Question

Topic: Strategy

Redemption Rate Gift Voucher

Posted by Anonymous on 6/10/2009 at 9:04 AM ET 25 Points
Dear all,
I need you to provide me information statistics regarding the redemption rate of gift check in technology products for Greece. I want to give to my clients’ gift vouchers at the end of the year regarding the level value of purchase. if a customer has total purchase from January till October 1000 € amount he’ll take a gift check of 20 € in order to use it for his next purchase which has to be up than the 20€. Is there any formula so as to measure in order to find out the minimum value of the future purchase? For example to redeem the 20 € gift check, has to purchase 100 €, 80 € or 50€ ? . Also what about the redemption rate. If I assume that I’m going to give a gift check of 20 € to 100.000 people. In which way I could now how of them are going to redeem. Because you understand that the cost in the redemption month will be very high if 95% of our client is going to redeem x20€ = 1.900.000 €. I understand also that the redemption rate has to do with the previous question the min value purchase to redeem. How can I measure all this. If there is no such a formula I have to go with assumption in different scenarios.
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RESPONSES

  • Posted by Jay Hamilton-Roth on 6/10/2009 at 10:28 AM Accepted
    A couple of articles for your research:
    https://www.consumeraffairs.com/news04/2006/12/gift_card_giveaways.html
    https://www.consumerreports.org/cro/money/shopping/shopping-tips/gift-card-...
  • Posted by steven.alker on 6/18/2009 at 2:16 PM Accepted
    A wrong assumption about the take up rate for free gifts (Same principal) totally wrecked Hoover in the UK. They had to offer so many free holidays and failed to meet the demand that the cost and the bad publicity bankrupted them.

    The safest way is for you to insure against the cost, in conjunction with the general insurance market. Their actuaries will be able to calculate the risk and therefore allow you to being too successful in the first instance.

    It’s not easy to secure this type of insurance, but Lloyds of London offers it for anything from insuring against a win on a charitable game of chance such as a scratch card or a lottery where the winning ticket is not necessarily bought.

    A car might be the prize, but they usually don’t possess one to give away until someone wins it. If the statistical odds of anyone at all winning the prize are 100:1 over the entirety of entrants, then you can take out an insurance which covers you against someone being a winner. Your scenario requires a more sophisticated approach, but I wouldn’t advise you to try it out for yourself!

    Steve
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