Economist Joel Waldfogel, author of the infamous "Scroogenomics" describes Christmas as, and I quote, 'an orgy of value destruction'. In the exciting world of economists, the destruction of value is the one and only cardinal sin.
This dispiriting summary is based on the assumption that the rest of us are generally pretty useless at buying gifts for each other. Put more technically, recipients of our thoughtful Christmas presents see far less value in them than the actual monetary value of those gifts when we purchased them.
Personally, I think that poor Joel has missed a fundamental, human element about the motivations for buying gifts for others during the Christmas period. Crucially, our motivations for giving gifts are subject to change depending on the giver and most importantly, the recipient.
The perfect example of this is Christmas etiquette surrounding the gift of cold, hard cash. If I was stuck as to what to buy a family member for Christmas, no problem, slip a nifty fifty pound note into their card. If I was stuck as to what to buy my boss for Christmas, I would categorically not be putting fifty quid into his card, that would be a bit weird.
The point is, finding Christmas presents is easy. Finding the right Christmas presents, ones that achieve parity with the monetary value invested into them? Less so.
If your business can grasp the psychology behind how people choose what gifts to buy for their loved ones, as well as how they find the 'right' gifts for Christmas and implement this into your festive strategy, then you're on to a winner.
WHAT IS GREAT GIFTING?
Our first order of business is to understand what great gifting actually is.
This is actually pretty simple, but not necessarily easy to achieve. We'd define the perfect gift as being one where the recipient gets more pleasure from an item than they would obtain if they were to go out and spend the same monetary value on themselves.
It could be the case that the item itself doesn't even have to be different to achieve this, but that's just common sense, right? We'd inevitably see more value in an item if a friend or loved one had the foresight to go out and buy us something that we'd happily go out and buy for ourselves.
In some, admittedly rare cases, it may be that our loved ones go out and spend a certain amount of money on us better than we could ever hope to achieve if we spent the same money on ourselves.
These are just some of the circumstances that lead to giving a great gift this Christmas.
GIFTS TO SHOW THAT WE KNOW THEM
As a brand, you should be able to appreciate the fact that the most precious possible gifting moment would sound a little bit like: "OH MY GOD! I never knew that I wanted this but now that I have it I realise it's something I've always needed!"
Sometimes, the recipient of your gift may simply be unaware of their own preferences, or they may have underdeveloped preferences regarding a certain topic. If the giver happens to be in the fortunate position where they have a more expansive knowledge surrounding that same topic, then it's highly likely that they will be able to accurately fill in the blanks of the recipients taste which often leads to great gift-giving.
To provide context, consider the following scenario: The person you're looking to buy for has started reading crime novels recently and it just so happens that crime novels are your favourite genre of book. Consequently you have a more extensive knowledge of this genre and so, you're able to supply a real corker of a novel that the recipient was not previously aware of and will enjoy immensely.
For brands, you can help customers in this respect with a website feature that you most likely already have. Product recommendations. Or, more specifically 'similar products' or even 'product recommendations based on your recently viewed items'. Optimise these features to assist customers to make a well-informed choice of gift; which should also help add to your repeat business!
SOME GIFTS REQUIRE PERMISSION
In some instances, people need permission to enjoy a product and this requirement for permission presents the perfect opportunity for buying a loved one a great gift this Christmas.
It may be that you know for a fact that a friend or family member loves a nice bottle of gin. However, it's not something they'd typically go out and buy for themselves because somehow buying a bottle of gin for their own consumption is wrong? However, if you go out and buy them a nice bottle of gin for Christmas, that love for gin may be expressed through considerably rapid consumption!
Similarly, if a loved one has been thinking about buying a big-ticket item, for example, a television, they may often hold off from buying it for themselves because that would feel a little selfish and over-indulgent. This presents you with the perfect opportunity to give them something they generally want if your budget can stretch to it.
Purchasing Christmas gifts that you believe fill the 'requires permission' category can prove to be a foolproof way of negotiating the gift-giving dilemma. As a business, if you can understand what sort of products fall into this category and adapt that message into your marketing, it may just prove to be an excellent way of making sales this holiday season.
THE GIFT OF TIME
Undoubtedly, one of the most precious gifts consumers can give anyone over the Christmas period is the gift of time.
Christmas rituals and traditions are undoubtedly a staple of the festive season and an investment in relationships with friends and family is often a gift in itself.
If your business can incorporate the themes of these relationship investments you will be showing prospective customers that you understand what Christmas is all about. In resonating with your prospective consumers they will be more inclined to do their actual gift shopping with you.
Recently, we have also been seeing a developing trend in the investment of time with friends and loved ones around the Christmas period. That trend is the upturn in purchases of experience gifts, which last year accounted for £1.66 billion of spending over the Christmas period. While this could in part be attributed to the rise of younger generations such as Millennials and Gen Z, who value experiences over material possessions; it could also be a sign that people are making more effort to invest time into their relationships while avoiding the prospective headache that finding the perfect material gift can involve.
To capitalise on this growing trend, your business could look to introduce some experience products if you don't possess any already. If you already feature experience products within your product range, it may be an idea to use what those experience products entail within your ad campaigns in a way that is emotive and highlights why they're perfect for Christmas.
CASH IN HAND
The gift of cash is one of the most passive and safe gifts consumers can give during Christmas.
Giving cash can be seen as a gift strategy devoid of imagination and emotional investment, but, from the perspective of an economist, is one of the best gifts that people can possibly give as the chance of any value being lost within the transaction from giver to recipient is minimal.
However, just as the gift of cash can be seen as somewhat boring, it's also not always deemed socially acceptable, as touched upon earlier.
As a business, you won't be benefitting from your consumers adopting this passive gift-giving strategy. To ensure it's avoided by potential customers focus your messaging on the emotive benefits of an amazing gift, and how your business can be the intermediate to helping you achieve that this Christmas.
Alternatively, if your customers believe that a passive gift is the approach for them, push for them to purchase a gift card/voucher as an alternative to giving cash. At least this way, your business will still benefit, plus research showed that last year, gift cards and sales were worth £6 billiion a year, with a whopping £300 million going unredeemed (so money that stays in your bank account!).
the efficient present conundrum
The 'Efficient Present Conundrum' brings a situation many of us can already relate to front and centre. That said, similar to the 'Efficient Markets Hypothesis', all the best presents have already been bought - typically when the recipient has already purchased those same gifts as a treat to themselves.
Let's imagine that this Black Friday, your customer sees something on offer that they know for a fact their partner has expressed a desire for, if they purchase it they already know it will lead to gifting success at a bargain price. A couple of days later, your customer is dismayed to find a package containing the exact same item has been delivered to their door. Unbeknownst to them, their partner has spotted the exact same deal and promptly ordered it as a treat to themselves when realising the price was a steal.
Fundamentally, spending a larger sum of money presents more risks when buying gifts. As a business, the reality is that there is very little you can do to combat this scenario but its certainly worth being aware of. This situation is one that willl inadvertently lead to an influx of returns this holiday season.
THE PERILS OF SPENDING MORE
When your customer spends a large sum of money on a loved one, it can go one of two ways. Get it right and the giver shows their recipient that they know them well enough and care about them enough to invest a large sum of money in buying a gift of real value to them. Get it wrong and, well, we've all been there!
As a business, there isn't an awful lot you can do to prepare for this scenario apart from being aware that people can get their gifts hideously wrong. All you can do is ensure that your customers are crystal clear about to your returns policy.
STUFF CAN BE HARD TO FIND
Understandably, most people would assume that if someone wants a specific present, then they'd know where to go to find that product and buy it; but this isn't always the case.
Often we underestimate the fiscal effort of going from shop-to-shop trying to find that one thing in particular that you have in mind; or even knowing where to go when browsing online for it.
As the giver, closing that gap of knowledge and knowing where to go to find that elusive item can be critical in achieving gifting success.
As a business, product awareness can be crucial in plugging this gap. If you advertise a product on social media, link back to where people can buy it. If you have an in-store advertisement for a product, detail what it actually is and where it can be found. Such simple steps can go a long way in helping to bridge that gap in knowledge.
COMMUNICATE THE FEELING OF SUCCESS
To help endorse your brand or business, through what is invariably a challenging and stressful time of year, you need to be able to understand and empathise with the situation of the customer.
Sympathising with a stressful situation and being able to communicate the feeling of success upon buying a great gift is a foolproof way of ensuring your customers feel you can be trusted as a point of purchase.
Endearing yourself to customers in this way during the holiday season will make them much more likely to buy from you.
Overall, the behaviour economics surrounding gift-giving at Christmas is complex and generally flies in the face of what economists would call 'sensible' behaviour.
If your business can understand the behaviour surrounding why people give gifts, and what factors influence their decision making, showing them that you understand their predicament and are more than capable of helping, you'll be winning this Christmas.
on the Ninth day of Christmas, adido gave to me...
nine gifts of giving,
