"Part of the question we are answering is how can we normalize giving gift cards and celebrate giving gift cards, and one of those pieces is building brand loyalty."
Kelly Vaughn & Rhian Beutler bring nearly a decade of experience in the ecommerce and Shopify ecosystem to the new company they’ve formed called Govalo — a gift carding solution for Shopify merchants. Their solution couldn’t come at a better time as many entrepreneurs are experiencing supply chain issues that are threatening to interrupt their busy holiday selling season.
Govalo is more than just a gift card app though, they see gift cards as a key acquisition and retention strategy and have developed a unique solution to help merchants automatically offer gift cards when their products are out of stock. They way merchants are able to easily offer consumers an on-brand alternative for the gift they were hoping to get that special someone. Govalo only recently launched and they are already revolutionizing the way Shopify brands are able to offering gift cards and manage a looming supply chain crisis.
If you are a Shopify merchant looking for a solution to your holiday supply chain issues, or are just looking for a riveting and entertaining discussion at the forefront of the world of ecommerce, you aren’t going to want to miss this entertaining and thoughtful discussion.
Kelly Vaughn brings over a decade of experience in ecommerce as Co-Founder of Govalo, the gift card solution for Shopify merchants. Before Govalo, she founded The Taproom, building custom development solutions for fast-growing brands on Shopify and Shopify Plus. She also co-hosts Ladybug Podcast & Commerce Tea podcast, and is the Author of Start Freelancing Today.
Rhian Beutler is the co-founder and COO of venntov, the creators of SEO Manager, Order Lookup, and ClockedIn. She loves search engine optimization, UX, Google Analytics, and has spoken about SEO all over the world. Rhian is passionate about small business success, and for over a decade, has utilized her background in SMB banking and retail operations to help merchants grow their business both online and offline.
Jay: Kelly and Rhian, thank you so much for coming on our show. I’m really excited to talk to you, well because there’s crazy stuff happening right now in the world and you guys are launching a product that might have some solution to helping some of that. Let’s go ahead and can you guys introduce yourself who you are, you’ve got really crazy, rich histories in E commerce and it’s brought you to where you are today and I’d love to talk about that. So let’s go Kelly and then Rhian.
Jay: Kelly and Rhian, thank you so much for coming on our show. I’m really excited to talk to you, well because there’s crazy stuff happening right now in the world and you guys are launching a product that might have some solution to helping some of that. Let’s go ahead and can you guys introduce yourself who you are, you’ve got really crazy, rich histories in E commerce and it’s brought you to where you are today and I’d love to talk about that. So let’s go Kelly and then Rhian.
Kelly: Awesome. So hello, I’m Kelly Vaughn. I am co-founder of Govalo. I have been a Shopify partner for seven years now, so I’ve been in the E commerce space for seven years. I’m a developer and I also run an agency called the taproom so I’ve seen everything from the client side to the product side down and I’m really excited to be
Rhian: Hi, everybody, my name is Rhian Beutler and I too am the co-founder of Govalo, because you have to have more than one founder to have a co-founder.
Kelly: You know what people say that I get introduced as a co-founder of the taproom.
Rhian: So and then prior to this and still currently, I’m the president of venntov, another Shopify app company that has been around for a long time, dare I say we are the Shopify Oh geez. I’ve known Jay for a hot minute or eight and prior to this, its eight years I’ve been a Shopify partner for and then prior to this I was in corporate banking. So, what we’re doing now is kind of a cool, mash up of my entire life.
Jay: This is a meeting of the Oh geez, right here. So nine years right here 978,I mean so many people have kind of come into the ecosystem in the last year. Versus so this is super interesting, so you guys did not know each other before Shopify and before building for E commerce, met through the space, became friends and now started a company together.
Kelly: It’s been a fun history, so I was speaking at Shopify pursuit which is a partner focus shop by events in New York City and that was my first ever speaking engagement. I just like jumped in like here’s 130 people, let’s talk to them and thankfully, Rhian is literally trained speaker and she quickly learned that I am new to this and Mother hen me which was wonderful and Rhian having a little bit more experience in the space. She offered to be my mentor as well, so we formed this mentorship relationship and then quickly became friends and then we’re like, let’s start a podcast, so then we started a podcast, which is currently on hiatus because of Govalo.
Rhian: Yeah, we’re building it
Kelly: We’re building and then one day I’m on I’m literally on vacation. I texted, Rhian with a link to a website and she responds with like, eyes emoji being like, Oh, I see that and that was the start-up, Govalo it was like the most basic conversation ever.
Jay: Its crazy, every start-up has that story, like it’s just an idea. We have a similar one with apple we were in a pub talking and that was how we decided to start bold and here we are 12 years later. So what is Govalo?
Rhian: Govalo is an app. Well, Govalo is a platform and we are reinventing
Jay: The season speaker takes the question, of course.
Rhian: Govalo is a platform that is reinventing the digital gifting experience, so we’re starting on Shopify, we’re making it so it is easy for you to send gift cards, especially during this holiday season where there’s been massive supply chain interruptions, which I don’t foresee changing prior to the holidays and because of this a lot of folks are like, Oh, your gift, oh, just gift cards, you’re just sending a gift card and there’s an important clarification that should be had. As it stands, I love Shopify right, I’ve built my entire career off of Shopify all we all have. Shopify is native gift card solution is trash.
Love you guys. Yes, not great you know this Jay, it’s like, and if I want to send you a gift, I’m sending myself your gift card and then I have to forward it to you. That’s the native solution and we’ve taken out that so if I want to send you a gift, I send you a gift card straight to you. I can schedule it out if a product is out of stock. Kelly’s a genius Kelly’s like, well hey, if this product goes out of stock we should make it so you can also get a gift card instead and that’s a feature that I think is going to have a lot of traction or
Kelly: We’re going to dig into that one a little.
Rhian: Yeah, we’re going dig into that so that’s a really long winded explanation of we’re reinventing the digital gifting experience so we’re starting with gift cards, but that’s not where we get it.
Jay: Yeah and I should actually take this back a bit. I messaged Kelly and Rhian yesterday and said we have kind of an internal conversation, our Slack channel at Bold and there’s been some conversation around brands this holiday season, are because of the shipping container situation right now and if no one’s following that. I’m pretty sure everyone knows about it but there’s a massive disrupter in the ability for shipping containers to land, get unpacked, get on trucks and it’s kind of like this snowball effect that there aren’t enough trucks; there aren’t enough people to unload them.
Now there’s a shortage and containers themselves, I guess because so many containers are just sitting in the middle waiting that there’s a shortage. So it’s like a ripple effect and there will be a shortage of product this holiday season and we have one of our leaders is in this leadership group with 250 retailers and the main thing that they were talking about was how they’re going continue to sell through the holiday season, and gift cards actually was at the centre of the conversation and that was when I messaged you guys yesterday.
I said, we got to get you on the podcast, like ASAP so here we are 24 hours later, you’re on the podcast and I just think it’s so timely and relevant. I want to try to get this out as quickly as I can because it’s going affect a lot of merchants this holiday season big and small, it’s going be that inventory doesn’t make it and if you don’t have a plan in place, whatever that is you need to have a way for sales to continue to happen. So tell me the mechanics of this, how this works with inventory in, inventory out and then converting to gift cards.
Rhian: So I’ve actually been up to my eyeballs in supply chain happenings of late and as you surmised the chain, right? A chain is meant to be a chain and there can be no weak links. Supply chain can get disrupted if there’s one weak link, but right now every link is a weak link and that’s very, very challenging. There some thought leadership kind of around saying how we can fix it, everything that I have read points to it being unsolvable before holiday. Basically, if you haven’t ordered your stuff right now, it’s not coming and that is what it is Right? And we’re entrepreneurs, this is part of our gig, we look at impossible things in the face and then we say how do we solve it.
So that’s the challenge is that like today, my husband, we have a place out in Long Beach and he drove by the ports, I’ll send you the pictures later, if you’re just like us a lot of boats and there’s no trucks and no truck drivers and there’s no and all the warehouses are full and the containers normally, so as a random fact, fun fact, everyone. Normally, when we get a shipping container into a warehouse and we load it back onto a truck, we put more stuff into it right? That because that would make sense, right? Send product here and product out, import export. Not now we’re just like, get the stuff out and ship the container back to China as fast as we can but when it gets to China, China’s having rolling blackouts and there’s this. It’s this whole thing.
We wrote a blog or I wrote a blog about it. That came out today and it’s literally titled, doom and gloom. What happens when this doesn’t work? But I talk about exactly what Kelly’s about to talk about, which is how to stare an impossible situation in the face and come out on top.
Kelly: So you know, if you’re a larger merchant and I’m talking like the big box stores there tends to be more financing available to charter your own jets to handle, getting your products,
Rhian: They’ve bought them.
Kelly: Exactly, they’re literally buying them because it’s cheaper and it’s the only way that you can actually get your product, but as a result, they’re we’re seeing a pricing, increase 5 10X just to be able to get products shipped over and so it’s putting the smaller the SMB is a small and medium sized businesses out of reach to even have this as an opportunity to actually get their products, so knowing this, what else can you do? Because you can’t just sit there and do nothing, as entrepreneurs, we’re always coming up with some sort of solution and that’s what we’re really focusing on this holiday season, we launched it the perfect time, because now we’re solving for it. So the first thing about gift cards is they’re never going away.
Gift cards are always going to be a thing and I feel like there’s been this kind of like the stigma against gift cards just being like a, I didn’t know what to get to you so I just got you a gift card and like, my grandparents hate giving me gift cards all the time and so part of the question we’re answering is like, how can we normalise giving gift cards and celebrate giving gift cards and one of those pieces is building that brand loyalty.
Like if I am a really big fan of let’s say Bright Land and I want to use I want a Bright Land gift card because I know what I like to get from Bright Land. So somebody else might not know so they can just give me a gift card to a store that they know I like and that’s you know, nothing against the big box stores. But you can get me a gift card to like Target or Amazon or Walmart and I can buy what I want. But it builds that extra like touch point being like I know what stores you like shopping so I went out of my way to buy you a gift card from a store that I know you like and that builds By that, I mean, it’s great for interpersonal relationships.
Also, I have a degree in social work, so I’m a trained therapist so that’s a whole other thing but it’s also helping to build brand loyalty between the customer and the merchant. Because I have now given you this gift card for a store that I know you like, I know you’re going to shop on that store and I know that that merchant is going to benefit from it at a time when they need that extra help and I think the other piece of this is, gift cards truly are a good stopgap measure right now, when you can’t get products, so you know, you have a friend or a family member who really wants a specific product, but it’s not going to be in stock until January or February, why not still buy them a gift card for that store so when it comes back in stock you’re still giving them something in the moment, but they can buy what they want once that is back available again and that’s why we built literally the weekend before we launched was like this is a good idea.
If you’re so we built this feature on govalo, where if you’re on a product page, and you’re looking through the variant options, and you’re going to one that’s like, oh, the size medium of this specific thing is not in stock, what we do is below that sold out button, we add another button that says send a gift card instead. And that way, the customer never has that dead end, the merchant never has a dead end, they’re completing the cycle to always be able to have something to purchase. So we’re really pushing this gift card as an option not just as a stopgap measure, but also being able to build these relationships with your customers and build a relationship between the merchant and the customer.
Jay: And so does that gift card go to, you talked earlier about some of the limitations with like native gift card functionality? Does it have the option to go either to the buyer or the recipient?
Kelly: That’s correct so when you click the Send To gift card button on the gift card page a little pop up appears in the first thing it asks for is this a gift it by default, it’s toggled on. So it just assumes that you’re buying a gift card for somebody else but you know, Singles Day exists and also I like trading myself and sometimes I just want to buy myself a gift card, so you can switch that off and then just buy the gift card for yourself and it gets delivered directly to you. So we provide both of those options.
Jay: Or maybe you want to print it and put it in a card or something..
Rhian: Yeah, exactly
Kelly: So you still have you still have those options as well, so you don’t have to send it digitally.
Jay: Interesting, so when did you start building it?
Kelly: We officially kicked off development in July and we launched October 4.
Jay: Yeah, just recently. Okay, so as of the recording today, it’s October 22. So it’s been live
Rhian: three weeks
Jay: 18 days and congratulations. How has your first 18 days been?
Kelly: I think it’s been very eye opening? Because both Rhian and I have been in the eco-system for a very long time and so we’ve worked with so many different merchants. This is my first time selling an app though and you never really understand customer needs fully until you’re talking to the customers, whether you’re a merchant selling to customers, or you’re a b2b selling to a merchant, whatever it might be, you learn more about what those needs are as you know, as soon as you get the get the product in front of them or get your offer in front of them and so it’s shifted what we’ve prioritised a little less. I was not expecting to already have headless support for Govalo but it exists already.
Rhian: Yeah, it had to; we’ve had some really great learning moments and opportunities these last three weeks and one of those moments, this aha moment was, oh, wow, other apps want to use us as a layer in their technical stack. We did it that was another moment where we’re like, we weren’t expecting that. We’ll go with it, though, we like where this is headed, and we love an integration. This is a deeper level of integration and then also we’re quite surprised by the volume of configurable requests, so folks who they want to come in and they’re like, well signed a year contract and like, please just do this and so we’re trying to navigate how to be a SAS company that allows configuration and Jay I’m sure and I know that Bold does have to navigate through this as well, right? You’re like I have this, I have this product. It’s highly configurable.
Not everybody can do it right out the box. You know, there’s us as app developers are like, we’re like, this part’s easy, but then the reality is even no matter how easy we think it is, users are not always going to think it’s easy and that’s okay because we’re coming at it with different levels of expertise and knowledge and so we’re doing a little bit more of that concierge level service than we were expecting, but we love it and we’re learning a lot from those merchants holy smokes, we’re learning so much from these merchants, and they’re invaluable. We’ve got just so much and you know how it is you get like all of this data back from merchants, right? You kind of have to filter it. So you get feedback and feedback and make a list or like, this is what I do.
I make a list of feedback requests or just feature requests and then I say, what is being repeated? Right, oh, we’re getting this repeated request. Okay, there was no, this is not an edge case, clearly, because this has happened three times in a row, not an edge case. Let’s solve for this and so it’s been a lot of that and really being flexible. We’re really lucky; we have a hyper lean team at the moment, so we can pivot and move and be hyper agile and so super grateful to the team for being able to move rapidly, in a time where we have to be rapid. There’s no time right now for garbage, like, everything has to be good. We have to be good.
Jay: Yeah, your first like 100 customers, you can say your first 1000 customers, whatever it is your first cohort, you have to be so close to them and understand and I would actually add to that, what we’ve learned at bold is not just the first group, but the ones that they really, really need your product, and they would pay more if they could, but their business relies on it. They’re the ones that really, they’re your segment, they’re your super user, they’re the ones that, if you can that are probably the closest to product market fit and if you can scale that segment, you’ve got this this thing that like, sells itself and actually, you kind of mentioned something that I wanted to touch on. I’m you know, coming from another like app development company and an agency, you must have a perspective on building this. I’m imagining with partners and agencies in mind.
Kelly: Oh, yeah,
Jay: I’m assuming?
Kelly: Yes.
Jay: What does that mean?
Kelly: Okay, so as a developer, I take developer experience very seriously, if I am not building this app for everyone, I’m not doing it right and that includes, as an agency when I’m trying to evaluate other apps for my clients. Do I have the ability to even test out the app without having to sign on to a paid plan? For example, is there an API available? These kinds of questions I need to have answers to as a development agency, because we are usually doing deeper customizability for these things, so for us, we’re a partner friendly app, which means if you have a development store
If you’re an agency and you have a development server or client you’re working on and you want to test out our app to see if it’s going to work for your clients, install the app, you’re not going to be charged for it, you go through our typical on-boarding flow, including selecting a plan but you’re never going to be billed for it until it’s time to actually switch over to a paid plan and so we want to make this app as friendly as possible, whether you are not technical at all, and you want to use our app, or you are me and like to see how deep you can break something or while still hopefully keeping it working.
Rhian: I want to piggyback off of what Kelly just said in terms of those partnerships and relationships. Besides it being imperative that we are developer friendly, which we are and Kelly has worked super, super hard on making sure that we are developer friendly everywhere across the board. It’s imperative to have these partnerships and relationships right with agencies and other app companies. We’re very fortunate in the sense that we’ve been around for I will don’t say a hot minute, because it’s been a long minute.
But so we were able to reach into our network and say, hey, do you want to try this and give us some feedback, or like, we’ve got meetings today about partnerships and we’ve had several meetings about partnerships already and we haven’t even started yet, really making that kind of a play and so it’s really crucial that as we build and scale that we’re creating an environment where everybody’s voice is heard, including our partners and our merchants. That doesn’t mean everyone has a vote but it does mean that everybody has a voice and we’re here to hear that and to learn and to gain feedback and really agency partners and app development partners are going to be huge for that, as well. So we’re super excited.
Jay: And they’re the ones that work with Well, Kelly, you know, like you work with brands, you understand the pain points, like working with clients at the tap room. I wanted to keep go back just on some of the mechanics of how it works and then I want to get into some other stuff. But as a brand, they install Govalo, they can set up what is configured like how quickly can someone be up and running with it? And what does that look like?
Kelly: Yeah, so when you install the app and you start your free trial, we have a seven day free trial for you to test out the app. The first thing you do is we on-board you so what this means is we go through the process of creating a product is a gift card product and I want to differentiate this from Shopify gift card product because this is the true product on your store. Just like any other product, we give you examples of like the name and the description, you upload the image of the product and then you choose your denominations or like the values that the customers can purchase a gift card for. Once you do that, we generate the product for you. We are using, you’ll enable something and your theme not getting too technical here, we walk you through specifically how to do this and then you’re off to the races. That’s it so you can just add the gift card to your navigation and your customers can begin purchasing it.
Jay: And does that have a designated amount? Or can it be any amount the customer wants to buy?
Kelly: At the moment is a designated amount, but we are as on our roadmap to support custom gift card values as well.
Jay: Okay, and can you create multiple ones? So you could have a 25, 50 or 100?
Rhian: Yes,
Kelly: All under one product. So you just offer which values you want to use for or you want to offer? So there’s one gift card product with multiple values.
Jay: Okay, so you can have essentially use it all the variants, so I could have like a five, ten
Kelly: to 100 values. Yes.
Jay: Can you cover like all the basics like 25,50,10,2 or whatever? Like, I’m sure there’s the debate the standard ones. Okay, Awesome.
Rhian: I think that’s really cool, too, is because it’s a product, it can be up sold.
Kelly: Yes.
Jay: Oh, I’m good. I know someone with an upsell.
Rhian: It’s so weird that we’re sitting here and you have an upsell app and our gift cards actually a product. So I’m just saying
Jay: That’s actually fantastic and that probably doesn’t even require integration; I bet you that just works.
Rhian: It just works.
Kelly: In that sense, it just issues the gift card and sends it directly to you but we could build a custom integration to support actually adding in the gift recipient information as well.
Rhian: We’ll talk about that offline
Jay: This is a say podcast slash partner meeting multi-tasking. I like it, I like it. Yeah, that’s a great idea, especially through the holidays. Like if you’re like buying a product and then offering a gift card as well to like, fantastic idea and then I imagine it not just in upsell offers but everywhere else on the website, you can have that product show on like every collection page, you can have it as you may also like on the product pages. So I constantly remind people that there is a gift card option so not just when a product is out of stock, but treats it as product that you would market it any other way that you like.
Rhian: And so many folks don’t do that and a lot of it is because of what Kelly has addressed, right. It’s like that stigma around gift cards and also the challenge with gift cards and the native solution on Shopify, but it’s in my opinion, gift cards should be another app almost like an acquisition channel. You could use it. I’m just throwing things out here because you can’t stack discount codes.
Jay: I was just you’re reading my mind right now.
**Rhian: **Well what you could do, I don’t know send out an email to your 100 most loyal customers and give them a gift card.
Kelly: So this is a very, very specific point. You have not only an acquisition strategy, but also a retention strategy.
Jay: Okay, well, I’m going one up your idea. Could you have a coupon code that applies to the gift card? So someone spend $90 get a gift card for $100 to encourage them to buy because I’m guessing there’s probably data on this that a certain percentage of gift cards just don’t get used? So yes,
Rhian: It’s approximately $15.3 billion in the US only of unused gift cards.
Jay: Okay, my guess was right. So
Rhian: I will say one caveat to your suggestion, which is absolutely wonderful. Talk to your accountant before you do that.
Jay: Right. Okay, fair enough. What would be I’m trying to figure out what would be the Accounting I just make sure you’re accounting properly for it
Rhian: Just making sure Yeah.
Kelly: The important. You know, when you’re going to offer gift cards.
Rhian: Yeah, we can hear you.
Jay: You’re good. You’re good. We do sounds like sounds like some amazing kitchen renovations happening in the background. Kelly?
Kelly: Oh, they’re absolutely wonderful kitchen renovations.
Rhian: Right now Kelly has Minimalist countertops that aren’t there
Kelly: As in they don’t exist.
Jay: Follow Kelly on Twitter, if you want to see the before and after.
Kelly: I honestly should have taken a picture today. Actually no, I’m not getting my countertops until next week. So I literally just like don’t have my husband ate off of a box yesterday as a as a table. You know, we’re working with what we have.
Jay: We’ve all been there.
Rhian: We’ve all been there.
Jay: Yeah. So she doesn’t have to eat off of a box. Yes, Joey, where were we?
Kelly: So as long as you can still hear what I’m saying perfectly fine. So it’s an important distinction to make about how gift cards work. Gift cards are what are called deferred revenue until they’ve actually been used. So this is an accounting thing. Please speak to your accountant. So what this means is that
Rhian: We are not accountant.
Kelly: Yes this is not accounting advice. It’s just some basic information that I learned from one accounting class so deferred revenue is what’s called a liability. It’s not recognised as revenue until the gift card has been redeemed or used on an order. So there are some tax implications, there are just some accounting implications that you just have to be aware of and also fun fact about gift cards, the legalities around selling them and redeeming them and how long they last and if they can’t expire, talk to your tax attorney about it.
Jay: Yeah. And I think that varies to it varies by country, and
Kelly: Which is why country to country, state to state in the US? So talk to a professional about that. We are not those professionals; we just know how to build the app.
Jay: Yeah, I’m up in Canada and they used to be gift cards actually expired after a year and I had a whole bunch expire on me one time and they changed it now, but I don’t know what it is state by state but assuming you talk to your accountant, assuming you talk to, you know all the rules, you could run a crazy promotion for the holidays, where you get $100 gift card, like spend $80, spend $90 Get $100 gift card and this is going back to the beginning where like we’re entrepreneurs, people listening or entrepreneurs think creatively about solving problems.
Really, entrepreneurship is turning problems into opportunity and we find things that don’t work, and we build solutions for it and this holiday season is just that on a macro scale and I think that you know, they’re going to beat like I can name so many businesses that through the pandemic, now are in such a better place, because they’ve rethought their business. They’ve implemented amazing digital strategies. We have this ice cream store I always used as an example that launched a subscription business that would have never thought. But now they have a whole other stream of revenue, their ice cream store opened back up.
So they have retail back in, but now they have another stream but brands that think strategically this holiday season are going to be ahead in the long run. So what do you think, is the future of gift cards? Because I don’t see a tonne of stores offering it and do you think that’s just because it’s not the best experience?
Rhian: I would posit that there are a few reasons why brands don’t offer gift cards. One, it’s not done. Well there are not really any online brands that do it. Well I’ll give props to Amazon when props are due. Amazon is about the only ecommerce provider that does it well. That being said, it’s also not really sexy. Like it’s one of those. It’s one of those things where it’s like, oh, yeah; it took Kelly’s point earlier, right. It’s like the afterthought gift until it’s not, if I’m buying you something from milk bar, and sending it to you, well, let’s say I don’t know you have an allergy, because we’re friends, but like, I don’t know, your food allergies.
So I’m not going to just send you a cake or cookies and pray that like you don’t die when you write, I’m going to send you a gift card and so there’s that removal of stigma and education around gifting and gift cards, that’s really going to push this forward to the next level and we’re just getting started. So we’re starting a gift cards. But obviously gifting is a very big space and we’re hoping to really, I’m going to take something from Harley here and I’m going to swear we want to arm the rebels without arming the rebels, like we want to be the intermediary here and help empower these small businesses to really grow into these legacy and enterprise brands and that’s where the magic can really happen is when a brand looks at gift cards and says this is an acquisition strategy.
This is a loyalty strategy. This is a retention strategy. Hey, this person based on $3,000 with me last year, but it’s already June of 2022. What’s up when I sent him a gift card and find out what’s up and there are just so many different pieces here that can be used and people just aren’t thinking that way right now. That doesn’t mean they’re not going to think that way because it’s our mission to make them think that way. So that’s a really long answer to a short question. But gift cards are just where we’re starting. And there’s a lot more to come, including things like push notifications, because as Kelly mentioned, right $15.3 billion in just outstanding money, just like hanging it out. Not making interest. It’s just saying it out. Why aren’t we reminding people to spend their gift cards? Why?
Kelly: Because it’s difficult. There’s no tracking of who has what balance?
Rhian: Exactly. So we will solve that.
Jay: I think too, when you kind of get out of the mind-set that a gift card has to be a gift. I think it’s a great reactivation customer acquisition tool reactivation tool. I think a lot about you know, when you hear customer acquisition costs, that term like kills me sometimes, like when you see that someone spends $71 to acquire a customer and that’s through like, Facebook, Instagram ads wherever else like that money is going to massive companies like Facebook and Google and wherever else are advertising, and not the customer and so there’s a huge market in between brands and customers and I have seen some companies trying to solve this but if those brands went directly, if they had a channel to go directly to the customer and say, here’s a $71 gift card, instead of paying Instagram, giving it to customers, because they know their customer acquisition cost is $71.
That’s what they’re paying so they shouldn’t mind paying that to a customer, theoretically, doesn’t have to be 71. It could be less, but whatever the point is, take your customer acquisition costs and turn that into a benefit for the actual customer is a huge opportunity. I think my mind is kind of spinning with like campaigns with clayvo or Omni sand or to send out like you mentioned earlier like to send out to your unengaged customers, and you can segment them that way. And I think it’s a fantastic tool but if Yeah, you’re right, maybe gifting hasn’t been sexy and hasn’t been whatever. But there’s, it’s more than just that and I think that’s what a lot of brands maybe have to think creatively about ways they can use this as an acquisition channel, not just a gifting channel.
Rhian: Absolutely.
Jay: Does it has it has that come up with any of your early adopters so far,
Kelly: I think the one of the most interesting ones that has come over some of our early adopters is slightly different but instead of basically knowing that they’re not going to have inventory for a little while, they purchase something during the holiday season and we will issue you a gift card that will be good starting, let’s say January 15 ,so kind of like different like Old Navy does this you purchase something you get like the Old Navy cash or whatever they call it, that has like a specific window of when it can be used or when it starts, which is after you’ve made that purchase is a retention method to get you to come back. It’s a loyalty method to get that second purchase third purchase fourth purchase from you, so I’m seeing that as a potential avenue for the holiday season as well.
Rhian: There’s also something to it too. It’s like let’s say I’m just I’m going say book of the month, right? Because I look at the month, let’s say book of the month was like Rhian. You spend so much money with us? And I’m like, I know and then they’re like, also, would your friends like this? I’m like, probably, but I’m not an affiliate link person. I’m not. There’s a lot of people who are I just tend to just not I’m just not the purchase like here’s my affiliate link and you’ll get 30 off and I’ll get 30 off. I feel like there’s a better
Kelly: There’s this one company
Rhian: Is it peloton.
Kelly: It’s peloton, I’ve only gotten like eight people so far this year to buy a peloton. So it’s
Rhian: But I think the thing is
Jay: Hash tag influencer
Rhian: Does peloton give you gift cards or discount codes?
Kelly: They give me a discount code.
Rhian: You can’t stack them?
Kelly: No, you cannot, which is why I have placed many orders on the peloton store.
Rhian: Whereas if they gave if they had been giving gift cards to Kelly this whole time, she could just be making these giant purchases and then and then we know we have data on this, that folks spend $59 more on average on top of a gift card, so it’s like why are we sending out discount codes if we can send out gift cards when we know and we have measurable data around gift cards and how much money because what’s the difference between a gift and a discount? It feels different?
Jay: Oh yes 100%
Rhian: You’re like what is the difference ran at functions
Kelly: Is this a joke?
Rhian: It feels different
Kelly: Gift going no this gift you come in?
Jay: Exactly.
Rhian: Like a coupon. A gift is a gift?
Kelly: Thinking of it from this way as well. I qualify for free shipping every single time I placed an order on the peloton store even using my discount codes but you as the merchant or peloton as a merchant is paying for that shipping costs every single order I place why Let me place a much larger order in pay one time for shipping.
Jay: Yeah and I have a theory on this and I talk a lot about this with like a lot of our subscription brands because one of my like, referred by friend is the number one reason people refer a subscription specifically like any e-commerce order, but subscriptions in general, because you are more tied to the brand like you’re like connected with them and I see so many people that have exactly what you just said Rhian it’s like share this link get 10% off. No one’s going to do that, but when you have a limited number of high valuable things you can share and like a good example of this was clubhouse recently.
They had you could invite five people which sounds counterintuitive like why don’t they just let you invite as many people wouldn’t they grow faster if you can invite as many people it’s actually the opposite when you only have five invites you think strategically about who you’re going to invite and then I actually reached out to some people and I said like okay are you really going to use this because I only have five I kind of like yeah okay well here you go. You can come in now whatever has clubs is a different story now but that strategy is really important and I always tell brands like, instead of having just to share it like give your, your subscribers the option to give three, like one month completely free like three really good.
But that’s it just three really, really good offers and then they’ll think strategically they’re likely to find out that, that person is actually going to use it and for something to grow virally, it depends on your on your churn rate, of course, but if you have around, if it’s actually if it’s 15%, churn, you need a referral rate of 1.2 so every customer has to refer 1.2, you can Google viral coefficient and figure out what this is but if you could do this, I think this applies to gift cards as well, too and I think that’s such a really important point is, if you can figure out a way to enable your customers to give a gift card for it’s a gift, but they only get three of them maybe or some limited amount,
You buy something and you can have you can get three $15 gift cards that you can give completely free, no questions asked, they don’t have to purchase anything, it’s just like 15 bucks that you can give, you’re going to think a little bit differently versus like, here’s a 10% coupon for anyone on my Facebook feed. Just such another great example of how gift cards can be used. Other than just like buying a gift for someone like it’s a tool, it’s a marketing tool.
Kelly: I’m so excited to see how people are utilising gift cards like through the holiday shopping season well into the next year. They’re just there are so many possibilities beyond as you said, just like the typical sending of a gift card. And I’m excited to like showcase some of these fun implementations.
Jay: It sounds like an Apple Keynote we built go follow and I’m really excited to see what you do. It’s headless.
Rhian: Beautiful.
Jay: Yeah. Well, let’s end on that. This was this was really good. Where can people go? I think everyone should, should have a gift. I mean, there’s no reason not to this holiday season, even if you have inventory, even if supply chain isn’t a challenge for you. Why not? Right? It’s just another option. Gift carding should be part of pretty much every store strategy. Where can people go to get started.
Kelly: So our company’s name is Govalo. It’s g o v a l o, you can either search for it in the Shopify app store directly or go to govalo.com and we also have a demo of all of the features that we’ve talked about today. So you can see it live and literally go through the purchase flow, because we have the test payment gateway enabled, so feel free to place an order.
Jay: Awesome. Thank you so much. This has been really great. We’ll put all these links as well in the show notes for everyone. And I hope everyone has a good holiday season and can sell no matter even if they don’t have inventory. Yeah, thank you so much for coming on.
Kelly: Thank you for having us today Jay. We appreciate it.
Jay: My pleasure. Take care.
Rhian: Cheers.