Increasing Gift Card Revenue with Email Marketing

By 2014, online gift card sales are slated to hit $5.86 billion in revenue. That’s a compound annual growth rate of 29% over the next several years, according to Javelin Strategy and Research.

E-commerce, retail, and hospitality companies regularly use gift card sales as a way to drum up revenue during peak holiday seasons. Now gift cards have gone digital, and because of the relative ease to develop and send online gift cards and the ability to drive incremental sales, they’re becoming increasingly popular with B2C companies.

Restaurants in particular are making a renewed push towards gift card marketing. According to RestaurantReport, in 2008 Uno Chicago Grill became the first casual dining chain to offer virtual gift cards. The results were telling: During the last two weeks of their gift card promotion, Uno Chicago Grill more than doubled gift card sales by utilizing email.

Using Email Segmentation to Send the Right Offer

Email segmentation virtually always produces better results than the “batch and blast” approach, so it makes sense that segmenting a gift card marketing campaign would significantly improve results as well.

Instead of sending the same gift card offer to everyone on an email list, marketers can also leverage behavioral data to analyze past response and purchasing habits in an effort to see what offers will be most appealing to each segment.

These purchasing patterns can turn a good gift card marketing strategy into an exceptional one by creating offers that are targeted and more personalized for different segments within a mailing list.

Segmenting for gift cards works similar to segmenting for any other type of behavior. Using behavioral analytics from past campaigns, a gift card intender segment (for example the folks that bought last year) can be segmented into groups of users with similar purchasing behavior.

Here are some ideas on how a restaurant could begin to segment lists for a gift card marketing campaign:

• Subscribers who have purchased a gift card in the last 3 months/ 6 months/ 1 year
• Subscribers who have purchased gift cards in store, but not online
• Recipients of gift cards who have not previously purchased a gift card themselves
• Subscribers who have purchased online deals, but not gift cards
• Subscribers who respond to dining offers or specials
• Subscribers who respond to drink specials and offers
• Subscribers who respond to special events like wine or spirits tastings or pairings

Segmentation Theory + Real World Action = ‘Out of This World’ Results

MarketTraq client, Ruth’s Chris Steak House, the largest fine dining chain in the world, employed a gift card email marketing campaign last year to help boost their seasonal revenue. Using MarketTraq’s advanced email segmentation tools, Ruth’s Chris targeted two important groups of prospective buyers within their mailing list: one group who were one-time purchasers, and a second group who were regular purchasers, but had lower order sizes.

The restaurant’s objective was to motivate the first segment to purchase a gift card, and to increase the order size of the second segment’s purchases.

Ruth’s Chris saw a 230% increase in revenue and a 48% increase in order size from their seasonal gift card marketing campaign – a huge improvement from previous years. And these results aren’t unusual. Targeting consumers with a more relevant offer through email segmentation routinely produces stronger results.

A well targeted and well-focused gift card marketing strategy can not only help companies increase seasonal revenue, it can produce incremental sales year round. But before jumping onto the gift card email marketing bandwagon, make sure that you take the right steps to ensure that each subscriber is getting an offer that matches their unique purchasing habits. These kinds of targeted campaigns can turn a mediocre campaign into a year long revenue driver.