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Gift Cards Serve Retention More Than Acquisition: Survey

By Aug 17, 2005

Marketers use gift cards slightly more for consumers than business-to-business customers, and more for customer retention than acquisition.

And while gift-card use is on the rise, less than 10% of U.S. businesses use gift cards as customer incentives, according to a survey of 68 U.S. businesses conducted by electronic payment processor First Data Corp.

That could quintuple next year: 52% of all respondents plan to offer gift cards in 2006, and 20% of current users plan to offer more cards next year.

First Data found that 77% of businesses use their current customer gift-card incentives for retention, versus 51% for acquisition. Forty percent of companies with customer incentive programs rely on gift cards, second only to product discounts (used by 52% of respondents).

“Consumers crave the convenience, flexibility and choice offered by gift cards,” said Karen Larsen, First Data Prepaid Services VP-global marketing, in a statement.

Fully 29% of respondents use cards primarily for consumers; 28% use them mostly as business-to-business incentives. The rest (43%) use card equally for consumers and business-to-business customers.

The most popular gift cards:

  • sit-down restaurants (cited by 67% of respondents)
  • specialty stores (56%)
  • department stores (45%)
  • large discount stores (40%)

First Data’s new division, First Data Prepaid Services, conducted the survey in April, interviewing 68 customer incentive program decision makers within U.S. businesses of 100 or more employees. First Data Prepaid Services handles bank- and merchant-issued gift cards.

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