Gift card sales have grown dramatically over the past five years and rapid growth is expected to continue through the end of the decade. Savvy retailers use gift card programs to strengthen their relationships with existing customers and entice new customers to shop in their stores. Companies that overlook the strategic potential of gift cards will find themselves left behind, while competitors take advantage of the array of new marketing tactics that gift cards offer.
Organization: Where should the gift card program reside in the company? Should it be part of Finance, as an alternative payment? Should it be in Marketing, because as a way to drive new customer acquisition?
Finance/Profitability: How much value does a company's gift card program create? What is the right way to measure gift card profitability? Should the gift card program have its own internal P&L, in order to properly align management incentives? If a gift card will require that space be taken away from another product, how should the company manage the trade-off between new, growing gift cards and more established products?
Marketing: What kind of marketing should a company do for its gift card program? How can a company maximize in-store sales? How can a company use a gift card to accelerate entry into a new region, or encourage visits to a newly remodeled store? Should a company have variable or fixed denomination cards, or both?
Card Design and Production: How many card designs should a company use? If a company has different retail brands, can the same card be used at all locations, or does each entity need its own cards? Are different cards needed for 3rd party sales and incentive programs? Should a company create seasonal cards for Valentine's Day, Mother's Day, and other holidays?
PR: Are there new PR opportunities where gift card can be used? How can gift cards maximize the publicity for charitable activities?
IT: Gift cards can require an additional investment in POS systems and connectivity. What are the relative costs and advantages to using a UPC 128 vs. a UPC 30 bar code? How do the different gift card processing companies compare? What IT functions should be handled internally, and what can be efficiently outsourced?
Operations and Security: What type of training is required for in-store staff? What is the most efficient way to print and distribute cards? What type of consumer and employee fraud might occur, and how can it be mitigated? What should be the policy towards a customer who thinks they have a live card, but the company IT system says has no value?
Customer Relations: Should a company encourage customers to register their cards? Can a loyalty program be combined with gift cards? Should a company return cash from a gift card that still has value? Should customers be able to check the remaining value on their cards by phone, online, in-store or all three?
In store merchandising: How should gift cards be presented in stores? Should they be at every checkout? Should temporary cardboard fixtures be used at holidays? If so, what should they look like and when do they need to be ordered?