One of the most effective ways of making money as a business is through the sale of gift cards. It’s an immediate sale for your company, and you attract the gift card recipient to your store in the future. The marketing potential of gift cards is almost limitless, too. So, if your business isn’t offering gift cards, here’s everything you need to know.
What is a gift card?
A gift card is essentially like a prepaid debit card. It comes loaded with a certain dollar value that people can redeem in-store or for online purchases. They’re extremely popular for people who struggle to find the right gifts for people, and for the business owner, it’s a way to get an upfront sale without technically releasing any stock.
There are different types of gift cards, such as vouchers, gift certificates, and more popular today, eGift cards which can be purchased, sent and redeemed digitally.
eGift Cards from Square
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How does a gift card work?
A gift card usually looks exactly like a credit or debit card, complete with a magnetic strip so that customers can swipe them in an EFTPOS machine at the counter as a form of payment. Basically, a customer buys a gift card for a certain dollar value and gives it to another customer as a gift. The business collects the full upfront payment for the card and the recipient can use it as payment for goods and services at a later date.
How a business makes money from gift cards
There are numerous ways businesses make money from gift cards.
Customer referrals – Sometimes people are given a gift card because the gift-giver knows they already love your store. Many times, though, the recipient has never used your store before, and it works as a type of referral. So, you end up with a brand-new customer, win!
Unused balances or cards – The reality is, some gift cards will never be redeemed. This means you’ve collected the money upfront, but not provided a product or service. The same applies to balances on cards. For example, a customer may spend $45 on a $50 gift card and forget about the rest, giving you a $5 profit.
Customers spending more – Most customers who redeem gift cards want to get the maximum value from them. So, rather than the scenario where a customer spends $45 on a $50 gift card, many are likely to purchase something worth more than the card’s value.
Benefits of offering gift cards for businesses
Many businesses see gift cards not just as a sale, but as a marketing tool. While there is usually a small fee to produce the cards, it’s worth it considering the many benefits a business receives, including.
Attracting new customers
Building brand loyalty
Compete with larger stores
Redeeming customers are less concerned with prices
A valuable tool for your loyalty program
Physical vs digital (eGift) cards
There are two major gift card types. Physical gift cards are more well known because they’ve been around for longer. They look just like a bank card, so they’re convenient.Customers simply swipe them at the time of purchase, and it’s nice and easy. Plus, in terms of gift-giving, many people like the idea of handing over a physical item.
Digital gift cards, or eGift cards, are growing in popularity, however, because they offer more flexibility, customers can purchase them online and send them digitally to the recipient. They can also be used to purchase items online, or in-store, giving the recipient maximum flexibility.
How can I get gift cards for my business?
Getting gift cards for your business is extremely easy . Square offers businesses the chance to sell gift cards online or in-store. Depending on your needs, they can even be customised with your business logo and artwork.
Square Gift Cards are also easily traceable through the Square app or Square dashboard. You can even reload customer cards if they want to add more funds. Full reporting is available, so you can see exactly how well your gift card promotions are performing.
6 Business gift card marketing tips
So, now that you know all about gift cards and how to get them for your business, the next step is actually selling them. Here are some useful marketing tips to keep in mind when selling gift cards.
1. Promote your gift cards
Like anything that you sell, if you don’t promote it, your customers won’t know it’s available. Gift card marketing is no different to other stock items or services that you offer. Include links to your online gift cards in all of your promotional material, post about them on social media and even set up advertising campaigns to promote them.
Remember, gift card sales often spike seasonally, so put a focus on this type of promotion leading up to events such as Christmas, Father’s Day, Mother’s Day and holidays where gift-giving is common.
2. Make gift cards easy to find
If you operate a brick-and-mortar retail business, make sure that customers can easily access your gift cards. Think about adding them to your counter as an up-sell when the customer is checking out.
3. Use gift cards as loyalty promotions
Gift cards don’t need to be sold in order to generate income for your business. You can use them as part of your loyalty program to reward your valuable customers. Consider issuing customers a gift card on their birthday, or after a certain number of purchases. This fosters goodwill, brand loyalty, and gives people a reason to keep enjoying your products and services over the competition.
4. Entice new customers with gift cards
Gift cards can also be used to lure new customers to your store. Social media is an excellent avenue for this because you can reach both existing and new customers. You can offer gift cards to new followers, or even give them as prizes for a certain number of new followers each week. This helps you build a following, giving you more people to market to in the future.
5. Ensure customers can buy gift cards easily
When you buy physical gift cards in a store, it’s usually quite easy. But, you need to make sure digital gift cards are just as easy to buy and use. Think about adding a link to gift cards in your main website navigation or having a feature banner on your home page.
6. Get rid of the rules
As a consumer, there’s nothing more frustrating than receiving a gift card, forgetting about it, and then finding it has expired when you try to use it. Firstly, this practice isn’t really fair because someone has already purchased the card and you’ve received that income, regardless of when it’s redeemed. Secondly, it leaves a bad taste in your customer’s mouth.
Some gift cards also have rules outlining certain things they can and can’t be used for. Again, this is annoying for customers. You’ve done the hard work getting them into your store, so don’t limit your gift cards with arbitrary rules that can create a negative customer experience.