During this season of giving, gift cards and gift subscriptions have made sharing what you love easy and rewarding for givers, receivers, and digital media companies alike. This is important because today there are over 200 streaming subscriptions available for consumers—a daunting number of options that can lead to decision fatigue.
On top of that, the average consumer spends about $273 per month on subscriptions according to a recent study about America’s relationship with subscription services. (In fact, after internet and phone connections, streaming and digital content subscriptions make up the next largest categories.)
In the crowded — and competitive — digital subscription market, you need proven ways to stand out and retain more users.
Gifts that keep giving
Gift cards are an easy, reliable way to give someone a subscription to try out your service. For starters, offering gift cards enables your existing customers to share their favorite and vetted subscriptions with friends and family members. Also, gift cards are branded and can be used only at the issuer’s site. This removes choice paradox for receivers, replacing decision fatigue with a positive and trusted experience.
According to Digital Commerce 360, digital gift card sales increased 100% during December 2020. Gift cards proved effective at helping businesses like restaurants, nail salons, and more stay afloat during the pandemic.
Notable brands offering subscription gift cards include The Wall Street Journal, Netflix, Spotify, Roblox, and Twitch. When used on top of discounts, gift cards provide consumers with an extra incentive to purchase.
The gift card conundrum
Automatic renewals are standard operating procedure for most subscription services. However, gift cards contain limited funds. While it may seem counterintuitive, limited funds encourage trial and adoption by providing just enough to get a taste of the experience. Controlling the sampling experience and how much the user is allowed to spend can actually help subscription brands entice users to stay engaged longer.
This was the intent of paywalls—a common tactic media companies use to provoke signup. What many paywall designers fail to realize is that the snippet of content usually available for 5 seconds is not enough to entice potential subscribers to subscribe. Particularly if the only perceived value in the moment is to read that article. More often, paywalls cause potential subscribers to become annoyed and exit. Unfortunately, that makes this interaction nothing more than a web impression with no way for the media subscription to reach out to the reader and re-engage them. Overall, that’s pretty ineffective at converting the reader into a subscriber.
Gift cards, like free trials but more effective, can inspire loyalty. First, a gift card removes the burden of making a decision, since the giver already made that important choice. Second,with a gift card, someone can sample the full subscriber experience, rather than a more limited trial. A recent study by InComm Prepaid Trends found that 85% of people who’ve received a gift card would likely go back to that brand and become a long-term customer.
Cash, but better
For a digital subscription, issuing gift cards is like printing cash. By offering a distinct and universal way to pay, digital media companies can reach more customers. Consumers also get the flexibility to use a gift card instead of signing up for monthly billing.
Can a company print too many gift cards? Is this like a country printing money and causing inflation? The answer is no, because the funds in gift cards are scanned and activated at the time of purchase. So, companies do not lose potential revenue if they print more than what is sold. When a consumer redeems a gift card, your billing platform recognizes the revenue, and the full value of the gift card purchase goes directly to your company.
See the tall stand of gift cards by almost every cash register in your grocery stores? Brands of all kinds leverage gift cards to collect revenue from physical storefronts and to facilitate the gift-giving purchase behavior specifically nurtured by physical retailers. Yes, most subscription gift cards are valid for digital experiences. However, offering them in-store ties them to real world experiences.
The bottom line: Gift cards are not merely another way to pay for media subscriptions. They give existing customers a way to support and share the brands they love, and in return, provide digital media companies with valuable new subscribers.
To succeed with this model, choose a subscription billing platform that combines the best of both worlds: gift subscriptions and gift cards. If you are looking to get in on the seasonal shopping boom — and add another inroad to building your potential subscriber base — it’s time to give gift cards a look this holiday season … and all year long.