Get More Out of Gifting: Acquisition, Retention, and AOV
While brands typically focus on gifting around the holidays, the opportunity exists year round.
Any merchant’s products could be purchased as gifts. Perhaps something obvious, like a gift card, or more subtle like an order with a gift note shipped to a different address. Other times, you’ll never know the final recipient.
While brands typically focus on gifting around the holidays, the opportunity exists year round.
In this post we’re going to look at:
- The opportunity of gifting and gift products
- How to offer a better gift experience
- How to use gift cards as a promotional tool
- What you can do with the data you get from gift products
The gift product opportunity
The most obvious way to demonstrate the value of gifting is the sheer size of the market for gift products—especially in Q4. Last year, holiday retail sales in the US topped $886 billion, with the vast majority of those sales related to gifts and gift buying. And it isn’t just during the holiday season—gift card sales globally are expected to reach $1.4 trillion by 2026.
However, the opportunity doesn’t end with just higher sales at key periods. Acquisition is one of your biggest opportunities.
Let’s start with the traditional gift experience: A customer buys a product to gift to a recipient. There’s a chance the recipient hasn’t heard of your brand before, so this is their chance to try your product for “free.” If the original customer has a good post-purchase experience, this can help to boost retention. They may pass on word of mouth recommendations, leave a review, or purchase another gift at a later date.
With digital gifts, the reward is even greater for your long-term brand strategy. Digital gifts like gift cards and subscriptions have two direct points of contact for a single order. You can engage with both the original customer and their recipient through email and SMS, having greater contact beyond the original order.
With gift cards, you also have the opportunity to increase sales beyond the original purchase. 75% of recipients are likely to spend over the value of their gift card, meaning that original purchase could end up being worth much more once the card is redeemed.
And last, but certainly not least, there’s corporate gifting. The corporate gifting market is set to top $312 billion by the end of 2025 with gift cards being the most popular option for corporate buyers. In offering a strong gift card option, you can attract this lucrative market year-round whether that’s for a holiday employee gift, giveaways for a promotional event, client “thank you” gifts, and so on.
How to offer a better gift experience
To make the most of the gifting market, brands need to offer an engaging, customer-led experience.
#1 - Give customers a more personalized gift card option
Customers buy gift cards for a variety of reasons—they’re a great last-minute option, they may not know which product to buy, or the recipient’s apparel size , etc. The convenience of gift cards is great—but the lack of personalization can be off-putting.
With a traditional gift, there’s gift wrap and a personalized tag, as well as physically handing it over. With a typical gift card, it’s just a basic brand image with an impersonal electronic transaction. It’s an underwhelming experience for both parties, so if you want your gift card to sell you need to bring in a personal touch.
Here are some easy, high-impact additions to your gift card experience:
- Allow customers to add the recipient’s name along with a gift note.
- Give customers the option to send it directly to their recipient on a chosen day, or to themselves to pass on personally.
- Offer a variety of images to select from to suit different occasions—holidays, birthdays, thank you’s, congratulations etc.
- Give your team clear, easy-to-use backend tools that make it easy to offer a fast customer support experience. For example, when a customer needs to resend a gift card due to a mistyped email address.
Adding these features is simple when using Govalo and can have a major impact on gift card sales. Shopify Plus merchant Felix Gray saw a 3.5x increase in gift card sales after they installed Govalo, and were able to offer a more streamlined support experience at the same time with the app’s backend tools.
#2 - Develop a gift subscription experience
If you offer subscription products—offer them as gifts! If you’re already delighting customers with your subscription experience, make it easy for them to give that same experience to friends and family. You’ll increase your brand reach and give potential customers a “free trial” of your subscription. This allows you to showcase the benefits of being a subscriber, and retain that customer long after the gift subscription period is over.
To get there, it’s essential that you have a strong, simple gift subscription product.
Govalo offers integrations with Shopify and Recharge that take the friction out of the gift subscription purchasing process..
#3 - Offer a simple corporate gifting solution
Typically when a corporate customer wishes to buy in bulk, they have to get in touch with your team to arrange the purchase. While this is great for building a direct relationship with the customer, it can turn into a time-suck—especially in the run up to the holiday season.
Instead, make it easy to purchase gift cards in bulk right—from your storefront.
Buying 1,000 gift cards should be as easy as buying one. Govalo’s bulk gift card feature allows customers to upload a CSV with the details of their recipients and the value of each card, as well as gift notes and the date on which the card should be delivered. They can then complete the purchase through normal checkout!
How to use gift cards as a promotional tool
Anytime you add a new app to your store’s tech stack, you want to get the highest possible value out of it. Gift cards can be a power tool in your promotional strategy.
Tip #1 - Use as an alternative to discounting
Discounting is a common practice in ecommerce, especially around Black Friday and Cyber Monday. Discounts are easy for merchants to implement, and customers love them. However, the long-term implications can harm retention and AOV. The customers who first buy using a discount may be unwilling to ever buy at full price.
So, you’ll need an alternative, and gift cards are an attractive option. They have the same effect on customers as discounts, without the harmful long-term effects on brand perception and loyalty. A gift card is seen as something of value, rather than removing value from a product using a percentage discount. The customer is more incentivized to use the gift card, and will more likely spend over the value.
Some ideas for running a gift card focussed promotion:
- Spend over a certain amount, get a gift card, i.e. spend $100, get a $10 gift card
- Buy a gift card worth a certain value, store tops it up. i.e. Buy a $50 gift card, get it topped up to $65
- Buy a gift card, receive another one for free. i.e. buy a $50 gift card, receive a $10 gift card for free, or even matched value
All of these options encourage the customer or their recipient to spend more when they come to redeem a gift card. If a customer doesn’t use a 10% discount code in their email, they don’t really feel like they’ve lost anything. However if they get a $10 gift card, it feels like they need to use it and make the most of it.
Tip #2 - Use as part of a referral program
Referral programs can be highly effective as an acquisition strategy. Unlike typical acquisition channels, personal referrals from a close, trusted source carry more weight. Reading a review from a stranger and seeing a discount code floating around online is one thing, but having a friend tell you how great a brand is and a gift card to spend money there? That’s a game changer. 84% of people trust recommendations from friends, and are 4 times more likely to make a purchase when referred by a friend.
Referral strategies work by offering both parties a reward if a purchase is made. The referred party is able to use their reward on their first purchase, whereas the original referrer usually gets the reward upon that purchase being completed. In many cases, rewards are discounts, like $10 off, 10% off etc. Instead, consider offering gift cards as rewards, rather than discounts
Tip #3 - Use as a reward for loyal customers
Rewarding loyalty is important in any retention strategy—your customers want to feel like their continued support is valued by your brand. 60% of loyal customers will purchase more frequently with their preferred brands, and 71% say that loyalty programs are important to their relationships with brands.
There are two ways to use gift cards as part of a loyalty strategy. The first is through automated triggers, and the second is through your loyalty program.
Everyone loves a good surprise in their inbox. Try setting up triggers using automated email and SMS workflows that take into account the activity of your most loyal customers. For example, if they’ve placed a certain number of orders in a given timeframe, or based on their LTV, or their AOV. These benchmarks can trigger different values of gift card being sent as a sort of “Thank You” for their loyalty. The bonus here is that loyal customers typically spend 57% more than their newer counterparts.
For loyalty programs, include gift cards as a reward that can be earned whether you use a tier or points-based system. This positions gift cards as something covetable, rather than something that customers will only remember if they need a last-minute gift idea. Increase the perceived value of a gift card over another redeemable reward option. For example, if a certain number of points can earn a product worth $10, make a $15 gift card the equivalent option.
What you can do with the data you get from gift products
Data is essential in any business—especially ecommerce. The data you gather gives you insight into your products, customers, and store that will allow you to optimize your offerings and increase key metrics vital to the continued success of your business.
The more data you use, the better your gift strategy will be and the more valuable this aspect of your business will be long-term. After all, every new product requires effort—development, creation, ordering, warehousing, marketing etc. If you have poor-performing products, identify them and focus your team’s efforts on what is successful. This can tighten up your offering, focusing customer attention on products that sell. You’ll also better understand your customers—what they like, what they buy, the kind of messaging they best respond to, what content they engage with and so on.
Some of the data points you can look at from gift products include:
- Which gift products sell best, and which are low performing—this includes different denominations of gift cards, and different durations of gift subscription. You can also dig deeper into audience segmentation, looking at new vs returning customers and order value
- What gift recipients buy with gift cards, and how much they spend
- Email and SMS engagement with gift customers vs gift recipients
- Which products original customers browsed before buying a gift product
- Retention rate with gift recipients—Especially with gift subscriptions
- Rate of sale with gift products during different time periods —For example, how does the rate of sale of gift cards increase over time or on key dates such as Christmas Eve, Valentine’s Day, etc
For many merchants, gift products and gifting in general only becomes relevant during holiday sales planning. Gift cards are rolled out in emails after shipping deadlines, then quietly added to a sitemap for the rest of the year. However, the opportunity to do more can unlock a major source of revenue, loyalty, and data that will serve your strategy year-round, and long-term.
To learn more about Govalo and how to improve your gifting strategy, click here.
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One of the best ways to understand your customer behavior is by using HotJar. Their heat-mapping and screen recording tools shine a light on where customers are navigating to and from on your site, where they're rage clicking and experiencing frustration, and where conversion is dropping off within real life customer journeys and flows!
Understanding your customers’ pain points via data and analytics , will allow you to work with your CRO/CX Agency to solve customer frustrations and improve conversion.
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When surveyed, about 80% of ecommerce merchants think that they are delivering a great experience to their customers. However, when the same customers are surveyed, only 8% of those customers think that they are getting a great experience from the merchant. Now, more than ever, retaining loyal customers is an essential part of any online business and you should spend time with your customers to judge their experience with your website and products and offer improvements based on that feedback.
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