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Top Takeaways:

• – Total holiday gift card sales value is up in 2022 while the total number of cards sold is down.
• – Digital gift card sales continue their rise.
• – The large holiday winter storm cooled what is traditionally the biggest day of gift card sales.
• – More consumers are opting for higher value gift cards.
• – Fine dining gift card sales are up, QSRs sales are down.

According to Paytronix Gift Card Data, some retailers have much to be cheerful about. An early look at the data shows that the shift to digital gift cards is in full swing and that dining trends across the country continue to trend towards sit-down concepts. Despite the swing to digital, an arctic blast translated to lower gift card sales on a key shopping day, demonstrating that gift card sales are not insulated from factors such as weather.

Holiday gift card sales are largely up across the board. The total dollar value of cards sold is up 2.2% versus 2019 and up 1.4% since 2021. 2022 was the best year for gift card sales in recent memory, with more dollars spent on gift cards between Black Friday and Christmas Eve than any year since 2019.

However, while the total dollars spent on gift cards has increased, the number of gift cards sold is substantially lower than previous years. For the holiday period from November to December, numbers of gift cards sold dropped by 5.1% vs 2019 and by 10.7% from 2022. However, this trend has a notable exception: digital gift cards. Between Black Friday and Christmas Eve, the value of physical gift cards is down nearly a fifth (22%) vs 2019 and down 7.9% since 2021. Digital gift cards, on the other hand, have seen the value of sales increase by a whopping 77% since 2019 for the same time period, while the value of digital gift cards sold also increased 4.6% since 2021.

One trend of note during the Holiday Season was the impact of a severe winter storm that froze out a large portion of the country just before Christmas. As shown in the chart below, December 23 is typically the best day for gift card sales. While this still held true for 2022, gift card sales suffered significantly, with numbers of cards sold per day down 32.6% from 2019, down 23% since 2022, and down 10.9 percent since 2020 during the height of the pandemic. Value of cards sold was down by 19% since 2019 and down 14.3% from 2021. Physical gift card sales in particular suffered significantly due to the storm, with numbers of in-store cards sold down by 37% as compared to 2019. Shoppers who procrastinated had to find other stocking stuffers this year as the weather prevented last-minute shopping.

Inflation has also impacted the values of gift cards sold.  $5 and $10 cards were far more popular in 2019, representing 11.2% and 16.7% of gift cards sold that year, respectively. During 2022, the sales of those values of cards dropped approximately 3% each, with sales of each representing 8.8% and 14.1% of total gift cards sold, respectively. On the other hand, sales of higher value gift cards increased to match, with sales of $50 growing from 12.2% to 16.3% and $100 gift cards getting a boost from 6% to 7.8%.

Finally, gift card sales this holiday season reveal that, 2 years out from the worst of the pandemic, consumer tastes are changing from both pre- and post- pandemic. Between Black Friday and Christmas Eve, the value of gift cards sold for QSRs dropped 3.2% compared to 2019 and 6.9% compared to 2021. But the value of cards for fine-dining restaurants has increased 9% compared to 2019 and by 3.7% as compared to 2021, indicating a building demand to revisit concepts with a sit-down model. Moreover, dollars spent per day for fine-dining gift cards during the holiday season is up 80% as compared to 2020’s holiday season, indicating the trends of the pandemic are receding.

So what does this all mean for restaurants? Inflation has taken its toll on the American consumer, but as previous Paytronix resources have shown, loyalty offerings like gift cards are an effective shield against inflation. Moreover, the concepts that suffered the worst during the pandemic are enjoying a resurgence. Finally, the proliferation of digital gift cards shows that digital guest engagement is increasing in popularity and will likely continue to build in popularity.

And of course, cross your fingers for good weather on December 23^rd next year.

Loyalty gamification offers a great way to connect with the growing demographic of young, tech-savvy guests.

Simply put, gamification means applying “game play” to different aspects of the digital marketing.  When it comes to loyalty, this can happen at three levels: core, layers, and promotions.

World of Beer tackled this at the core level in which its entire program rests on a game. Gamified layers would be actions like adding badges to the program, while gamified promotions are short-lived game-based discounts, like a free offering when your favorite sports team wins.

World of Beer is seeing smashing results with its gamified loyalty program. Founded in 2007 in Tampa, Florida as a craft beer bar that serves a variety of brews from across the world. WOB has a long-running loyalty program that awards guests $5 for every $75 spent. It then gamifies the whole program with badges and challenges.

Two recent challenges this year saw between 10-25% increases in spend and completion rates over 90%.

“Customers can earn badges when they try different beers. The badges are to honor their achievements, which they can show off to friends,” explained Cori Rosecrans, Director of Brand & Digital Marketing for World of Beer. Customers can enter challenges for their chances at more than just bragging rights. “We encourage customers to try beers and [enter for a chance to] win trips to beer capitals of the world. These challenges help highlight our [brand] differentiators and our assortment of beers.” More than fun, the challenges have produced serious results. Two recent challenges this year saw between 10-25% increases in spend and completion rates over 90%.

World of Beer’s loyalty program shapes its brand experience. At every engagement, guests climb the ranks of badge leaderboards and try their luck at life-changing prizes. As a digital engagement strategy, WOB’s gamified loyalty program keeps guests coming back and drives revenue.

Wondering how your brand might benefit from gamification? Speak to a loyalty expert at Paytronix today.

Loyalty programs can only succeed if people use them, which means you have to get strategic about enrollment. Customers want to quickly understand the value of signing up, and they want to do it fast. Meanwhile, employees want to know what’s in it for them if they can get people on board.

Here are three ways leading convenience stores are driving loyalty program enrollment.

1. Expand Enrollment Methods

Brands need to reach as many customers as possible in as many ways as possible. I spend countless hours designing industry-leading loyalty programs, but every program’s success requires the right number of enrollment methods. The best loyalty programs engage the masses. They reach outside the top 5-10% of customers to grow customer lifetime value and attract new customers.

Here are six popular methods of enrollment with unique advantages:

• Mobile App: Provides immediate access to full loyalty program functionality.
• NFC Payment: Fits seamlessly into a transaction and caters to younger customers.
• Kiosk: Grabs the customer’s eye and prevents in-store lines.
• Reverse Enroll: Expands marketing ability via a QR code or hyperlinked banner.
• Text-to-Join: Enables customers to enroll on the go, and on their own time.
• Physical Cards: Caters to older customers, and it’s fast.

2. Promote Your Program

There are two broad steps to promote a program. First, make sure your program is easy to understand. Ideally, customers will do some of the work for you through word-of-mouth. But they’re not going to rave about terms and conditions, so make the program perks clear. Second, consider the best ways to reach your customers. No matter how much technology one puts in place, it still matters when a cashier asks, “Are you a member of our rewards program?” at checkout.

Train your employees on the value of your loyalty program, and craft FOMO messages to drive customer interest. Employees should be capable of selling a customer on the loyalty program within 5-10 seconds. A great method here is offering immediate rewards on the transaction at hand. For example: “Would you like to join our loyalty program and enjoy a free snack with your coffee if you join?”

3. Incentivize Your Employees

Give your employees some skin in the game! Competitions and rewards are great ways to motivate and recognize your hardest working representatives.

Here is one way to structure incentives:

General Registration Thresholds: Any store that hits the general thresholds gets a reward.

In Conclusion

In a program’s first year, you should spend 80% of your time driving participation. Make sure that you’ve covered the right enrollment methods and that your employees and executives understand the value of your loyalty program. Loyalty program success begins with your team. Develop the right internal and external messaging around your loyalty program, then find ways to make it easier for customers to join.

The economic story of 2022 has been around one word: inflation. But there’s a second story that has remained under wraps: how loyalty programs keep customer spending in line with inflation. By studying the check sizes for customers of 64 restaurants and convenience stores, Paytronix data analysts discovered that loyalty customers kept their check sizes roughly the same, despite the rise in prices.

Of particular note, the customer segment hit especially hard by inflation was fuel purchasers at convenience stores, who saw their prices more than double between January 2020 and June of 2022 (though fuel prices have since dropped). Despite this rapid rise, fuel-purchasing loyalty members continued to buy until prices rose nearly 80%, and even then continued to spend more. As prices once again dropped, loyalty spending quickly moved to match.

Turning to restaurant concepts, QSRs saw a similar pattern from their loyalty members. Prices did not increase as rapidly as they did for fuel, but the most loyal customers of these QSRs kept increasing their spend, at times doubling the rate of the increase in menu items.

As the rest of the data brief shows, inflation is difficult to overcome, but restaurant loyalty programs provide the ideal tool to hedge against even the toughest economic circumstances.[CT1] 

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