Tap Into The Science of Gifting

By Monika Kochhar

Tap Into The Science of Gifting Consumers collectively spend billions of dollars on gifts each year. Gifting is a powerful mechanism to build stronger alliances, and engage in positive social experiences. People enjoy and find meaning in the personal bonds created through giving and exchanging gifts. Gifting also taps into the human need for social approval and balanced reciprocity. By understanding and applying the psychology and economics of gifting behavior, retailers can improve the customer shopping and buying experience in their stores, position their brands as customer-centric, and maximize their gifting revenues throughout the year. The following are three strategies retailers can employ to maximize gift sales, based on scientific research.

Provide more gift options

Gift givers tie the act of giving to their own self-concept, and will overspend to send a stronger signal to the recipient. Because gift givers overspend when setting out to purchase a gift, revenue can be increased by upselling at the point of sale.

There is an asymmetry between gift giver and recipient’s beliefs about gift price and feelings of appreciation. In a study conducted by Stanford University, participants were divided into gift givers and recipients. Participants were asked to imagine either giving or receiving an iPod or a CD as a graduation gift. Recipients were asked a series of questions to gauge their overall appreciation for the gift, and givers were asked to predict how recipients would respond. The results showed that gift givers believe that higher priced gifts are appreciated more, whereas recipients showed no such bias. Gift givers tie the act of giving to their own self-concept, and will overspend to send a stronger signal to the recipient. Because gift givers overspend when setting out to purchase a gift, revenue can be increased by upselling at the point of sale.

Enable shoppers to re-gift

Re-gifting is no longer a “no-no,” and there is a narrowing gap between the reactions of gift givers and recipients when it comes to re-gifting. In an experiment conducted by Harvard Business School, London Business School and Stanford University, participants were assigned the role of gift giver or re-gifter. Gift givers were given a $50 Amazon gift card to give to a friend on his birthday. When asked, the friend confessed he had re-gifted the card to his sibling. Givers then responded to eight questions assessing the extent to which they felt offended, while re-gifters predicted how much the giver would be offended.

The results show that our reaction to re-gifting is contingent on our role in the gift exchange. Re-gifters overestimate the extent to which givers would feel offended. Givers would rather see unwanted items re-gifted because they believe recipients are free to do what they please with a gift, once it has exchanged hands. Online retailers can benefit from re-gifting by offering mechanisms that allow gifts from their online store to be re-gifted before they ship. All retailers can encourage re-gifting by offering incentives such as discounts on future purchases. This serves as a way to prevent returns.

Personalize the gifting experience

Tap Into The Science of Gifting Women gift more frequently than men, and have a very different gifting profile. Margaret Rucker, a consumer psychologist at the University of California, Davis, found that men are typically more price conscious and practical about gifting, while women tend to be more concerned with emotional significance. A study commissioned by eBay identified four types of gift givers: emotional, practical, convenience, and last minute. Of these, 42 percent of women consider themselves to be emotional gift givers, whose shopping behavior focuses on planning, personalization and finding thoughtful gifts for everyone on their list. Despite their shopping tendencies, 71 to 77 percent of women put meaning into their gifting process. This opportunity can be leveraged to enhance your brand experience by offering personalization options. These can include greeting cards, real and virtual gift-wraps, animations, and ways to record and send voice and video messages along with gifts. While gift cards are considered impersonal, offer shoppers personalization through pictures, video, animation and the inclusion of personal messages, both in-store and online.

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