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Tips, advice, and information for South African business owners

05 Feb

Gifts That Keep On Giving

Gift purchases have an obvious financial benefit. Any time a customer buys your product or service as a gift for someone else, you make more money. However, the benefits don’t end there. It turns out that gift purchases can also dramatically increase customer loyalty and lifetime value.

German researchers compared the purchase history of customers who bought for their personal use to those who bought gifts for others. They discovered that gift givers made 41% more shopping trips, completed 25% more purchases, and spent 63% more than regular customers.

So why are people more likely to make more purchases if they buy a gift for someone else?

According to the researchers, giving someone a gift is a public commitment to the brand in question. The gift giver is implicitly announcing that they trust and value the brand. This is very different from purchases for personal use which are private affairs. As a result, customers identify more deeply with brands that they purchase gifts from, and this deeper affiliation increases their probability of future purchases.

If you aren’t already encouraging your customers to use your products or services as gifts, now is a good time to start. This may be more natural in some industries than others, but the point is to actively encourage gift purchases (e.g. by organising a promotional campaign explicitly around gift giving) instead of relying entirely on the initiative of your customers.

The gift giving effect is more powerful for new customers and can be enhanced by special assistance that reinforces your brand (e.g. a complimentary gift-wrapping service with branded wrapping). So target your promotions accordingly and make the gift giving experience as memorable as possible.

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