Thinking of Buying a Fast-Casual Franchise? Read this report first.

Outside Insights | By David D. Stone

Cashing In on Holiday Gift Card Campaigns
Virtual gift cards prove to have more value than simply being easier to distribute.
Consumer behavior can be analyzed with the use of virtual gift cards.

Did you know that restaurant gift cards are the most popular type of gift card that consumers will be shopping for online this holiday season? Restaurant gift cards are the most popular gift carding market, and the holidays are the single most important time of the year for gift card sales in the industry. With this in mind, restaurateurs are turning to new technologies and implementing creative campaigns that will drive sales during this period and offer the most in return post-holidays.

Most restaurants offer guests the opportunity to purchase gift cards both in their restaurants and online. Until recently, customers who visited a restaurant’s site only had one option: purchase a standard, plastic gift card in a pre-set denomination and have it mailed to the recipient. However, with today’s shoppers spending more time online and having more interactive experiences than ever before, shipping a plastic gift card via snail mail isn’t the best option. Recently, restaurant chains have begun offering virtual gift cards that can be purchased online at the restaurant’s Web site. These can be customized with a photo and message and are e-mailed instantly to the recipient. Senders can select whatever amount they want and choose a future send date. Virtual gift cards also cost less than plastic because there are no shipping costs.

These cards are rapidly catching on in popularity. In fact, during the 2008 holiday season, Uno Chicago Grill became the first casual dining chain to offer virtual gift cards. By offering a gift card that could be e-mailed to recipients, Uno Chicago Grill more than doubled gift card sales through its Web site during the last two weeks of December in 2008. Not only are virtual gift cards more convenient for your customers, they are also trackable—unlike their plastic predecessors. This opens up a world of marketing possibilities for restaurant owners to take their gift card and marketing programs to the next level. Here are a few simple tips for cashing in on your gift card program this holiday season.

Drive Sales Online and In-Restaurant

The best way to boost gift card sales is to promote your gift cards, both online and in-store. Most restaurants have an e-mail club—that is the first place you should turn to when marketing your gift cards. Not only do you have a group of brand enthusiasts, but they are also reading their e-mail while they are online. Why not provide the opportunity to click through to your gift card page? Also, look at your current marketing “real estate” for places to promote your online gift cards—banners on your Web site’s homepage, buttons on your staff’s shirts, table cards, and menu inserts, to name a few. Online gift cards lend themselves especially well to social media tools like Facebook, Twitter, and other social communities.

Virtual gift-card programs should be rolled out just like new menu items—feature them prominently to ensure customers are familiar with this new offering. Also, keep in mind that gift cards are very often a last-minute purchase prior to a major holiday. A plastic gift card shipped via snail mail or even express mail may not arrive in time for the occasion, and restaurants can capture incremental sales for last-minute gifts with a virtual gift card’s ability to be sent and received instantly.

Play Up Personalization

Seventy percent of consumers recently said that the ability to send a personalized gift card with unique designs, photos, and a message is important to them.* Capitalize on this! Let your customers choose from a wide variety of gift card face plates, let them upload special images, and give them enough space to write a personal note or a poem. Don’t lose potential sales just because you’re only offering one standard gift-card option. Expand your gifting options and watch your customer base grow.

Seventy percent of consumers recently said that the ability to send a personalized gift card with unique designs, photos, and a message is important to them.

Drive Incremental Sales with Incentives

When asked whether they would be more likely to purchase an online gift card if given an incentive such as “Purchase a $50 gift card and get a $10 gift card for yourself,” an overwhelming 88 percent of consumers answered ‘Yes.’ These give-one-get-one promotions are very popular and they not only convey a sense of value for the sender, but more importantly they efficiently drive two customers into the restaurant—the purchaser and the recipient. Offering virtual gift cards can also motivate certain sales and marketing goals such as joining a restaurant’s e-mail club or dining at an establishment a certain number of times in order to receive a virtual gift card.*

The Analytics Advantage

One of the major benefits of virtual gift-card programs to the restaurant is the ability to track behavior for both the sender and recipient, enabling restaurants to tailor promotions to each customer. This is especially valuable considering that 85 percent of virtual gift cards are redeemed within the first three months and consumers typically spend more than 60 percent of the card’s face value. Analyzing the customer data generated from virtual gift-card campaigns will help restaurants create better-received promotions, and ultimately help them capture these quick-spending gift-card redeemers.

Conclusion

Virtual gift cards open a world of possibilities for your e-marketing and loyalty programs. Not only do they set you apart from the competition, but they enable restaurant marketers to get to know their customers better so they can tailor future campaigns that are sure to not only sell more cards, but fill more seats in your restaurants. With the holiday shopping season just around the corner, will your restaurant cash in on the virtual gift card trend?

*Source: 2009 Pre-Holiday Online Shopper Gift Card Survey.
David Douglas Stone is the founder and CEO of virtual online gifting company CashStar. Previously, Stone worked for American Express, where he originated the idea for the world’s first prepaid currency, the American Express Gift Cheque.