Gift giving, is it really an unselfish act of kindness? Apparently not, if you agree with various studies that have been conducted into the psychology of the reasons behind why we give. Although giving may reduce a givers objective wealth, spending money on others increases the givers perceived sense of subjective wealth, according to a study by Chance and Norton. In essence, the more we give, the wealthier we feel.
Some also argue that there’s a inherent expectation of reciprocity (be it conscious or subconscious) that comes with gift giving; we have an innate desire to receive when we give. Indeed, Carolyn Costley of the University of Waitoko, comments that…
. . . gift giving makes people happy by activating a part of the brain typically associated with receiving rewards.
Understanding why we give is interesting, but how can we potentially increase gift voucher sales by employing some simple psychology? Here’s 5 ideas;
1. Sell experiences, not products
Interestingly, studies have shown that although an experience shared between the giver and recipient provides an obvious social connection, an element of this still applies for experiential gifts, even if the gift isn’t consumed together. Experiential gifts connect the giver to the recipient more than products can.
In an interesting WSJ article about holiday gift giving, the behavioural economist Dan Ariely suggests that “…if your goal is to maximize a social connection, don’t give a perishable gift like flowers or chocolates. True, people enjoy them, and you don’t want to impose by giving something more permanent. But what are you trying to maximize? Is your goal to avoid imposing on them or for them to remember you?”. The truly special gifts are those experiences that help create long-lasting memories; both of the experience and you as the giver.
Whilst most hotels will feature experiential gifts, they’ll likely be very standard; an overnight stay with dinner, a two night stay with theatre tickets etc. There’s a real opportunity to think about what drives human connection here. Rather than a standard break, offer something exceptional, something money can’t typically buy. Leverage your concierge’s connections and create an overnight stay with private backstage theatre tour, meet the cast etc. Yes, these are more challenging to create but consider the impact on the giver and the recipient – a truly memorable experience (and one that they’ll likely talk about, tweet about or plaster all over Facebook for years to come). Beyond just gift voucher sales, you might well get some fantastic blog content too.
A side note, but why not think about your booking engine upsells too? Chances are you have the standard options covered; a bottle of wine, box of chocolates, bunch of flowers, but what about considering more exciting offerings like a private wine tasting or a gastronomy experience where your guests can meet the chef.
2. Consider personal circumstance of the giver and recipient
It’s understandable that the suitability of a gift is often very closely related to the relationship between the giver and the recipient. For example, early in a new relationship someone might give chocolates and flowers, before considering more lavish gifts such as holidays and trips away. Carefully considering the gifts you offer and their suitability for different audiences provides opportunity to target people dependent on their personal circumstances.
For example, why not make use of Facebook’s extensive targeting options to present adverts to the following audiences;
- Those who are in a ‘new relationship’ – offer a gift voucher for a romantic weekend away with added luxuries. They may well be more inclined to book a break of this nature in the early stages of a relationship so as to impress their new partner.
- Newly weds of 6 months – offer a gift voucher for a romantic anniversary weekend, with some surprise extras celebrating their first year of marriage.
- Those who are ‘newly engaged’ – offer a gift voucher for an engagement celebration, perhaps a private dining experience for them and a group of friends.
- Target those over 65 – offer a more traditional gift voucher for a classic 1 night stay with dinner (a recent study from Bhattacharjee and Mogilner suggests that more mature audiences and retirees may well be more at home with more ‘ordinary’ experiences).
3. Ensure there’s a perceived expense
Devin A. Byrd of South University notes that advertisers are aware of the satisfaction consumers receive finding a gift that appears expensive, but at a good price. Indeed a recipients perceived value of a gift is important with Byrd suggesting that “a person can have immediate feelings of resentment if they feel a person has not spent enough”.
There are two important aspects to consider here; the messaging used to sell the voucher to the purchaser and the messaging the recipient sees. Whilst it might sound obvious, make sure the purchaser knows what a great deal they’re getting for such a special gift, but ensure the voucher itself makes no reference to any discounts or savings made, instead highlighting everything that’s included to create a perceived expense.
4. Cater for our inherent desire for reciprocity
Many studies and psychologists have suggested that we have an innate desire to receive, when we give a gift. Cater for this inherent desire for reciprocity by creating vouchers that are a gift for both the giver and the recipient.
One of the most common examples in the hotel industry are shared experiences for Mothers Day (e.g. shared spa experiences etc.), but don’t just stop there. Create year round shared experiences for couples, friends, groups, anniversaries etc.
5. Where monetary vouchers still have their place
Finally, back to Dan Ariely, who suggests that most rational economists would suggest you “give cash or give nothing” (due to a study that a third of gift money spent on Christmas gifts is potentially wasted as the recipient assigned a lower value than the retail price to the gifts they received). Evaluating on value alone, why give a gift that is considered cheaper than it’s actual value?
There will always be those who will want the recipient to know exactly how much money they’ve spent on a gift. As such, whilst not the most inspired gift, monetary vouchers should always have their place in your offering.
However, combine the learnings of point 3 and create a sense of perceived expense for the purchaser by suggesting what £100/$100 might buy the recipient, or better still combine this with an offer of £5/$5 off and see if there’s an uplift in sales.
On the monetary voucher itself, promote your premium offerings. Studies by Helion and Gilovich suggest that “… individuals experience less guilt when paying with a gift card, compared to credit cards or cash”. Thus, it’s been observed that gift cards are often used for more hedonistic purchases than standard cash – people are more likely to buy luxury/premium offerings with a voucher.
Gift vouchers are big business. In the UK alone the market is estimated to be worth £5 billion per year. Gift voucher specialists SK Chase advise that a number of their luxury hotel and resort clients generate in excess of £1 million per year in gift voucher revenue alone. A significant percentile of vouchers aren’t even redeemed, meaning 100% of the sale is profit (after any platform/processing fees). Although hotels should really encourage their gift experiences to be to redeemed; it increases footfall and people tend to spend more than the value of their voucher in the venue. Ultimately it creates more happy customers.
With Christmas on the horizon, don’t just dust off the standard range of vouchers that you’ve always offered. Consider our motivations to buy gifts for others and create a range of gift vouchers that are more fitting to your target audience.