Consumers have an appetite for mGifting

By Jon Squire
CEO, CARDFREE

It is the season for gift-giving, and 80 percent of us have gift cards on our shopping lists. In fact, U.S. consumption of gift cards exceeds the GDP of 136 countries. It's probably no surprise that sending gift cards via digital and mobile channels has increased eight times since 2012.

Those in the restaurant industry have likely noticed that mobile in particular has been a theme throughout 2013 and will only become more prevalent in the years to come.

Digital and mobile gift card growth

The good news for consumers is mobile gifting makes it even more convenient to purchase and/or send gift cards since they can use their mobile devices wherever they are. And, because more and more retailers are launching mobile apps that integrate loyalty and rewards with purchases, consumers have even more incentive to mGift.

The mGifting opportunity

In 2013, $118 billion will be loaded onto gift cards, $19 billion of which will be on restaurant cards. Restaurants have seen dramatic increases in gift card purchases since 2012, as well as in purchase amounts. If your restaurant has not launched a mobile program, you may be thinking about your mobile strategy and where gift cards fit.

One of the many things we learned when launching Starbucks Mobile is that integrating loyalty or rewards into a mobile app in general and tying it to stored value cards in particular is a win for both merchants and consumers. Consumers clearly have an appetite for mobile commerce solutions; the Starbucks app has more than 10 million active users and now accounts for more than 11 percent of all transactions in the U.S. Since the My Starbucks Rewards loyalty program integrated with stored value four years ago, the values loaded onto cards have nearly tripled.

Mobile users spend more per ticket and per reload than non-mobile rewards members. Consequently, Starbucks has recognized significant savings on interchange fees. More importantly, mobile app usage has increased speed of service and spending.

Note that Starbucks Mobile ties loyalty to stored value cards (SVC), which is a broader program than gift cards. Stored value programs promote self-use and reloads, which is a potentially larger opportunity than gifting. With the additional components of loyalty or rewards, consumers have a reason to continually use stored value cards for themselves and gift them to others.

Once someone is mGifted a stored value card/gift card, it is the ideal time to convert them into a consistent mobile user who reloads the card for themselves and also gifts to others. Gift cards do not have to be a one-shot deal. In fact, if there isn't a mechanism to reload and a reason to keep using (loyalty/rewards), you are not fully leveraging the long-term opportunity.

Beyond the holidays

Though a large portion of gift card purchases happen over the holidays, smart restaurant marketers will promote gift cards throughout the year emphasizing other gift giving occasions such as Mother's Day, graduation and birthdays. In fact, 20 percent of consumers have purchased gift cards for "no special occasion," so don't feel limited to calendar events to promote mGifting. Mobile apps that have features like group gifting or social gifting make gifting fun and more likely to be used spontaneously and frequently.

Today's consumers are more mobile than online or even in-store. No longer do they need to stand in line at the local grocer to buy a physical card and send via snail mail as purchases and personalization's can all be completed and sent from their mobile phone.

A final note about mobile apps, it is natural to wonder whether consumers will use your mobile app. The last thing any merchant wants is to devote time and resources to developing an app that is not adopted.

The mobile measurement company, Flurry, has found food and beverage apps are among the apps with the most engagement. Though other app categories such as gaming and communication may have more frequency, once consumers download your app, they are likely to use it consistently and keep it on their devices. If you add in components that were discussed above, your app is even more likely to experience good adoption and usage.

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