Gift Cards Gone Wild?

As the old saying goes, “virtue is its own reward.” These days, though, it seems like shopping itself may be its own reward. Businesses of all kinds are racing to reward customers for their loyalty with gift cards, sales and other offers.

But businesses aren’t the only ones looking to reward customers. Often, it’s also friends and family members wanting to present tokens of appreciation. But, while they often may seem like sweet and simple purchases, there’s a lot that can go into turning gift cards, rewards, and other promotions into profitable and meaningful transactions.

Donna Novitsky, co-founder and CEO of Yiftee, is trying to make that process less complicated. PYMNTS caught up with Novitsky to discuss what it takes to use gifts and rewards to drive profitable customers to retailers, restaurants and eCommerce websites.

Accepted by (almost) everyone

Yiftee is a digital gift card and rewards company that allows consumers and merchants to give rewards to their friends or customers via digital gift cards that can be redeemed at more than 55,000 retailers, restaurants or eCommerce websites.

As those industries become more driven by loyalty, deals and promotions, Novitsky said, it will be crucial for merchants to find ways to turn a profit after reducing their prices.

“How do they navigate that landscape and continue making money and not just be giving away the store to bargain hunters that never come back?” Novitsky said.

Through Yiftee, merchants can build upon their rewards program by integrating Yiftee’s API on their platform, thereby making it possible to send rewards to their customers one at a time or to an entire list, she explained.

Novitsky added that making those transactions lead to loyal, return shoppers, rather than just one-time bargain hunters, can be a challenge, due in large part to the wide range of payment technologies currently in use today.

“It’s a tall order because payments systems are all over the map,” she noted. Merchants Yiftee works with include, among others, franchise chains and SMBs, she said. That means there are hundreds of different POS systems to integrate with. “The challenge for us is how do we find something that works on all of them because many [merchants] do not have IT staff sitting around waiting to do integrations with whatever particular payment system they have.”

Novitsky said she and her team set out to design the company “to be very nimble on the back end,” which meant there would be plenty of partnerships, primarily with POS providers.

Yiftee’s partnerships with POS providers and semi-integrated payment solutions enable merchants that use those POS systems to accept the digital gift cards seamlessly. According to Novitsky, merchants can accept digital gifts from Yiftee in the same way they would use gift cards from their POS providers.

One merchant doing just that is FOCUS Brands, a restaurant group that owns and operates more than 4,500 franchises in the U.S. and internationally. Stevie Liang, FOCUS Brands’ Senior Vice President, said the company began working with Yiftee in order to meet some of its online objectives, and is pleased with the results so far (though he declined to provide figures). He also praised Yiftee’s integration process, saying it was one of the easiest payment solutions they have implemented.

Yiftee, Liang said, seemed like a solution that could help the company accelerate its digital goals. The goals, he added, namely were to “create more avenues for our customers to interact with us digitally. This is [also] one of the great ways to integrate that with our existing in-store systems.”

And, if a merchant uses a POS that hasn’t yet partnered with Yiftee, the company’s partnership with Mastercard allows any retailer, restaurant or website that takes Mastercard to accept and process Yiftee cards in the same way.

“Everyone can take a Mastercard,” Novitsky explained. “We can serve merchants with POS that they (Mastercard) haven’t partnered with.”

Going forward, Novitsky said, she and her team hope to partner with more POS providers in order to become a staple of many POS offerings as the default e-gift card provider.

Online, mobile and in-store

Novitsky noted that another advantage of digital gift cards is their omnichannel features, which allow the cards to be used online or in-store just as easily. She said that for merchants looking for new ways to establish relationships with consumers, that kind of cross-channel outreach is crucial.

“All of our merchants are looking for ways to connect with customers on mobile devices,” she said. “Because the gift card is delivered to the phone and because the merchant has partnered with us, they have a mobile marketing engine. They didn’t have to go buy a whole bunch of different technology, they can just use us to send out the digital gift card as promotion.”

By extending Yiftee-powered digital gift cards to customers, merchants prevent their promotional efforts from being perceived as a discount on the brand, Novitsky said. Yiftee allows merchants to “send” these promotional gifts, which could be stored in a simple email, text message or tweet or involve redemption over advertising mediums such as print, TV, radio and billboard.

Yiftee gift cards live on the customer’s phone, Novitsky explained, meaning that a merchant’s gift card can be redeemed at any location, even online or via a mobile app. It also means that, no matter where the card is used, the transaction funds end up in the right place.

The cross-channel nature of the gift cards also has another advantage, Novitsky said, and that’s data – and lots of it. The company is able to, among other data, track who has redeemed gift cards, where they have redeemed them and what they’ve purchased. Merchants and franchisees can then use that data to fine-tune their promotions and make sure they are attracting as many long-term, loyal customers as possible.

Merchants can also use the mobile properties to offer multifaceted deals. For example, Novitsky said, some have run television or print ads promising sales, coupons or gift cards for customers who text a certain number displayed in the ads.

The omnichannel features also help Novitsky and her team to entice consumers to make the most out of their rewards. First, they prompt customers to redeem their rewards by sending mobile notifications and reminders to customers who haven’t yet redeemed their gift cards – or, if the gift card expires, the company will transfer back the credit of the expired gift card to the buyer.

“We can say, ‘Hey you haven’t gotten your free pizza from Joe’s Pizza yet, you should go pick it up,’” Novitsky said, adding, “A business that may not have had a big, or any mobile presence, has that outreach.”

Turning promotions into profits

Novitsky said that more and more merchants should consider extending gift cards in the form of special offers and deals, noting that 25 to 33 percent of restaurant industry revenue is driven by promotion. As merchants offer more deals and offers, Novitsky said, it will be crucial for them to find ways to turn those promotions into profits, rather than serve bargain-hunting customers who aren’t loyal, or in the long term, profitable.

“The way Yiftee is structured, when you give someone a gift it doesn’t devalue the brand,” she said. “It tends to bring in more profitable and loyal customers. You get a gift and you think, ‘Oh, this is nice,’ and then you want to send a gift. Now, you’re not just a bargain hunter, you’re an advocate for that brand.”

To download the July edition of the Payments as a Service Tracker™, click the button below.

About the Tracker

The PYMNTS.com Payments as a Service Tracker™, in collaboration with Cayan, is designed to give an overview of the trends and activities of merchant platforms that not only enable payment processing of new and old technologies, but also integrate with other features to improve the merchant’s experience, including customer engagement, security, omnichannel retail experience, analytics, inventory management, software and hardware management, and more.