Influence Who Uses Gift Cards

Many people buy gift cards to use themselves. Or they like a deal where a bonus card comes with the gift card purchase. One for you, one for me. Outback Steakhouse restaurants have been regularly giving a $20 reward card, with a time limit on its redemption, along with each $100 gift card.
     Research at Stanford University and Yale University suggests this type of bundling of reward card and gift card will be most attractive to consumers when one of the pair is seen as serving a utilitarian purpose—satisfying the obligation of purchasing a gift for somebody else—and the other is seen as hedonic—giving oneself the pleasure of a no-additional-cost acquisition. It’s like buying a dozen roses in a gift bouquet and also receiving an arrangement of six lilies.
     But who ends up getting the roses and who gets the lilies? Does the purchaser keep the $20 reward card or the $100 gift card? Researchers at University of North Carolina-Charlotte, University of Electronic Science and Technology of China, and University of Texas-Dallas say the answer to those questions will impact your profitability from the use of the reward and gift cards.
     See how much you can influence the decision, keeping in mind these questions I’ve used the North Carolina/China/Texas findings to generate:

• Who will be more attracted to your high-margin items? Ask the gift card purchaser what sorts of items she likes and what the gift recipient might like in your store. A profitable move for you is to have the larger denomination card go to the one who prefers the high-margin items. This might not be the same one who will spend the value of the gift card quickly. 
• Who is more likely to buy large quantities of items in advance and stockpile them? That one is the candidate for the smaller denomination card if you’re aiming for greater profitability. With the same reasoning, the researchers would recommend that if you offer a gift card as a reward for a large purchase amount, you consider the type of shopper you have: If your shoppers are usually constrained in their spending, offer a gift card at equally spaced purchase amounts—a $20 card for each $100 spent. But if your shoppers are usually ready to spend freely, the profitable route for you is to offer only one card—a $20 card for the first $100 spent. 

For your profitability: Sell Well: What Really Moves Your Shoppers

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Redeem Gift Card Profitability 
Bundle Utility, Discount Hedonism