a “ritual vendor” (The average US household made 1.5 trips to the grocery store per week in 2017) and usually consumers repeat at the same store due to proximity and familiarity – two inputs that make a habit hard to shift once engrained. Publix also has a long history of superior customer service, and unfortunately brands looking to retain and engage customers in the here and now can’t afford to wait 80 years to build up that kind of reputation.

Before dismissing the Publix case study as irrelevant to your company’s situation there are aspects of the Publix secret sauce which every brand should aim to replicate, namely creating a resonating value prop + delivering your core product well. Without these key foundation blocks, a brand will not succeed no matter how clever their loyalty program design is.

So how do you determine which strategy is right for you?

As you can see, no loyalty program is one-size fits all. Program design must be unique and tailored to the brand’s needs and more importantly, their customer’s wants and needs. And while Publix doesn’t operate on a formal loyalty program, their initiatives over the last 87 years have formed loyal customers who stay away from competitors.