The Psychology of Gift Card Incentives

Aren’t gift cards the same as cash?

Given that gift card incentives have a fixed monetary value; it is reasonable to question whether or not consumers will perceive a gift card offer to be the same as a cash offer. However, there are four important factors contributing to gift cards being perceived as having greater value than cash incentives:

Co-Branding

Brand awareness is a very significant influence within the consumer experience; therefore, by offering leading industry brand gift cards marketers increase the value and attractiveness of the offer. In addition, by offering gift cards for brands consumers are already familiar with, publishers can benefit from that awareness and have an easier time creating excitement for their program. Finally, given the greater perceived value of leading brand gift cards, publishers can often lower the actual value of the gift card, lowering program costs, while maintaining desired perceived incentive value (e.g. – “Subscribe today and receive a gift card from Target, Walmart, The Home Depot or Amazon”).

Separability

Monetary offers, which usually take the form of discounts, cannot be separated from the purchase resulting in very short-lived value for the marketer. The consumer may have been incented to take a particular action, but there is no lasting benefit for the marketer beyond that moment in time. With a gift card as the incentive the subscriber has multiple benefits as well as positive branding opportunities (receiving the gift card in the mail, putting the gift card in a wallet, and using the gift card at a retailer or restaurant).

Justifiability

Arguably the greatest value a gift card provides a recipient is that a gift card “permits” or “justifies” the purchase of products or services that the consumer may not normally buy. Gift cards facilitate the purchase of a treat or luxury item that might be outside the subscriber’s budget (e.g. – the choice of Outback Steakhouse, Olive Garden, the Cheesecake Factory or some other restaurant allows participation in a dining pleasure they may not have otherwise allowed themselves).

Longer-Term Incentive Value

As mentioned above, the downside of cash incentives is that they are a singular moment in time and are not separate from a purchase. Gift cards provide the benefit of extending the value of the promotion and of the publisher sponsoring the promotion over the period the gift card is redeemed. Then, after redemption, the subscriber continues to remember the offer and the publisher whenever they use or interact with the item that was purchased with the gift card (e.g. – the subscriber purchases a blender and may recall the newspaper helped enable the blender purchase)

Want to learn more? Get a copy of our white paper and learn why gift card reward programs are the most popular and effective way to motivate customer behavior and increase profitability.

2018-09-08T19:00:25+00:00