Gift Cards – A new type of Currency issued by the Brands and its Benefits
Giugno 11, 2020
Gift Cards: a new type of Currency issued by
the Brands and its Benefits
How would the oldest ancient merchants or the first European professional bankers in Venice and England react, if they found out that the concept of money they knew – minted gold or silver coins, and only in the seventeenth century issued banknotes – evolves several centuries later not only into electronic form, but it will even expand to brand-related forms and concepts.
Electronic representation of money is nothing new and appeared with the invention of computers, initially being only a direct equivalent of the value of physical money in digital form. As a result of the digital revolution, concepts of new virtual currencies, like Bitcoin, have emerged. This currency is not very widely accepted, but the curiosity on the Polish market is that payments in bitcoins are accepted for example by the national Polish air carrier – LOT Polish Airlines.
The latest stage in the formation of another form of electronic currency is the example of the currency issued by known brands and networks, which can be fully justified and explained as branded currency, and which is represented in the form of gift cards, vouchers and vouchers for a relative network.
The very concept of declaring a monetary equivalent in the form of a voucher that allows for shopping with a relative value in stores of a given brand is not entirely new. On the other hand, the growing popularization of this form of gratification or payment among brands, its evolution into the rank of international networks of globally accepted cards and the necessity of its issuing by brands in view of the risk of marketing and digital exclusion of a given brand, more and more justify treating digital gift cards as a type of new currency that connects inside the features of money (quantitative features) and brand marketing features (qualitative and intangible features). That is why we can use the term branded currency with justification and sense.
Gift cards and vouchers as the branded currency are not only a nice form of customer benefit and a form of gifting, but above all they represent a group of financial benefits and marketing instruments for the brands themselves. Thus, they create an additional form of the sector, which is of support and leverage for existing business and brand marketing activities.
The first of the benefits is the anticipation of pure cash and positive cash flow for the brand before real sales are made. One does not complain about excess cash in normal times, whereas in turn of the economic crisis we are currently facing as a result of the global SARS-CoV-2 coronavirus pandemic and Covid 19 disease, for the brands that were forced to significantly reduce or completely stop sales and their income dropped to zero, if they had a digital gift voucher system in their portfolio, it allowed those brands tomaintain any liquidity in exchange for deferred sales.
In addition, it is estimated that statistically from a few to several percent of purchased vouchers, depending on the sector and product, are never used as a result of forgetfulness, loss or expiration, which is then pure revenue for brands,constituting a non-redemption rate.
Another benefit is the increased value of the shopping basket when using gift cards by an average of 20% in excess of the nominal value of the voucher. As the brand manager of one of the leading perfumery chains tells us, in their case the increased value of the basket reaches up to 100%, which means that with certain denominations of vouchers the psychological willingness of the client to add to his purchase from his own pocket (when he received the voucher as a gift) is additionally the value of the voucher itself. For the brand, this is a pure benefit that would not occur when buying a traditional one without the benefit of an alternative means of payment, in addition to the gift. A psychological mechanism of not feeling the negative weight of money that was donated to us operates here in favor of brands.
Finally, it is not without significance that gift vouchers, on average 25% more than other marketing tools such as discounts or consumer promotions, help maintain customer loyalty and reactivate customers who for various reasons have lost ongoing contact with the brand. As the above examples show, a modern system of gift vouchers is an extremely effective marketing tool for brands ensuring an increase in sales and revenues and long-term loyal and satisfied customers who will be the best source of honest and coherent marketing advertising for the brand.