Loyalty Truth

Gift cards have become the de-facto standard for gift giving in North America. I don’t need a lengthy research report to support the claim. This time I’m relying on my visceral instincts.

During the past Christmas holiday season, I overheard multiple conversations concerning gift giving plans for office colleagues, adolescent family members, and acquaintances that deserved a good pat on the back. Taken together, the conversations revealed a consensus of opinion on the principal perceived benefit of gift cards – it serves to bridge a relevancy gap between giver and recipient. In other words, whatever lack of knowledge the “giver” has about the intended recipient can be closed through a gift card. Impersonal as they are, gift cards make an easy solution for most people. In the “just do it” culture of North America, opting for a gift card satisfies a need and mitigates the risk of selecting a gift that misses the mark. As they say, “one size fits all”.

I have fallen prey too often to the temptation of using gift cards as a default option, but am increasingly uncomfortable with the idea. I am even less comfortable with putting too much emphasis on gift cards as rewards in a loyalty program. As a reward, a gift card provides little profit margin for the reward sponsor and can be perceived as a utilitarian option for program members. From the member’s perspective, it’s certainly better than losing points to expiration, but the gift card is similar to cash back – an option that lacks emotional value, has low perceived value due to its transparency, and is soon forgotten after being cashed in, or possibly lost.

During the holidays, Starbucks put a new twist on gift cards by wrapping the staid gift in a book of “Mini Moments”. Flipping through the little book, the giver is reminded of small acts of kindness that can be otherwise overlooked. The book prompts the reader to “enjoy a little me time or friend time” by “taking a moment or two or five” to enjoy and relax. By re-thinking the meaning of a gift card, Starbucks plants the seeds with users to cash it in with several options in mind. The booklet suggests the card can be good for one “Delicious Daydream”, a “Chat with an Old Friend”, or  a “Face to Face Conversation”, each one introducing a new level of perceived value in sharing a Starbucks gift card with a friend.

Loyalty program sponsors are often seeking to add “experiences” to their reward catalogs. In this case, Starbucks found an experience right under its nose, transforming the mundane into an attractive gift with sure-fire relationship value.