In Depth

Gift Cards As A Second Currency

Some people find gift cards to be impersonal. Swappable is out to change that perception.

Launched by loyalty marketing service MyPoints in February, Swappable is a mobile gift card app that allows users not only to buy gift cards but personalize them with a video, photo or text message. On the receiving end, users have the option to — as the name suggests — swap their card for one from a different merchant.

Seth Barnes, head of marketing at United Online (the parent company of MyPoints), says that the idea for Swappable was born from the observation that, as gift cards become more digital, consumers — especially in the loyalty space — are increasingly interested in using them “almost as a second currency.”

Seeking to define what could make the app stand apart from others in the space, MyPoints — through customer research related to gift cards — discovered what Barnes describes as “a big pain point” in the realm: Simply put, when it comes to buying gift cards, consumers worry that the recipient might not like what they get.

Is it sufficient to give someone a Visa gift card? a potential buyer might wonder. Or, I want to buy my friend a gift card to Starbucks … but does he even drink coffee that much?

To address that “guilt factor,” as Barnes puts it, MyPoints designed what would become the namesake feature of the Swappable app: giving the user the option to swap out a gift card that he or she receives for one affiliated with a merchant that he or she might find more preferable.

Built upon that layer of customization was yet another distinguishing factor: The sender of the gift card can, through the Swappable app, create a video or add a photo or a note.

The incorporation of those available features — in whatever form it takes, be it “a thank-you note or if you’re congratulating your niece or nephew on [a] recital” — says Barnes, “makes the gift card just a little bit more personal.” He cites video in particular as one option that has been popular among users of Swappable thus far.

One more element currently helping to drive usage of the app is loyalty rewards. In addition to traditional reward promotions to incentivize customers — such as a “five dollars towards your first purchase” feature and incremental accruing — MyPoints is currently preparing seasonal promotions.

“The loyalty shopper in particular is really attuned to seasonal sales,” remarks Barnes. “We’ve seen probably about a 30 percent increase in digital gift card usage this back-to-school season.”

He points to the use case of parents with children headed off to college, who “can give them a little bit of currency” via Swappable. “It gives [the kids] some leeway, but it’s not cash like you’d get just from an Amex card, or a check or literal bills.”

Barnes also posits the holiday season as a potential time of growth, through targeted promotions, for the burgeoning app. If a user is headed to a Christmas party and forgets to bring a bottle of wine, a gift card — which “normally … might not seem classy enough” — can become, via the personalization elements of Swappable, an ample substitution.

The opportunity to create “little moments” like that, attests Barnes, is something that MyPoints is hoping to build upon with Swappable, given that the gift card industry is largely “based on seasonality.”

Incorporated with nearly every mobile retail app these days, of course, is geolocation technology. While MyPoints is in the process of incorporating such a feature into Swappable, Barnes stresses that the company is being very careful about it.

“We’re being cautious about introducing [location-based notifications],” he explains, due to the negative consumer experience that other apps have been known to create through excessive pinging.

Once MyPoints settles on a level of geolocation technology that operates with a frequency that is acceptable to the consumer, Barnes says that Swappable will — when a user is within a certain distance of a location of one of its affiliated merchants (the number of which presently stands at 26, including Macy’s, T.J. Maxx and Sears) — be able to “ping them about not just the gift cards that are available [for use] but also … [potential] rewards.”

It’s incentives, in fact, that Barnes expects will play a large part in shaping the future of the increasingly digitally based gift card industry — which is, in his estimation, moving into the realm of prepaid.

“Online, people have been conditioned to look for a deal or a coupon code before they checkout,” he states. “If we can offer the right kind of incentives on the sort of ‘prepaid currency’ [that gift cards present],” when the time is right, the informed loyalty customer will seize the opportunity to purchase credit at a preferred retail store.

“Whether it’s eCommerce or gift cards, there has to be some sort of incentive for the consumer,” adds Barnes. “I’m sure there’s going to be a lot of gift card sales in the aisles of malls, supermarkets and retail stores … for some time to come.” Providing the right incentives to savvy consumers, he believes, is a good way to build a customer base.

In that sense, again, what stands to delineate companies in the gift card space is the ability to make it personal.

“If we can be clever about it,” concludes Barnes, “and allow another way for people to make it more personal, then all the better.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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