This article was originally published on Forbes.com
If one could create a pragmatic formula for scaling profitable retail growth, what could it be? I suggest something like:
(Sales@Peak Moments)^Customer Advocacy - (Returns + Marketing) = Scale
This formula may be simple, but it’s not simplistic. Underlying this notion is that marketing exists to nurture happy “people” (as in customers, shoppers or guests), who in turn amplify or advocate for your message during peak sales moments, specific instances when consumers are primed to purchase, so that the marginal costs of acquiring new happy people decreases with growth.
At its core, gifting is a social activity; it involves exchange among friends and family. Due to this social nature, shoppers who love your products, services or brand can be mobilized to advocate on your behalf. Yet, in retail—and elsewhere—gifting has been presented mostly from the point of view of the giver instead of the receiver.
A recent episode of the podcast Hidden Brain questions the premise that when it comes to gifting, “it’s always the thought that counts” and makes a compelling case to evaluate the psychological and economic costs of bad gifts. When it comes to gifting, perhaps it’s what you want that counts.
Enter the gift list!
Gifting is a big part of retail sales, estimated at over $475 billion annually. And while exchanging gifts should be enjoyable for both the giver and receiver, it is usually not. As receivers, we often get stuck with the hassle of dealing with returns or resort to regifting. As givers, we often turn to gift cards—despite our every intention of being thoughtful about what we buy for friends and family.
A gifting economy that puts the recipient at the center of the ecosystem could constitute a win-win-win for all parties involved, including the retailer.
How?
A gift list connects the dots between what people want, their friends and family and the stores they support. The polarization of retail across the big box and boutique local brands underscores the fact that if your store doesn’t offer a wishlist (a private list of curated items) or a sharable, shoppable gift list of the things your shopper wants, your business gets left out of a large swath of e-commerce sales events like birthdays, weddings, housewarmings and more.
These present opportunities where the buyer is most primed to make a purchase. For some brands, gifting solutions, similar to the ones that power well-known wedding and baby registries, make this possible with a click of a button for retailers of all sizes, from starter-level software to end-to-end enterprise solutions.
Here are three actionable strategies I advise for companies seeking to amplify their most valuable sales tool, “add to cart.”
1. Leverage the ways in which gifting is inherently anchored in advocacy.
A gift list is advocacy marketing at its finest. A user who loves your brand adds items from your store to a sharable and shoppable gift list that makes it easier for loved ones to get them what they really want. According to my own company MyRegistry’s database of millions of users, our own registries and gift lists are typically shared with five to eight different friends and family members, resulting in 75% of purchasers who are net-new to file to the retailer.
Users can create gift lists for specific occasions like birthdays, housewarmings or the holidays—or have a personal gift list that can be updated for gifting all year around, helping to introduce your products to new people. These advocates, by sharing a gift list with your products on it with loved ones, provide the three-fold benefit of driving awareness, expanding reach and converting sales through a channel that gets more efficient the more happy people your brand nurtures.
2. Use gifting occasions to mobilize sales.
From Valentine’s Day to Father’s Day, Easter to the holidays, gifting occasions drive the biggest peaks in retail sales. Furthermore, gifting never sleeps as shoppers are always looking for gifts for birthdays, housewarmings or any occasion that requires rallying friends and family behind what you want. In a recent article in The Cut, “Starting Over With a Divorce Registry,” the author interviews sisters who were inspired to create a “Fresh Start Registry” for those going through a divorce.
One sister is quoted saying, “We don’t see these things as gifts; this is a support registry. It’s not about the sheets and towels; it’s about the decisions that you’re making to make a big change.”
This illustrates the point that it is not only the obvious gifting occasions, like the holidays, or milestone moments, like weddings, that create sales opportunities, but also the micro-moments, where gifting is an expression of support and solidarity.
3. Remember: People don’t return the gifts they really want.
Bad gifts are bad for business, and retailers are catching on. According to the Wall Street Journal (subscription required), major retailers started instituting restocking fees and shortening return windows leading up to the holiday season in 2022. According to NRFs annual survey on returns, 17.9% of total merchandise purchased in 2022, amounting to $171 billion, was estimated to be returned.
Returns are expensive and time-consuming. Processing a return can cost anywhere from 20% to 65% of the cost of the item, not to mention the significant inefficiencies of restocking if it’s even resalable.
Gift lists can provide a win-win-win situation for all parties involved.
Gift lists can benefit recipients by sparing them the hassle of returns, givers by saving them time and energy and retailers by enabling more profitable processes. By using the right strategies, companies can leverage a gift list solution capable of enhancing customer advocacy.
I hope this piece helps fellow business leaders understand how the inherently sharable and shoppable features of a gift list can help drive such growth. Branding, product and influence are amplified when happy people who love your products tell others to buy. With this in mind, perhaps it’s time for “add to gift list” to be as ubiquitous as “add to cart.”
If you have any questions in particular or want to learn more about managing your registry data, we can always be reached at marketingguru@myregistry.com