Referral Success in the Gifting Sector

What are the trends in the gift market, and how can referrals boost acquisition? The gift market is the perfect environment for referrals. This guide to outline the key trends and how referrals can play a part in driving new customers during peak shopping periods.

  • Key dates for the gift sector
  • Recent gifting trends
  • How referrals can boost new customer acquisition
  • Examples of great gift referral schemes

Content Summary

Introduction
Part 1: Key Dates in the Gifting Sector
Part 2: Key Trends
Part 3: Great Referral Examples
About Mention Me

Introduction

The gift sector experiences significant seasonal peaks and troughs, driven by key events throughout the year. Referrals offer a golden opportunity to harness the traffic from the peaks to drive additional sales during the low season.

Overview of the gift sector

The basic facts of the gift market haven’t changed: at certain times of the year, customers spend money on items to give to friends, family, partners or work colleagues. But consumer behaviours and expectations of the gift market, driven by the digital economy, have evolved significantly in recent years.

In this article, we consider why some of the most significant consumer trends affecting gift market growth and success in the digital age — namely, increased demand for ultra personalised, customised and shareable experiences — are a perfect match for combining with refer-a-friend programmes.

Overview of the gift sector
Overview of the gift sector

Part 1: Key Dates in the Gifting Sector

Four key events during the year deliver a huge percentage of sales for the gift sector. Clever retailers can take this boost in traffic and harness the data to drive referrals & sales post event.

Key Dates in the Gifting Sector
Key Dates in the Gifting Sector

Valentines day

According to Worldpay, in 2016, over £1.6bn was spent on gifts and treats during valentines. There is also evidence that it is not just couples contributing to this spend; parents and even pet owners purchase gifts!

Mother’s Day

With over half a billion pounds spent in 2015 (Mintel), this is a key event, particularly for florists. Research suggests that many of these purchases are last minute. Father’s day drives much lower sales, but there is definitely room for growth. For gender neutral gifts this could be a key opportunity to drive repeat purchase via referral.

Easter

In 2014 £370m+ was spent on confectionary and Easter gifts. Whilst a large proportion of these gifts are for children, there is a growing trend towards luxury chocolate gifts.

Christmas

This represents the biggest time for gift buying, with 36% of all gifts bought in the UK being for Christmas. The Retail Gazette reports that £24bn+ was likely spent on Christmas 2015 and 27% took place online.

What are the key trends in the gifting market at the moment? And how can these be capitalised on to drive referral?

Personalisation

Spending on personalised items is set to exceed £1bn in 2016. It’s clear that consumers appreciate and have come to expect highly customisable gifts that stand them out from the masses. Ecommerce giants such as Photobox and Moonpig currently lead the way in satisfying consumer demand for everything from personalised stationery, photos, greeting cards and keepsakes.

Desire for handmade products continues to grow

Whilst on the one hand, the internet has strengthened the position of established retail juggernauts, it’s also provided the perfect conditions for bespoke handmades to blossom into big business.

In a kick back against mass produced averageness, consumers increasingly crave unique, one-of-a-kind items sourced directly from the makers. Etsy springs to mind as the major online player in this field, providing a marketplace for crafts, jewellery and fashion, direct from their designers and makers.

Evolution of click and collect services provides increased flexibility

Click and collect services are set to reach new levels of sophistication and increased flexibility for consumers. Major obstacles to online shopping include not being at home to receive an order and not being able to try before you buy. The roll out of Amazon’s collection lockers and Doddle’s parcel collection points are increasing customer’s confidence in the online retail experience.

Experiences valued over material goods

Since UK-based company Red Letter Days conceived of the concept of ‘experiences gifts’, this area has become a major industry in its own right. From hot air balloon rides, to spa days, to taking a luxury sports car for a spin, the experience gift market combines the best elements of the above examples — personalisation, uniqueness and flexibility to suit the tastes of the recipient — making it one of the runaway successes of the ecommerce era of gift giving. This increase in demand has resulted in new entrants to the market, such as the hugely successful buyagift.com, who recently became a client of Mention Me.

The hidden benefits of referral

When you think about it, a friend referral is a form of gift giving in itself. The discount or reward that the customer creates and passes on to his or her contacts, is an act of generosity.

In this sense, many of the psychological and social factors which motivate gift giving are shared with refer-a-friend programmes.

Gifts trigger the rules of reciprocation

First of all, the act of gift giving is a trigger for reciprocation. We are conditioned to follow the social conventions of ‘give and take’. When we receive a gift, we feel socially obliged to return the favour.

Applied to gift market referral programmes, an obvious tactic for leveraging this rule of reciprocation would be to target the recipient of the customer’s gift with a referral offer. I.e. Your friend found your awesome gift via us. When it’s time to return the favour, we’ll give you 20% off.

Gifts can be expressions of a unique identity — and generate scarcity

As mentioned earlier, another trait specific to the ecommerce-driven gift market is the creation of highly personalised products or experiences. We all love to be made to feel extra special and that we’re experiencing something one-of-a-kind. And in the digital age, when we experience something that makes us feel this way, we love to share it with others.Customer sharing any of these extra special products or experiences is referral programme perfection, driven by scarcity. In other words, when a customer shares their amazing, one-of-a-kind gift on social media, it’s going to create a buzz. They elicit comments such as “Wow, that’s amazing!”, which more often than not are going to followed up with, “Where did you get that?”. Cue the referral.

Some insights into referral from the data we see at Mention Me…

  • Gifting customers are 24% more likely to refer a friend than other sectors
  • Referred customers spend more on their first order – typically 15-25% more
  • Customers of gift brands deliver 78% more new customers per sharer than other sectors

Part 3: Great Referral Examples

buyagift.com

Buyagift is one of the largest gifting experience websites, with over 500,000 orders a year.

They decided to partner with Mention Me since they had limited development resource and wanted a solution which offered ”best in class” referral capabilities.

In the first 6 months they have seen great potential. It not only delivered new customers (with over 200 new customers in strong weeks), but also stimulated existing customers to purchase again. These impressive results were achieved before the peak Christmas trading period, so the full potential from their referral program is yet to come!

Referral is now a key component of buyagift’s marketing mix.

27% of revenue that comes from incremental referrer purchasing at buyagift.

“Having hands-on help and support from a referral expert at Mention Me has enabled us to do much more than we could on our own” – Leanne Harrison, Head of CRM

buyagift.com
buyagift.com

Bloom & Wild

Founded in 2013, Bloom & Wild is shaking up the UK flower market. They deliver beautiful, fresh flowers in presentation boxes that fit through your letter box. The business has enjoyed rapid success and key to their success is their attention to detail and the delight that customers experience when receiving a Bloom & Wild delivery.

The CEO, Aron Gelbard, understood the complexity of building a referral solution with the sophistication he wanted, one that would be able to run AB tests by cohort and could test different offers for different customer segments.

The Mention Me platform has enabled Bloom & Wild to undertake a complex amount of testing which has resulted in referral becoming one of the primary acquisition channels for the business. In peak months, 30% of new customers come via referral and 45% of referred customers go on to become referrers themselves.

30% of new customers that come via referral in peak months.

“We always felt that referral should be a significant driver of acquisition for our business and with Mention Me we’ve managed to deliver that.” – Aron Gelbard, CEO

Bloom & Wild
Bloom & Wild

About Mention Me

Mention Me exists to help businesses unlock referral as their leading marketing channel. Our world class platform has unique features to deliver referral success. Our team work alongside you to determine how to maximise the potential of the channel for your business.

We start by modeling a business case to show how well the channel will work for you and the numbers you can expect to deliver from a refer-a-friend programme.

Our integration is light (based on JavaScript tags) and places few demands on your technology team. So your referral programme can be up and running quickly.

You’ll have all of the tools you need, and the expertise on hand, to allow you to optimise the referral programme for your different customer segments.

We incorporate best practice and innovation (such as the ability for customers to share by name) so that you can have a world-class referral programme live from day one.

We also back ourselves to make it work for each business we work with by charging on a cost per acquisition basis, rather than charging license fees.

We work with 200+ brands such as Farfetch, Cath Kidston, Swoon Editions and Karen Millen to power their referral programme. Want to join them? Get in touch….

Source: Mention Me