In a world redefined by smartphones and social media, the conversation about gift cards is shifting to digital, mobile, and social. Brands like Amazon, Starbucks, and even Target are now offering digital versions of their gift cards in a bid to capture the tech-savvy market enamored by smartphone apps and everything virtual. It’s an exciting medium for engaging customers, and it’s a sales channel that must be given serious attention by marketers.

Fortunately for small and medium businesses that just got started with their physical gift card program, the shift to digital isn’t going full swing yet. Data from CEB TowerGroup’s research shows that total sales of digital gift cards are roughly at $3 billion -- a drop in the bucket of the $110 billion gift card market. 

What does this tell us, then? It means that while digital gift cards are on the rise, physical cards are here to stay. In fact, 9 in every 10 gift cards sold today are still in paper or plastic form.

With physical gift card sales remaining strong, let’s look at ways on how you can capitalize on this opportunity:

1. Use multiple channels to promote your gift cards

• In Store Signage
• E-mail Newsletters
• Direct Mail
• Menu Inserts
• POS Displays
• QR Codes
• Online Banners

2. Expand sales outlets

• Offer them to other businesses to give as employee incentives
• Sell them at gift card malls

3. Package your gift card

• Include a free gift box for higher denomination cards
• Bundle a free item with the gift card purchase
• Offer a free $5 gift card with a $50 purchase or something similar

4. Try a paper version for your gift card

• Paper gift cards are friendlier to the environment compared to plastic
• Offers a certain degree of flexibility to card design and construction not possible with plastic

5. Be creative in your gift card design and construction

• Use unconventional materials that tickle your customer’s fancy (e.g. Starbucks Metal Gift Cards)
• Some examples include: Gift cards that double as USB flash drives, MP3 Players, and as a mini-camera

Gift cards continue to be a solid revenue channel for merchants and their appeal to consumers remains strong, but the most gifted item in the United States is evolving. Loyalty programs have become an important strategy for retailers in attracting new customers as well as retaining current ones. As some brands have learned, gift cards tied to loyalty programs are proving to be very effective tools for drawing new customers and keeping existing ones happy.

Studies show that shoppers who receive gift cards as an incentive from a loyalty program spend 43% more than the card value, with more than half redeeming their cards within a month of receiving them. This indicates high customer engagement, which is a good indicator of a well-executed customer gift card and loyalty program. It also means increased revenue.

While digital is the way of the future, with thorough planning and creative execution, plastic and paper gift cards will always have a place in the marketplace.