Recurly Gift Subscriptions: a Smart Customer Acquisition Strategy

blog_gift-subs2x.pngGift Subscription is not just a holiday buzzword for subscription businesses, it’s a smart customer acquisition strategy. Using the psychology of ‘social proof,’ a gift subscription given between friends or loved ones puts the gifter’s stamp of approval on the product or service, making the recipient more likely to use the gift and convert to a paying customer.

The current gift card industry is valued at over $100 billion annually (according to GiftCards.com), and online gift card purchases are projected to grow 29% per year. Subscription businesses are eager to get in on the gifting trend to grow their customer base and bottom line. Not only can gift subscriptions increase customer acquisition, but they can do so at a lower cost. The effort needed to convince a recipient to try a product or service is greatly reduced when the gifter is perceived as having already done the due diligence for the recipient.

Yet many subscription businesses shy away from offering gift subscriptions because there are few solutions that are easy to use and provide automated features. There can also be the potential for an increase in fraud, and legal compliance concerns. Partnering with the right billing provider and following best practices in fraud and compliance management will allow any business to reap the rewards of a gift subscription program.

Recurly is pleased to offer a feature-rich gift subscription solution that lets subscription businesses market both gift cards and gift plans. Combined with our coupon function, these make for a powerful promotional toolkit to support subscription businesses in their customer acquisition strategies.

A positive customer experience

A successful gifting program requires building a relationship between three stakeholders: the business, the gifter, and the recipient. Multiple touch points mean added complexity in the user experience, making a good experience the key for customer conversions in a B2C business.  The gift purchase, delivery, redemption, use, completion, and all possible scenarios in between, like a delivery failure or redemption reminders are all part of the experience equation. Businesses that choose to develop a gift solution in-house will find that it is a resource-intensive effort, likely to result in a sub-par user experience. Finding a billing provider that supports gift subscriptions, like Recurly, greatly reduces the amount of time needed to successfully launch and manage a gifting program.

Gift cards and fraud

It is no secret that with online gifting comes increased online fraud. E-gift cards are often purchased by fraudsters with stolen credit cards and resold on secondary sites for easy cash. Many times the second purchaser of the gift does not realize they have purchased a fraudulent gift card, which can cause relationship issues between the business and the customer who finally redeems the gift card. Recurly can help limit gift card-related fraud through our integrated, automated fraud management solution. Visit our webpage to learn more about how Recurly can help you fight fraud.

Compliance

While businesses are concerned about fraudulent gift purchases, governments have stepped in to make sure businesses are not defrauding gift recipients of their promised value. U.S. federal laws have put requirements in place that protect consumers from unfair expiration dates and dormant account fees. The states are left to establish their own rules above the federal laws, which can make managing compliance for online gift sales somewhat overwhelming. While Recurly’s gift subscription function follows the rules common across the majority of states, subscription businesses should consult their own legal team to determine their compliance requirements regarding gift cards.

Gifting should be a year-round customer acquisition strategy for any B2C company focused on growth. The lower acquisition cost and increased conversion probability due to social proof make it a smart strategy. The growth can become exponential when loyal customers extend their love of your product or service with a gift to friends and family. The benefits are clear, and the execution can be automated and streamlined with the right subscription management platform.

To learn more about Gift Subscriptions through Recurly, visit our webpage

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