Have you purchased or received any gift cards recently? With the holiday season here, chances are becoming more and more likely that your answer is yes. This is due to the growing popularity, convenience and use of gift cards. According to the National Retail Federation (NRF) Gift Card Survey, over two-thirds of consumers (79.7%) plan on purchasing at least one gift card this year. The average consumer will spend $116.51 on gifts cards in 2006.

The sales impact for businesses making gift cards available is . . . BIG. Gift card sales will total an estimated $24.8 billion in expected holiday gift card sales this year, up about $6 billion from last year according to the NRF Gift Card Survey. Some businesses like Starbucks are using gift cards to build customer loyalty and generate a significant portion of their sales. According to the article entitled “Starbucks builds on loyalty with gift cards”, customers of the Seattle-based coffee retailer activated 15 million cards last holiday season that brought in $170 million, accounting for 12% of Starbucks’ revenue stream in that quarter.

I recently received in the mail a simple holiday card from Dick’s Sporting Goods. The holiday card was brief and thanked me for being one of their “best” customers and it included a $20 gift card good toward any purchase in their stores. They likely identified me for this since I use their store’s loyalty card (called a “Score Card”) which gives you points for each purchase you make . . . OK, I did purchase a lot of golf balls there this year as I have tendency to lose them quickly! Nice gift and smart move by a company that knows I’ll likely spend that $20 gift card and more when I make a trip there to use it.

What’s your take on gift cards and their sales and marketing effectiveness for businesses? Have you or your business had any positive or negative experiences with gift cards?

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