Unredeemed gift cards and the problem of not providing customers with value

Abstract

Purpose The purpose of this paper is to demonstrate how the “money for nothing” attitude about gift card non‐redemption, that pervades retailing, directly conflicts with a customer focus. Further, it aims to show how short‐term financial benefits are completely offset by long‐term increases in indirect costs and damage to brand equity. Design/methodology/approach The paper uses examples of behavior to demonstrate common attitudes of practitioners revolving around gift card issuing and redemption. Additionally, the use of simple case study brings into question the common assumptions about the short‐ and long‐term effect on organizational performance of non‐consumer‐centric policies. Findings The paper finds that claims that retailers get “money for nothing” on unredeemed gift cards are illusionary. The actual costs of non‐redemption are quite high because the retailer misses the opportunity to bring both existing and, importantly, new customers into the retail environment. Further, brand equity may suffer if consumers feel that retailers have taken advantage of them. Brand equity damage can grow exponentially if media and governmental interests step into the fray. Originality/value The real issue is whether retailers pay lip‐service to their gift card‐holding public or really embrace the potential value that a gift card‐holding customer generates. Long‐term benefits accrue to organizations that reject the “money for nothing” mentality and actively try to attract gift card shoppers.

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