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72% Of gift card users become regular customers

By Peter Clark, Marketing Factbook


For the 2010 holiday shopping season, business owners had the benefit of knowing that every gift card sold represented not only one future sale, but a potential lifetime customer as well, according to research by Harris Interactive, commissioned by Givex.

When surveyed, more than two out of five American consumers (41%) said they had tried a retail store, restaurant or hotel for the first time because they received a branded gift card. Furthermore, many of these first-time customers had also become repeat customers as a result, with 72% of them saying they had returned to the same business afterward.

The study evaluated consumers' responses to many of the strategies employed by businesses to retain them. For example, once a new customer is acquired, the journey to customer retention requires building a relationship with them with relevant communication and appealing rewards.

But different customers demand different treatment. For example, many merchants are discovering that discounts do not have the universal appeal they had hoped for. While consumers aged 35-64 overwhelmingly preferred discounts as a reward (46%), Americans in the 18-34 category were more divided between discounts (32%), small instant rewards (17%) and large rewards, such as free trips (18%). Consequently, the most successful rewards programmes could be said to be those that recognise the different needs of customers.

During the recent tough economic climate, many businesses saw the benefits of having previously invested in gift card and loyalty reward programmes, having already built up a larger customer base to communicate with and to encourage repeat business. However, they also realised, as the survey showed, the importance of customizing these incentives, and personalising communications to truly maximise their effect.

In other words, Givex argues, the more that marketers focus on how they are acquiring new customers and learning about their specific needs, the stronger they are during slow economic periods and the faster they can grow under normal trading conditions.

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Sources: Givex; Harris Interactive
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