Case Study: Digital Gift Cards Produce Increased Sales for Home Depot

PROBLEM: Home Depot sought to increase sales of its gift cards.

SOLUTION: Contracted with a digital gift card company to upgrade its gift card program.

RESULTS: Since launching its digital gift card program in October 2009, Home Depot has realized increased sales and a higher customer retention rate from the channel.

Home Depot prides itself in being an innovative company that's always at the forefront of new technologies. The brand's use of digital gift cards speaks to that culture of innovation. Digital gift cards started appearing in the marketplace in late 2008. At that time Home Depot offered only plastic gift cards, available for purchase in its stores and through third parties such as grocery stores and drug stores. The cards were also available to consumers through B-to-B partners such as American Express.

Realizing that e-commerce was a growth channel and digital gift cards were a better solution — they're easier to transport and send vs. plastic gift cards — Home Depot quickly acted on this opportunity. After researching the marketplace for a digital gift card vendor, Home Depot chose CashStar in early 2009. Nine months later Home Depot went live with its digital gift card program.

"When CashStar's e-gift cards came along, we took what we thought was a very good program and made it better," says Spencer Allen, director of incentives at Home Depot. "We take new ideas beyond what was initially in scope."

Speed Extends Selling Seasons
The speed in which digital gift cards can be delivered has enabled Home Depot to extend the selling season around the holidays. Consumers no longer have to worry about meeting a shipping deadline to send gift cards. Instead, e-gift cards can be bought and sent no matter the date or time. With gift cards the No. 1 most requested gift at Home Depot, that equates to a lot of sales that might not otherwise have happened.

"When we first rolled e-gift cards out, we were able to extend our holiday season as we led up to Christmas," Allen recalls. "Before we could never sell gift cards on Christmas Day; now we can, for example."

In addition to being available for purchase in multiple channels (with the ability to purchase via mobile device coming later this year), Home Depot's e-gift cards can be redeemed online and in-store. The retailer promotes its e-gift cards in all channels as well — e.g., via gift card landing pages, on in-store signage and in print circulars.

Customizing the Gifting Experience
With a traditional plastic gift card, personalization isn't possible to the extent it is with a digital version. This is one of the many reasons Home Depot was attracted to CashStar's digital solution — it could personalize the gifting experience. Customers can add a message to their Home Depot e-gift card, upload images to it or record a video for it.

This personalization has resulted in many e-gift card recipients becoming e-gift card buyers. Recipients experience firsthand the ease and convenience of e-gift cards as well as the personalized gifting experience they offer, and they want to share that experience with others. This viral trend combined with the high rate of repeat buyers of e-gift cards has helped Home Depot significantly increase its gift card sales.

Home Depot leverages e-gift cards in ways besides its gifting program. The retailer uses them in its customer service efforts, for example. An upset customer can be placated quicker with an e-gift card than dropping a plastic card in the mail to them. Home Depot also uses e-gift cards in its extended warranty program to fulfill claims.

"We're constantly trying to solve our customers' problems," says Allen. "When we can come up with a solution for their problem, that's a big win for us." It's safe to say that digital gift cards are a winner for Home Depot.