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Ep. 89 - Using Gift Cards and Store Credits as Your Brand’s Currency with Nadav Berger

 

Nadav Berger is the VP of Marketing at Rise.ai and a serial eCommerce entrepreneur, helping brands to create magical customer experiences in their marketing and in-store funnels. 

Today, at Rise.ai, we are operating the leading Gift Card & Store Credit platform For Online Brands.

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:05] Nadav’s career background
  • [04:02] Listen to your customers
  • [04:55] The Israel app market is very competitive
  • [06:28] From gifting to gift cards to brand currency
  • [08:29] Sponsor: Klaviyo klaviyo.com
  • [09:08] Gifting options empowers customers
  • [10:12] Industries that frequently use gift cards
  • [11:45] Self-care market is booming due to COVID
  • [12:42] Store credit vs standard refunds
  • [16:01] Sponsor: Gorgias gorgias.link/honest
  • [16:49] Chase breaking down the store credit benefits
  • [17:50] Store credit is better than discounts/coupons
  • [18:51] Making irate customers happy
  • [19:36] Rewards and customer engagement using credit
  • [22:01] Store credit has a higher chance to be used
  • [23:27] Sponsor: Postscript: postscript.io/install
  • [23:59] Gift cards vs store credit
  • [26:54] Lots of regulations with gift cards
  • [27:44] Where to find Nadav

Resources:

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Transcript:

Nadav Berger  

(By) creating store credit refunds, you are ensuring yourself or at least giving yourself a much higher probability for future engagement with your customers.

Chase Clymer  

Welcome to Honest Ecommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners. 

I'm your host Chase Clymer, and I believe running an online business does not have to be complicated or a guessing game. 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.th us visit electric guy.io slash connect to learn more. Now let's get on with the show.

All right, everybody. Welcome back to another episode of Honest Ecommerce. I'm your host, Chase Clymer. And today I'm welcoming to the show, Nadav from Rise.ai. Nadav, how are you doing today? 

Nadav Berger  

I’m doing great, Chase. So fun to be here. How are you man? 

Chase Clymer  

Oh, man, I'm doing great. Doing the intro twice is always good. So (laughs)

Nadav Berger  

(laughs) Starting in the right foot (laughs)

Chase Clymer  

Oh yeah, absolutely. Let everyone know that mistakes are always made on this show. So Nadav is amazing. 

For those of you that don't know, Rise.ai used to be known as GiftWizard, so that might let a few of you understand the expertise that Nadav is going to bring to the table for today's show. 

But before we get into that, you want to give just a quick background of your career up until joining and becoming the VP of Marketing over there at Rise?

Nadav Berger  

So actually, not a very long career but I'll run through it briefly. I was studying in the University of Jerusalem in Israel, and then a friend came back from India. 

He told me "Listen, I have this awesome idea. We need to start [selling] sustainable. yoga mats. And a lot of... And a lot of things that would replicate or would look like leather, but would be made out of cork. 

And I noticed [an] awesome vendor that we can start buying products from. So let's do it." So we started an online store on Shopify and it went fine. And then I came to understand some of the core issues that Shopify had. 

It was 3 years ago, 2 and a half years ago. So the app market was not as robust as it is today. And then another friend came with an idea to do some sort of [an] automated chat, something in the chatbot world that will automate processes there. And I said it was really interesting. 

I felt like for us here, --here in Israel-- has a lot of benefits to sales directly to stores in opposed to customers because consumers are in the US [and] it's quite far for us. And here, the market is not that big. 

So, I said "Yeah. Let's hop on this opportunity." I kept the store on a small light and started the thing. We operated the app for a bit over one year. It was a really cool experience. 

It didn't go very well. We had some tech issues we didn't [fix]. I think the biggest issue that we had is we weren't very customer-centric and stuff in terms of product feedback. 

We really saw that we found some sort of big push, that's obviously never the truth. And then after a bit more than a year, I told my partner that I don't think the thing is going well. And I want to move forward to the next opportunity. 

Of course, in the ecosystem here in Israel, it's much smaller. So everyone... I know all the app developers. There are a lot actually but everyone knows everyone. I knew Yair, who is our CEO. 

And when I saw that they were... He was searching for a VP of Marketing, I thought it would be a great fit. I felt like I had the relevant experience. Fast forward a year and a half, I'm still here. (laughs)

Chase Clymer  

So you actually... You've dropped an amazing piece of advice in that quick intro, which is... You realized why your app failed. [It] was because you weren't listening to your customers. 

So obviously, a lot of our listeners are  store owners or entrepreneurs getting into it or growing. And that's super exciting. But I do know that some... We do have some developers... The audience is wild for this show. And I love it. 

But yeah, so there's a great piece of advice. Listen to your customers. Doesn't really matter what you're building. If you don't listen to your customers, you're probably going to end up building something they don't want or producing a product that doesn't have market fit. 

So that was some great advice hidden in your little intro there so thanks for that.

Nadav Berger  

Yeah.

Chase Clymer  

Awesome. So is Yotpo also from Israel? 

Nadav Berger  

Yeah. 

Chase Clymer  

Yeah. Okay. So your guys' market isn't that small over there. You got 2 power players from Israel. And then I guess this ecosystem.

Nadav Berger  

We have more. There's Loox, and there’s ReConvert, and also Videofy. There are a lot of really strong apps from Israel.

Chase Clymer  

That's awesome. That is so cool. Well, hopefully, when the world's in a better place... We're partners with half of the people you just listed, so I gotta get a trip out there. But...

Nadav Berger  

(laughs)

Chase Clymer  

For the time being, we're all doing our work from our bedroom. It seems like.

Nadav Berger  

Yeah. Maybe [if] this podcast would be posted a year from now, it would be relevant. 

Chase Clymer  

Exactly. Yeah. So anyways, you got my word though. I'll be coming to visit. So alright,  let's get into the world of gift cards and the world of store credit. And this is something that... It is severely lacking on Shopify. 

There are other platforms out there that... I believe Magento... It might be built into Magento or very easy to accomplish. But with Shopify, it's definitely... It wasn't a feature that was really baked into the product. So obviously back when they were called GiftWizard, it was definitely a strong product to bring to the people that wanted it. 

So I guess, explain a bit about how the product works just to catch people up to speed and then we can talk about how you can use that as a merchant to grow your business. 

Essentially, how am I going to use store credits and gift cards to grow my business? It's going to be the highlight of this show but let's talk about what the product does and what it solves.

Nadav Berger  

Yeah. So I'll start from from the beginning. Actually, when we started with the product, it was in a very different scope. It was a bit more about gifting, not even gift cards. But from the process of funneling, yes we understood that if we can provide a really good gift card experience, it would be the gifting experience that you're in.

Because a gift card has a lot of promise in sight, a lot of benefits to generate to sales and gives the recipient more flexibility. So we turned from gifting company to a gift card company because we understood this is what people want to get. 

But along the way, --and that transition happened 2 and half years ago-- but as we progress, and learn, and understand gift cards better, we understand that it provides a lot of value. And good merchants can get 3% to 4% from their older cycles to be contained or to be gift card orders. 

But the promise of interacting and connecting with your customers with gift cards and store credit can be a lot more valuable for brands. It can be incorporated in so many different ways. 

And this tool and this power of having your own --what the industry calls-- "brand currency", something that you own and you can distribute and you can communicate with customers with for reward, for refund, for compensations, for any of the basic communications that you'd like to have with customers. 

This is really where the power of gift card lies. So that's the transition and that's how we really moved on from a gifting solution to a really holistic brand currency solution. The gift card product and the gifting experience is still incorporated into it. 

People are using it. It's one of our most popular features. You can... When you are going to a Shopify site and you have the option to give a gift card, there are a lot of chances that this is our gift card.

Chase Clymer  

Absolutely.

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Chase Clymer  

Just the gifting thing, especially right now, we've got a few projects on the horizon at the agency and people want to add gifting in especially in advance of the big holiday season in a couple of months: Black Friday, Cyber Monday. Because the holiday season people are.... Majority of the time, they're not buying for themselves. They're buying for other people. 

And having the opportunity to buy gift cards, and have them buy what they want or buy a product for someone else to have it gifted to them, that's a powerful feature to have on your store. But also it's a powerful angle for your marketing because then you're changing the... 

Essentially you're changing the copy and the direction in the purpose of what you're advertising. At that point, it's no longer about, we want to sell you this thing. It's like we want to help give you the power to make your friends day better. 

There's all sorts of ways to spend that kind of whole marketing angle. So it's a super powerful feature for people that don't really have it involved. [Are] there industries that you see that are using gift cards more than others out there? 

I personally feel like I see it a lot in food and beverage. People are gifting a lot in there, but are there other industries that --to where you see-- people are using these features a lot?

Nadav Berger  

Yeah. So footwear, definitely. It's really, really popular in those areas. For us, actually... I guess, whenever we're diving into this data... For everyone, I think the biggest industry is that especially in apparel where they're like... We have a lot of amazing examples and brands that are using it. And if I'm trying to find a trend that I really noticed for our product is that in the recent... 

In the last year, the fastest growing industry, percentage-wise on our end --in gifting experiences-- is cosmetics. I think it may seem that COVID really accelerated that actually. Because beauty and cosmetics became something that you're doing at home. 

And all those brands really got a boost and the self-consumption aspect became much more popular. So I think that for us today might be the fastest growing industry in the world.

Chase Clymer  

Yeah, no. We had a beauty client that was just exploding during the whole pandemic. And it was once people felt a little bit safer and everything they wanted to feel good about themselves and obviously self care. It was an amazing time of growth for all those types of brands

Nadav Berger  

Yeah. And I think it's from the things  that you can really easily get to a very close level to what you're doing outside, inside. And when you give the people the information and education about how to do it... 

I saw a lot of really cool YouTube videos and explanations from our merchants are really best represented using their products. And when you give people access to this information and you give them a way to feel better in themselves and feel like they look good and smell good, it's really powerful. So I definitely agree.

Chase Clymer  

Awesome. So I'm gonna pivot a bit now and I've got a question for you. So what is... I guess this is a benefit that some people might not realize with having store credit on their store. It's incorporating it within the returns and refunds flow. 

So let's talk a bit about that and the advantages that you get by offering store credit as opposed to your standard refunding it to the card that they used.

Nadav Berger  

So there are 2. First of all... And this is a disclaimer that I love to begin with. It's not the... It cannot be the only solution for refunds and returns. And because there are people, there are customers that didn't have a good experience and they don't want to have any future engagement with your brand and you need to make them go home happy and forget about it and move forward. 

So store credit is not the only way to incorporate a refund and return strategy but when used correctly, it has a huge, huge impact based on [the] research that we made and general research that was made in the industry. Using your brand currency is up over 75% cheaper than using actual credit or actual money, from your bank account, from your PayPal, from whatever. 

This is... Practically  it's cheap money. And when you're taking it and using it, the first thing that you do is you save yourself from every transaction. You save 75% of the transaction if you paid $100 on a Paypal transaction or if you paid 100 always store credit to discuss. 

So first of all, that's a really simple and intuitive [process] to understand and an obvious impact. And that's immediate in terms of not only how you create a good experience but also keeps the kid to the future, I would say. 

It's the fact that once you are creating a store credit refund you are insuring yourself or at least gives yourself a much higher probability for future engagement with this customer. 

People, when you tell [them] "Listen, I know you have another good experience."... And actually, when I visited one of our brands --actually it was in the Netherlands-- they told me that they're not only giving store credit refunds, what they do is they add 10% to the refund value and give it in store credit. 

And then when you get such an experience that says, "Okay, someone here thought about me, he gave me additional value, he really believes in his product because he wants me to buy it again. And now, as a customer, maybe I want to use it today. Maybe I'll send it. Maybe I'll give it to someone." 

But the probability for me to remain a customer is much, much higher. And you can really use this tool in order to really increase how your brand looks for their customers, even when they had a bad or complex experience because eventually we're talking here about returns, probably something didn't work out.

Chase Clymer  

Mm-hmm.

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Chase Clymer  

Yeah, that's powerful. Sending a refund... Not a refund but giving the store credit and adding, tacking on additional value to that store credit. And I'm sure a lot of people are listening here [they're] like "I can't give away money." 

But I'm going to use this time to break down what actually is happening and that whole thing there. It's essentially a reverse coupon, maybe. Or the way to consider it is, you're not really giving away anything. This store credit is currency, that's brand currency --that you're talking about-- that you own. It's a currency that you've invented. 

So now the only thing that's really going against it is whatever the margin is on your product, which should be way lower than what you're selling it for. So you're only ever going to be out of the value of your cost of goods

So the rest of this store credit allows you to get really creative with marketing. It allows you to really make experiences that much better for your customers. It allows you to turn a bad experience into a good experience. There's all sorts of stuff. 

Nadav Berger  

And just to put out, it's much better than a coupon in the fact that it's a payment method. 

Chase Clymer  

Yep.

Nadav Berger  

It would cover shipping, it would cover taxes, you can buy the product, you can go through a full cycle of purchase without even inserting your credit card. So it is really a replacement for... Not only for your end, it is some sort of an alternative to money. Also for customers, it's a real alternative for money because it can pay for the entire purchase. 

Chase Clymer  

Yeah, no. And that's so... That's the perfect way to point out. It's so much different than a coupon code. It's so much different than adding on 10% to there [or] 10% off or whatever. It is way more powerful. 

And the just perceived value of it is... Your customers are going to perceive it like cash, but it is not costing you really any money at the time. And it's... Depending on how far down the rabbit hole you want to get with lifetime value. You can spend money to acquire people because over the lifetime of your business, you're going to make it back. 

Nadav Berger  

Yeah. 

Chase Clymer  

You're selling a product that people actually want.

Nadav Berger  

Yeah. We like challenges and [we] think that if you run your own business or if you're a customer support representative and you really made an angry customer come back with this thing. 

I think it's an amazing accomplishment for brands, something that you can really, really cherish. And it can make you happy and make them happy. So I think that having said that, that it's not one solution fits all. 

Definitely, it needs to be incorporated in the right circumstances. It's definitely an option. It's a no brainer. It's a must-have as far as the refund and return strategy, at least in my perspective.

Chase Clymer  

Awesome. So what are some of the other benefits with using store credit for rewards and customer engagement?

Nadav Berger  

So in general, I think that today, people want to have a straightforward 2-part experience. They wanted to have a great experience and they wanted to have a very transparent, very straightforward, very honest experience. 

Today, I think in the world of legacy loyalty programs or engagement programs, and speaking about reward [and] referrals, all the things, the fact that you're that most of them are being done with a lot of points with some sort of manipulations and things that are not identical between different stores. 

And you can really play with it. "I get 500 points. Now, I don't know how much it is? Is it the discount code? Is it the coupon code? What am I getting for it?" It might be confusing. And even more than that, I think that it might... There is some sort of... Because if it's something that I don't understand within 2 seconds, I will lose my interest. 

Because if I don't know how to make it work, I'll skip and move forward. And I think the biggest advantage with credit is besides the fact that market metrics are showing that if you get on points you get between 10 to cook percent redemption rates across industries. 

And what's great if you get between 22 to 24, which is almost double. And I think the main reason for it is that it is super straightforward. And it is something that's identical across all sites. I know exactly what I'm getting, I know exactly how much I'm far away from buying the product. 

If I have credit, if I get $10, I know, and I want to buy a $50 product, and I know that I'm going to need to pay $40 which is something that you can just not promise with other types of promotions. 

And I think that the fact that this is so intuitive for customers to understand this, it gives us great leverage in building a good customer experience but it mainly helps our merchants build good relationships with their best customers because they're offering them something that it's simple to use, and it's straightforward and that's what people are expecting today.

Chase Clymer  

Oh, absolutely. So you're saying, if I heard that right, if you're using store credit as part of your loyalty program as opposed to using a more traditional points style approach, that you're almost twice as likely to have your customers redeem it?

Nadav Berger  

Yeah. That's correct. And again, it's [hard to] differentiate between industries, but I don't know, like when you see the biggest brand in the world, let's say, for that trend to move from that move... Their end of year promotions, from discounts to credit. 

And as you see the shift of how brands are treating it, and I think that's definitely a trend that is here to stay. And again, I think that something very important here as well would be to put the redemption into the customer experience in a very seamless [way] and simple to use. 

Anything that  not only asked but all the words providers are really doubling down on it. I think that when you're using credit, you have a simpler way to do it. 

Because again, in the point where there's like two points of redemption, there's the redemption of the points to a promotion and the promotion for the checkout. And with credit, it's only one process of redemption. You're only redeeming it on checkout.

Chase Clymer  

Absolutely. That's great right there. 

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Chase Clymer  

Now, let's just quickly chat here about.... Obviously store credit and then there's gift cards, and there's some pros and some cons to it. Maybe that's not the right approach of what the way to describe it, but let's talk about the differences between the 2. So I'll hand it back over to you.

Nadav Berger  

So yeah, there are a lot of ways actually to interact with this. I'll explain a bit about what our approach is. It can be done differently, but I think we'd find some good logic that helps us understand it internally and then explain it to our merchants and brands. 

So I'll start with gift cards because it's a bit simpler. Gift cards basically are some sort of IOU. It's something that you are buying from a store, you're paying money for it, then you get it for yourself or as a gift, and you have a lot of like... There's the card off and there's a lot of rules around it. 

For example, in New York, it needs to be expired after 5 years and you need to get the money back to this customer's credit card. If no one used it in California, it must never be expired. And there are different rules in different states. 

But gift cards have a lot of regulation because of all the consumer empowerment thing that we see a lot all over the world today. And that's a gift card. It's a very... It's like a private case of brand currency where customers are actually actively buying it from the store. 

Store credit, although it wouldn't appear maybe on backends, identically, it's the same thing. It's a code that contains contains money to use. It's very different in the manner of how it's regulated. 

Store credit is something that you are, as a brand, issuing to a customer. It's not something that's being bought, it's something that you are issuing from your goodwill to someone. 

So, for example, if you're doing a reward, so you can have an option to really do some sort of manipulations around it. I  can do that this reward will be activated 2 weeks after you purchase, and it would expire 90 days later. And then you're like you're creating something much more flexible. It's not like... You don't have all the gift card regulations that you need to apply to here. 

This is something that you can really play with and make it look up in the way that fits you and fits your business needs. 

And you'll find that the same for any sort of interaction between a brand and a customer. So  that's the main difference that we do here. Gift cards are something that you buy from the store and store credit is something that you, as a store, are issuing to a customer.

Chase Clymer  

Yeah, no, that makes that makes a lot of sense in it. I didn't know about the regulations in the world. That stuff is wild man. (laughs)

Nadav Berger  

Actually, prior to this call, I had a call with some guy from the Netherlands. And he said to me that they are... I haven't really checked it out but he was trustworthy. 

He said that in the Netherlands, they're going to restrict buying gift cards from over 60 years, because it has a lot involved in laundering money and stuff like that. So there are a lot of different approaches and different places in the world that take this thing completely in a different way.

Chase Clymer  

Oh, absolutely. Now, if I'm a merchant, and I am interested in learning more about gift cards and store credit, how do I get ahold of you? How do I learn more about Rise?

Nadav Berger  

So for us there is like... We have... First of all, I think, the best way is to start on my YouTube channel. We have all those explanations that I made for a gift card versus store grade, what are the differences, how you could start, how you can set up your gift card program, how you can set up your rewards program moving forward. So there is a lot of great information there. 

Of course, there's our website that breaks down really all of our different solutions in the world --so we [really have] all those issues-- that are described with all those things. We have really, really advanced solutions so it really is worth reading. 

And also we are... As part of the lessons that we [have] learned in my latter in my last entrepreneurship journey, there are a lot of... We are really, really, really eager to speak with customers. So if they want, it's really easy. Just go to our site and hit request a demo and we were taking calls from everyone because we really are obsessed with merchant feedback.

Chase Clymer  

Awesome. Nadav, thank you so much for coming on the podcast today.

Nadav Berger  

Thank you, Chase. It's been real fun.

Chase Clymer  

Awesome. 

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well. 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!