This article was first published in Paybefore.
A synthesis of emerging technologies, consumer preferences and e-commerce innovation is fundamentally transforming the retail landscape. Today’s shoppers expect highly relevant and personalized experiences. Winning their purchase and loyalty requires deep customer engagement, targeted promotions and relationship-driven campaigns. The traditional gifting transaction (buying for others) meets few of those expectations, ensuring that gifting continues to be an anxiety-ridden, unfulfilling experience for consumers. But, it doesn’t have to be.
SKU-level e-gifting marries the trophy value of a gift, “I thought about you. I think you might like this.” with the flexibility of the gift card.
The convergence and overlap of the above transformers finally are moving gifting forward with a natural evolutionary step for gift cards. The question is how to combine the best of physical and digital (in terms of channels and products) for maximum success? SKU-level e-gifting is gaining momentum and is embraced by many as the industry’s next innovation. This successive generation of e-gifting is better adapted to meet the needs of the shifting market landscape. SKU-level e-gifting empowers consumers to express the warmth and personal touch central to gifting a physical item, while maintaining the flexibility and convenience of the gift card. While a beneficial revelation to consumers, it’s driving growth for retailers and payment processors and expanding commercial opportunities for loyalty providers and issuers.
At its core, SKU-level gifting provides gift purchasers with a mechanism that enables them to buy an item-level (physical) gift online and send a notification with redemption information to gift recipients. Recipients choose their product preferences, such as size, color and style, or exchange the item for something else before it ships. Since gift senders give an actual product instead of cash, SKU-level e-gifting makes the gift-giving experience feel more thoughtful. It marries the trophy value of a gift, “I thought about you. I think you might like this.” with the flexibility of the gift card. SKU-level gifting encompasses a broader view of the consumer, provides the right customer experience and captures crucial gifting data—all of which ultimately leads to increased revenue for retailers.
All about that Data
A seamless SKU-level capability requires deeper integration with e-commerce solutions touching product catalogs, inventory, payments and fulfillment. It’s precisely this requirement for deeper integration that lays the pipe to granular SKU-level gifting data. It captures customer preferences, providing a 360-degree view of consumers’ buying behavior. This, in turn, enables retailers to slice and dice product-level data. Which products are my most gifted items for each occasion during the annual cycle? Which attributes are most important to my customers? Which price points are optimal for each holiday? And, ultimately, it enables retailers to offer a highly personalized shopping experience and market one-on-one with individual consumers in ways that weren’t previously possible.
SKU-level gift card technology is being leveraged by retailers and loyalty and rewards providers. Retailers bring gifting to the core of their businesses with e-gift checkouts, run product level promotions and rewards campaigns, and set up corporate/bulk gifting to sell more products.
- SKU-level gift checkouts increase customer acquisition, engagement and sales, reducing cart abandonment rates and returns by bringing greater choice and flexibility to gift shoppers and recipients.
- SKU-level product promotions inspire new and existing customers to spend more and drive customer traffic, whether to promote a new product line, push high margin products or reward loyal customers with SKU-level gifts—all while maintaining choice and flexibility for recipients.
- SKU-level corporate/bulk gifting drives sales, customer acquisition and brand awareness by enabling easy bulk gifting for businesses and organizations to recognize their employees and partners with high perceived value SKU-level gifts from their preferred brands and retail partners.
Some retailers report that their SKU-level checkouts perform four to six times better than their e-gift card programs, a 23 percent higher shopping cart conversion, a sharp drop in returns and up to 97 percent new customers in gift recipients and shoppers. On top, they enabled thoughtful long-distance and last-minute gifting and empowered men to give certain lines of products more confidently (think jewelry and lingerie). SKU-level product promotions have led to a 27 percent uplift and positive social engagement as up to two-thirds of senders and recipients share their positive brand experience on social media.
Looking beyond retail, pushing SKU-level rewards creates a tremendous opportunity in loyalty, an industry that’s been saturated for far too long with miles, gift cards and undifferentiated experiences.
Innovative use of data will once again be the key to unlocking value in next-generation loyalty programs. SKU-level capabilities are instrumental in generating customer data and approaching loyalty in a way that more accurately reflects the consumer’s journey. The companies that combine personal touch and thoughtfulness and maximize the difference between perceived value and real cost will rise to the top. SKU-level rewards and promotions show strong growth potential for issuers and payment providers as payments and rewards experiences need to be fully integrated into the brand through every possible channel.
The marriage of digital and physical is what SKU-level embodies. It’s about building upon what works and harnessing technology to add new layers of convenience, flexibility and personalization to the process that ultimately lead to increased top and bottom lines.