If you’re a gift card manager, you have your work cut out for you. You need to stay in tune with what your customers want, and how they want it. You need to understand the financial complexities of your program. And you need to be able to demonstrate your program’s value to the decision-makers in your company (as well as how to make adjustments). The health of your gift card program can be a key indicator of your brand’s overall strength; understanding all the program components is the first step towards maximizing its profitability potential.
A new eBook has just been released that was designed to help brand gift card managers identify the key metrics and tactics used to fully measure a gift card program’s success—plus, pinpoint areas that need attention. “How to Value a Gift Card Program: A Guide For Merchant Brands” was created by The Incentive Gift Card Council (IGCC), a strategic industry group within the Incentive Marketing Association (IMA), dedicated to educating corporate America on the use of gift cards as corporate incentives and for customer loyalty.
Start with total program sales growth
According to the IGCC eBook, total program sales growth is one of the primary ways to measure the health of your gift card program. If your gift card sales aren’t growing, or are growing at a slower rate than you’d like, it may be an indication that something needs to change. To really understand your program’s performance, it’s important to track and understand your trends.
How and what to measure:
- Year-over-year sales: Look at both dollars and units, comparing YOY results.
- New customer acquisition: If you have a way to gather the data, measuring new customer acquisition through gift card redemptions is an important metric of program growth.
- Sales by channel: Measure and compare total program sales across all distribution channels, including in-store, B2B, online and third party.
- Percentage of total sales: Compare gift card sales to company sales as a whole. Is this consistent with the company’s goals for the program?
- Incrementality: Are you attracting new customers, re-engaging past customers or driving more frequent interaction with your brand? If not, what could you do to drive greater engagement?
- Sales lift: Sales lift, or overspend, refers to a customer spending more than the value of the gift card(s) used in the transaction. The more lift, the greater your program’s value.
- Average check/basket size with and without a gift card: On average, are transactions using a gift card higher or lower than those without?
- Return on Investment (ROI) of program overall: Analyze the following compared to sales: program costs, including discounts to third parties, production/fulfillment costs, internal costs (staffing), distribution, etc. Does your program’s performance outweigh its admin costs?
The contents to help your program grow
Total Program Sales Growth is just one page out of this 25-page IGCC eBook. The other 24 pages are just as informative and invaluable in terms of helping your gift card business grow—in size, in profit ability and in value.
Your results may vary
The conclusions drawn by the IGCC and examples they provide are including solely as a learning tool and should not be considered professional or legal advice. It’s important to recognize that every brand is different and you should evaluate your program based on your unique situation.
Again, this eBook is available only to members of the IGCC. Join or learn more here. If you feel there is an area that is missing or needs further explanation, we welcome your input.