What Your Gift Card Program Data Should Be Telling You: An eGifter Q&A

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Why gift card program data has to go beyond sales

For years, brands primarily measured gift card program performance by sales, and for many, those sales came through their own websites and stores—known as first-party channels. But as programs have expanded beyond first-party channels into third-party retail and B2B distribution, understanding performance has become more complicated.

When gift cards are sold on grocery store racks or purchased in bulk by corporate buyers, for example, how much visibility do brands have into what happens next? Where is growth actually coming from? Are marketing investments working? Who ends up redeeming the cards? And are these channels bringing in new customers or simply changing how existing customers behave?

I sat down with Nicole Bromley, VP of Professional Services at eGifter, to talk about what brands should be looking for in their third-party and B2B gift card data and, more importantly, how they can use it to make better decisions.

Why is gift card program data so difficult to manage?

Nicole: Two reasons. First, gift card programs have become much more complicated. Second, the data needed to understand them is often fragmented across multiple distribution partners and systems.

When third-party distribution was newer, the questions were simple: Are we selling gift cards in this channel? How much are we selling?

Now programs are bigger, there are more places to distribute, and brands are being presented with more opportunities to spend marketing dollars within those channels. You might be asked to invest in an additional retail placement—like getting your gift card onto a special display in the middle of a grocery aisle during the holidays. It could be a digital awareness banner on a financial institution’s rewards landing page, or participating in a promotion where consumers can redeem loyalty points for your gift card.

Those can all be good investments. But now you have another question to answer: Did that investment actually drive incremental sales?

That’s where the data becomes much more important. It’s not enough to know that you sold $X in gift cards. You need to understand what’s driving those sales, what’s changing over time and what you’re getting from the investments you’re making.

That brings me to the second challenge: the data is fragmented. If you’re selling through multiple distributors, you may be getting separate reports from each of them—and those reports don’t always organize or even define the data the same way.

Bringing all of that together takes time and resources, and a lot of gift card teams simply don’t have either.

Where should gift card program managers start?

Nicole: Start by solving the fragmentation problem. Before you try to analyze anything, you need a consolidated view of where your gift cards are actually being sold across all of your third-party retail and B2B distribution partners.

Then get as granular as you can, so you understand sales by channel, by buyer, by retailer, by format (physical versus digital) and, when the data is available, even by individual retail location.

From there, you’ll need to normalize the data. We built a tool for our clients that pulls together data from multiple sources, but whether you use a tool or handle it internally, this step is essential.

Different partners organize data differently and use different terminology. A sale might be categorized by buyer in one report, by channel in another and by retailer in a third. Before you can compare them, you need to establish consistent names, categories and definitions across all your data. Otherwise, high-level numbers spread across different reports can be misleading.

For example, say a large B2B buyer—perhaps a bank that offers gift cards as a redemption option in its loyalty program—has been sourcing your gift cards through one distributor. Then the bank moves their business to another distributor without telling you. In separate reports, it looks like one distributor’s sales dropped and another’s jumped. Without buyer-level data that’s been normalized across partners, you might think you lost business or that one partner suddenly outperformed, when nothing changed except the route.

When you see movement across the entire program, you can ask the right questions. Did the volume move with the buyer? Has the buyer’s spending increased or decreased since the switch? How is that business performing through the new distributor? Has the change created new opportunities—or new challenges?

Without that complete view, you might spend time reacting to a problem that isn’t actually a problem.

What should you look for in your gift card data?

Nicole: Begin with trends. We’re constantly looking at year-over-year performance and asking what has changed. Where are sales growing? Where are they declining? Is something behaving differently than it did last year?

Then look at any new third-party distribution opportunities, such as a new retailer, B2B partner or program. Those new distribution opportunities often come with sales forecasts, so go back and compare the forecasts to what actually happened. Did the new distribution deliver what you expected?

Do the same with your marketing investments. Whether it’s a holiday display, a banner on a partner’s rewards page or a loyalty points promotion, go back to the original question: Did it drive the promised incremental sales? Compare performance during the gift card promotion to the same period last year, or to locations and partners that didn’t run it, so you can separate the lift from what you would have sold anyway. And when you see something unusual, drill down before you draw a conclusion.

We’ve seen situations where sales looked like they were down overall, but once we got to the store level, we could see that the decline was concentrated in a particular region. In one case, severe winter weather had temporarily closed stores in that area. That’s a very different problem than your third-party gift card program suddenly underperforming.

The goal isn’t just to report that a number went up or down. It’s to use the data to understand why. Once you understand what’s driving the number, you’re in a much better position to decide what to do about it.

How can gift card data drive better program decisions?

Nicole: That’s the real shift—from reporting on the program to managing it. Once you understand what’s driving your numbers, you can start asking more strategic questions, such as:

• Where is the strongest return on investment?
• Which channels and programs deserve more investment, and which need to be reconsidered?
• Where are opportunities to expand?

There isn’t one metric that answers all those questions. You have to match the data to the decision you’re trying to make. If you’re evaluating a new distribution program, for example, look at the sales it’s generating and whether it’s performing against projections. If you’re trying to understand a sales decline, you may need to drill into geography, retailer or even individual locations.

If you’re evaluating return on investment, you need to understand the costs associated with each channel. A distributor may generate significant sales, for example, but cost you more in discounts, fees or additional marketing investments. With all your data in order, you can compare what you’re putting into a program with what you’re getting back.

And remember, the return goes beyond the value of the initial gift card sale. Customers often spend beyond the value of their gift cards. Breakage is also a factor, but most of the clients we work with today care much more about what the gift card does for the customer relationship. Did it bring in a new customer? Did an existing customer spend more? Did it help build loyalty?

That’s where redemption data comes in. Sales data tells you where your gift cards are being purchased. Redemption data helps you understand what happens afterward—and whether those sales are creating value beyond the initial transaction.

Together, that information gives you a much clearer picture of which parts of your program are delivering value and where you have opportunities to make improvements.

How can gift card data help evaluate marketing opportunities?

Nicole: As I mentioned earlier, brands are constantly being asked to spend additional marketing dollars within the third-party retail and B2B gift card channels. The data can help you determine which of those opportunities are worth the investment.

Say you invested in a new one-week marketing promotion in a grocery store during December and sales went up. That sounds like a success, but gift card sales typically go up during the holidays anyway. Did the promotion drive incremental sales, or would those sales have happened regardless?

To answer that, you must put the results in context. Look at the same period last year. Look at sales leading up to the promotion and after it ended. Look at how the rest of the program performed, including retailers or locations that didn’t have the placement. You’re trying to separate the lift from the promotion from the growth you would have seen anyway.

If you can isolate the gift cards sold through a particular retail display, even better. That gives you another way to evaluate the placement’s performance.

Over time, you start building a much clearer picture of which investments are producing results. So, when your marketing budget is limited, you’re not evaluating each opportunity in isolation. You have your own program data to help you decide where that money is most likely to make a difference.

Is gift card distribution really a marketing channel?

Nicole: Yes! This part of the industry has evolved too. Third-party retail and B2B distribution have traditionally been treated as sales channels or cost centers. Today, they should also be viewed as marketing channels.

Think about what’s happening in a third-party B2B program. Another company is marketing your brand to its audience—perhaps as part of an employee reward, customer incentive or loyalty program. Your brand gets exposure to consumers you may not otherwise reach, and when someone chooses your gift card, you have an opportunity to bring that person into your brand.

Third-party retail creates a similar marketing opportunity. Your gift card might be hanging on a rack in a grocery store alongside dozens of other brands or available in a retailer’s digital gift card marketplace. That’s brand visibility at the moment someone is actively deciding where to spend or what to give. And when they choose your gift card, you’re potentially reaching two people: the person who buys it and the person who receives and redeems it.

Now compare that with other forms of marketing. With digital ads, paid search, television or radio you pay for impressions, clicks or exposure whether or not they lead to a sale, and it can be hard to prove what worked. With gift card distribution, you’re getting brand visibility and potential customer acquisition associated with an actual gift card purchase. That can make it a very efficient way to reach new customers and keep your brand top of mind.

And even if the recipient is already a customer, the distribution still has value. You may be giving that customer another reason to come back, spend with you, and continue engaging with your brand.

Of course, each brand still must determine whether that exposure makes financial sense. Along with the discounts and fees we talked about, there can be internal resources, fulfillment or shipping and technology or setup costs, and all of them belong in the ROI calculation.

Here’s an example of how that can play out. We worked with a brand that was generating significant sales through an incentive channel, but the buyer wanted a much more aggressive discount. The brand had a very specific ROI requirement. They ran the numbers and decided the return no longer justified the business, even though that meant walking away from sales and exposure.

Another brand might make the opposite choice and accept a lower margin because it values having more gift cards in consumers’ hands and ultimately bringing those recipients back to redeem. Neither choice is wrong. What matters is that with a detailed view of the program, brands can put real numbers behind the value of these channels and decide for themselves what matters most.

Personally, I think those can be marketing dollars very well spent. You generate revenue and put a gift card in someone’s hands that can lead to a bigger sale, a new customer or greater loyalty. And when your data is in order, you can prove it.

What can redemption data tell you about customers?

Nicole: Redemption adds another important layer to the story. On the distribution side, we can tell you where the gift card was sold, through which channel, through which buyer and often much more. But once that card is redeemed, the brand has data we typically don’t have access to.

That’s where you can answer the questions we talked about earlier. Was the recipient a new customer? Did they spend beyond the value of the card? Did they come back again? What did that customer ultimately become worth to the brand?

Like distribution data, though, redemption data usually lives in a different place, so it’s one more source to bring together. When you can connect distribution data with redemption and customer data, you can see both sides of the program: how your gift cards are performing in the market and what happens when those gift cards bring customers to your brand. Together, that gives you the full picture of the value your gift card program is creating.

What’s the biggest takeaway for gift card program managers?

Nicole: Don’t collect data just to report it. Use it to run the business.

A gift card program really is a business within a business, with its own sales channels, partners, economics, marketing investments and customer behavior. When we started doing this work, we were primarily tracking sales. As our clients’ programs grew across more channels and partners, that stopped being enough and managing it all manually wasn’t sustainable. So, we built our own tools and processes to handle it.

Today, having the data is just the starting point. You need to be able to bring it together, understand what’s happening across the program and then use it to make decisions.

Thanks, Nicole! Here’s my takeaway.

There was a time when buying a gift card meant going to the store. Then came online gift cards, grocery store racks, employee rewards, customer incentives and all the other ways we buy, give, earn and use gift cards today. Brands even use the same stored-value technology for merchandise returns, customer appeasement, and more.

That’s a lot of activity to keep track of, especially when the data comes from different systems, partners and channels.

As a former programmer, I appreciate the value of normalized data. It just makes sense to bring everything together in a consistent format so you can compare apples to apples. Otherwise, you’re back to that old programming principle: garbage in, garbage out.

The good news is that the technology exists to do this. You can build the capability yourself or work with a team like eGifter Professional Services to help you get there. Either way, the sooner you get your data organized and accessible, the sooner you can start making more informed decisions about your gift card program.

Happy gifting!

Shelley