US consumers return billions of dollars worth of unwanted products every year. These returns, while beneficial for customers, pose significant challenges for retailers. The phenomenon of buyer’s remorse often leads to returns; impulse buys or well-intentioned gifts may not meet the buyer’s expectations once they arrive home.
According to the NRF, in 2020 it was estimated that $428 billion in merchandise was returned, accounting for more than 10% of total retail sales. This issue is exacerbated during the holiday season, with an estimated two-thirds of purchased products being returned. Contrary to popular belief, many returned products do not easily find their way back to resale; instead, a large number end up in landfills.
eCommerce gift cards present a strategic solution to mitigate these issues. By offering gift cards in eCommerce settings, retailers can significantly reduce the logistical and financial burdens associated with returns and exchanges. As the holiday season approaches, it’s crucial for retailers to streamline their processes for handling returns, ensuring they retain customers and prevent them from seeking alternatives.
For retailers looking to improve customer retention and sustainability practices, we dive into how incorporating gift cards eCommerce into your return strategy is more essential than ever.
How Do eCommerce Gift Cards Work?
Gift cards serve as a versatile payment option used across various sectors such as retail, dining, and more. You can pre-load money onto these cards, which can then be used by the holder to make purchases at participating locations. Both physical and digital formats of gift cards are available.
Digital gift cards provide a unique code that recipients can use to make online purchases at participating retailers. The availability of both physical and digital options enhances convenience for customers, allowing them to choose how they prefer to shop and spend.
Moreover, the flexibility of gift cards, including their use in ecommerce gift cards applications, makes them an increasingly popular choice among consumers who value convenience and security. They simplify the gifting process and offer a practical alternative to cash or direct product gifts, ensuring that recipients can purchase exactly what they want.
Retailers also benefit from offering gift cards in eCommerce settings by broadening their customer base and potentially increasing sales volumes, as gift cards can attract new customers and encourage repeat business. Incorporating gift cards eCommerce strategies allows businesses to cater to modern shopping preferences, providing a seamless experience whether customers shop online or in-store.
Benefits of Offering eCommerce Gift Cards to your Customers
Enhanced Brand Awareness
eCommerce gift cards serve as an effective tool for increasing brand exposure. They provide a risk-free opportunity for customers to explore what a brand has to offer, tailored to their personal preferences. This firsthand experience can lead to word-of-mouth promotion, expanding a brand's visibility and attracting new customers through gift cards in eCommerce.
Strengthened Customer Engagement
eCommerce gift cards are pivotal in building lasting relationships with customers. By integrating them into your loyalty programs, they not only reward customers but also encourage them to engage more deeply with your brand. Setting specific spending goals with gift card rewards incentivizes customers to return, enhancing customer loyalty and engagement in your eCommerce store.
Valuable Consumer Insights
Utilizing gift cards, especially as refunds, opens avenues to gather significant customer data. This strategy allows customers to express their preferences and purchasing behaviors, providing brands with actionable insights to tailor their offerings more effectively within the eCommerce realm.
Increased Sales and Revenue
Issuing gift cards can lead to higher sales. Customers often spend more than the value of the gift card, especially when they use it to buy premium products at a perceived discount. This overage guarantees additional revenue over the initial value of the gift card.
Convenience and Security
Digital gift cards offer a secure and hassle-free alternative to traditional returns or exchanges. They eliminate the risks associated with physical returns, such as damage or theft, and can be easily transmitted and redeemed online. This convenience enhances the customer experience, making gift cards an attractive option for both giving and receiving.
Reduced Fraud Risks
eCommerce gift cards reduce the likelihood of fraud associated with returns. They allow for partial redemption, where the remaining balance stays on the card, thus minimizing cash back scams. Moreover, when returns are converted into gift card refunds instead of cash, it discourages fraudulent activities related to expired or illegitimate product returns.
5 Strategies to use eCommerce Gift Cards for Refunds
There is no doubt that the average customer is going to want refunds in cash. It means they will either shop somewhere else, or, if you are lucky, at your store. You cannot depend on the latter turning out to be true.
Providing Extra Refund Value
Offering ecommerce gift cards of a higher amount than the original amount as a refund option can transform a standard return process into a positive customer experience. For example, if a customer opts for a refund via gift card instead of cash, consider adding an additional 10% to the card's value. If the original purchase was $100, offer a $110 gift card instead. This not only pleases the customer with a bonus but also secures their continued patronage and investment in your brand.
Exclusive Membership Opportunities
Integrate ecommerce gift cards into your loyalty programs by offering them as a gateway to exclusive club memberships. For instance, a fashion retailer could offer customers who accept gift cards as refunds automatic entry into a VIP shopper program that includes early access to sales and special events. This strategy not only enhances the appeal of accepting a gift card but also bolsters customer loyalty and satisfaction.
Incentivizing Product Retention
Use gift cards to encourage customers to keep their purchases when they are undecided about a return. By offering a gift card for a portion of the product’s value as a bonus for keeping the item, you effectively reduce return rates while increasing customer satisfaction. For instance, a consumer electronics store might offer a $20 gift card to dissuade a customer from returning a slightly unsatisfactory gadget, thereby saving on return costs and keeping the customer engaged.
Motivating Employees
Align your staff’s interests with your gift card strategy by providing incentives for promoting gift cards as an alternative to cash refunds. For instance, offering a small commission or bonus for each gift card refund processed can motivate employees to support this initiative enthusiastically.
Diverse Perks for Customer Retention
Develop a range of enticing perks that can be offered in conjunction with gift cards to make them more attractive than cash refunds. This could include exclusive discounts, access to special product lines, or additional loyalty points. For example, a home goods store might offer a 20% discount on future purchases made with a gift card received from a return, encouraging further spending.
Example of Brand Using Gift Cards for Refunds
Free Fly Apparel's Gift Card Strategy
Background
Boost your business's sales and customer experience by incorporating the versatile gift card solutions offered by 99minds. Introducing gift cards in your business strategy isn’t just about boosting sales - it’s about enhancing customer engagement and providing seamless shopping experiences. 99minds supports a comprehensive gift card program that adapts to your specific business needs, whether you operate online, in-store, or both.
Strategy
Free Fly decided to incorporate gift cards as a refund alternative during returns and exchanges, particularly during promotional periods and as part of their loyalty programs. This decision was influenced by the need to enhance customer retention and satisfaction without the typical expenditure involved in processing cash refunds.
Implementation
Through Shopify’s enhanced capabilities, Free Fly issued digital gift cards that customers could use immediately for online purchases or save for later use. The flexibility of the Shopify platform allowed the company to manage these gift cards efficiently, ensuring that customers could receive and redeem them without hassle.
Results
The introduction of gift cards as refunds contributed significantly to customer retention rates. According to internal data, Free Fly observed a noticeable increase in repeat customer transactions involving gift card redemptions. The strategy also reduced the logistical and financial burden associated with handling physical returns and refunds. By minimizing the need for cash refunds, Free Fly saved on transaction fees and reduced the financial impact of returns. By partnering with 99minds, you can also effectively implement a gift card program that not only drives sales but also enhances customer loyalty and satisfaction.
Wrapping Up
In conclusion, integrating a gift card program into your business strategy offers numerous benefits, including increased brand awareness, enhanced customer engagement, and improved sales and revenue. eCommerce gift cards serve as a versatile tool for encouraging customer loyalty and can effectively transform how businesses manage refunds and returns, making transactions more customer-friendly and economically efficient.
For those looking to develop or enhance their gift card program, 99minds provides a robust solution tailored to the needs of modern businesses. With 99minds, you can easily create, manage, and optimize gift card programs that are integrated seamlessly across both online and physical stores.
Frequently Ask Questions (FAQs)
How can gift cards improve customer retention?
Gift cards encourage customers to return to your store, increasing
brand loyalty. They offer a convenient way for customers to engage with your brand post-purchase, whether they're using a gift card they received as a refund or as part of a promotional campaign.
What are the advantages of offering gift cards instead of cash refunds?
Offering ecommerce gift cards instead of cash refunds helps keep the money within the business and encourages customers to make future purchases. It also reduces the complexity and cost associated with processing returns and managing inventory.
Can gift cards be integrated into existing loyalty programs?
Yes, gift cards can be seamlessly integrated into existing loyalty programs to enhance customer engagement. You can do it with the help of
99minds.Gift cards can be used to reward customers, incentivize repeat purchases, and elevate the overall shopping experience.
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