You don’t have to be in the giving spirit to know that gift cards are a top incentive.
But what’s the psychological value behind them?
Dr James Giordano, professor of Neurology and Biochemistry at Georgetown University Medical Center, spoke to us about the value of choice and its connection to gift card success.
Gift cards let customers make their own choices
I remember the first time I received a bad gift.
It was during one of the many holiday seasons in my formative years, and I was just starting to get into fashion. I loved all things girly, glittery and glamorous. Yet, the gift I received was perfect for an entomologist: It was covered in embroidered spiders and ants, stitched across a bland beige outfit. Safe to say, I never wore it.
I would’ve much rather preferred another pair of clothes, or better yet, the money to choose something for myself. Your customers are the same way.
Gift cards are the perfect combination of free will and financial freedom. Recipients aren’t tied down by the burden of accepting some “prize” that doesn’t feel like a personal win for them. How would you feel if your favorite pizza shop gifted you with a large cookie despite you never having much of a sweet tooth?
Giordano says the real customer reward is the gift of choice.
“You’ve gifted them the option of their choice. In other words, you don’t give them some random prize; they might not like it. But if you give them the monetary value of that prize and say, ‘exercise your choice and utilize that money on those things that are going to appeal to you most strongly,’ you provide that individual with flexibility to be able to make choices that most resonate with their particular interests,” Giordano said.
As people we’re more prone to want to do things that give us autonomy over our own choices — and it’s all due to behavioral economics. Created by political economist and philosopher Adam Smith, the Rational Choice Theory was developed on the basis that humans make decisions that are best aligned with their personal interests. This is done in hopes that the decision-making process will help consumers avoid negative emotions or losses based on the choices they make.
Redeemable incentives like gift cards work well in leveraging the Rational Choice Theory and the psychological benefits that come with giving consumers the freedom to choose the best fitting reward for them.
“If you tell me you’re going to give me something, an actual thing or item, I might not like whatever it is you’re giving me, but if you give me something of the same value and tell me that I can use it however I want, what you’ve done explicitly is given me flexibility and implicitly you’ve honored my ability to make a choice,” said Giordano.
From a psychological perspective, when you gift customers with money they can spend freely, you do a few things:
1. Lessen feelings of restriction or fear and heighten safety
2. Increase products available to customers
3. Heighten the perceived value of your products or services
4. Leverage personalization strategies and their corresponding emotional responses
One simple monetary gift gives customers ownership of their shopping experience, shows them you trust your products enough to let them take their pick and rewards them with a valuable prize at the end — further incentivizing them to shop with you again.
