Question

Topic: Research/Metrics

Gift Cards And Incrementality

Posted by bdggmg on 12/1/2007 at 11:39 PM ET 250 Points
I work with gift cards. We are trying to prove the "incrementality" of our business. There is, of course, an ability to measure sales uplift--that being the amount spent above the funds on the card which equates to about 35% more than the baseline value. I maintain there are greater incremental sales gained from gift cards but don't know how to measure. This would be the revenues we wouldn't have otherwise gained from having the program. I think it is a fairly high incidence. Any ideas on how to measure or compute? Many thanks for your ideas.
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  • Posted by Jay Hamilton-Roth on 12/2/2007 at 10:53 AM Member
    You can also track: time from purchase to redemption (one of the hidden benefits to gift cards is not all the people who receive them ever use them), number of visits required to use up a card, cards with outstanding balances (people may not bother keeping cards with under $5 on them, for example), and interest (potentially) earned from having people prepay for cards.
  • Posted by mgoodman on 12/2/2007 at 5:45 PM Accepted
    Neat project. I'm sure there must be a way, but it will depend to a large degree how detailed your history database is, how easily it is to query the database with ad hoc questions, and whether there are any "hold-out" markets where you don't sell the gift cards.

    This is one case where you probably need an outside analytics expert. Sometime that objective look from the outside to ask the questions and explore possibilities is worth a lot. If you need a recommendation for this, let me know by private email.

    It might also be a good idea to conduct a small-scale survey among customers if you can't come up with all the information you need from your database.
  • Posted by bdggmg on 12/3/2007 at 4:48 PM Author
    Thanks to all for your feedback.

    Appreciate the validation that the only real way to do this is to create control groups to measure.

  • Posted by Chris Blackman on 12/4/2007 at 8:17 PM Member
    I know the question is closed, but I think you may have missed something.

    The uplift isn't necessarily the difference between the face value and the final expenditure by the gift card recipient.

    For first-time customers, it's probably all of the sale value. Because if the recipient hadn't been given the card, they would not have come and trialed the store/service/whatever.

    Come to that, if you convert them into a lifetime customer, that's another whole new slice of long-term revenue you might never have got. Value that.

    It's complex, and merits more detailed research. But if your gift card campaign is under pressure, please consider these points.

    I've instigated gift card campaigns in a number of businesses and it is always an earnings-accretive initiative. Always...

    So don't let the bean-counters make you over-think it. Occams razor, remember?

    ChrisB
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