How store gift cards can boost your bottom line, your brand loyalty, and customer satisfaction
There's a reason gift cards are so popular. They're convenient to buy, they're easy to use, and they net big bucks for companies. Industry expert Gift Card Granny estimates that the gift card industry will reach $160 billion by 2018. Digital gift card sales alone are expected to reach $15 billion this year.
The National Retail Federation reports that shoppers spend an average of $44.83 per gift card. Consumers spend about $213 per year on gift cards, but corporations are also big buyers. In fact, 83% of corporations use gift and prepaid cards for employee incentives. For more on how consumers are using gift cards, check out this infographic.
Gift cards bring big benefits to retailers
With so many consumers using gift cards, it's easy to see why businesses should think about accepting them. Think your business is too small to offer gift cards? Consider this. Half of U.S. consumers are very open to buying gift cards from small, independent retailers. Consider these benefits.
1. Gift cards generate more revenue
Gift cards provide your business with an additional revenue stream. 65% of consumers spend more than the value of their card. How much more? About 35% more, which means extra revenue for your business. A few dollars of extra spending multiplied across dozens or hundreds of shoppers translates into a big boost to your bottom line over the course of the year. And, those shoppers who come in just a few dollars under the gift card’s value are inspired to return to your location for a repeat visit, where they will surely need to spend more to exhaust the leftover funds on the card.
2. Gift card help sell more big-ticket items
Shoppers are more likely to treat themselves to something more expensive or to an item or service they wouldn’t necessarily purchase with their own funds. Consumers are 2.5 times more likely to pay full price for an item when they’re using a gift card. Gift cards can make shoppers feel detached from the transaction – the “it’s not real money!” effect – which often causes them to spend more. When a shopper comes into your store with a gift card, they’re less likely to compare prices, hunt for bargains, or wait for an item to go on sale.
Millennials are the group of consumers who are most likely to treat themselves with small indulgences if they are shopping with a gift card, In fact, 90% of Millennials use gift cards to treat themselves to an item or service they wouldn’t usually buy, or will put a gift card towards a more expensive item.
3. Gift cards attract new customers
Offering gift cards is a great way to entice new shoppers to patronize your business. And since current shoppers will purchase your gift cards for their friends who might not have been to your store, it's a great way to widen your customer base. Some shoppers purchase and give gift cards to friends and family so they can experience a new store or a new product.
For merchants, this means that a new consumer will be coming into your store, armed with money to spend. And, if the gift card shopper loves your brand and product, you will have a great shot at converting him or her into a long-term customer, thus expanding the impact of your gift card far beyond its initial face value.
4. Store Gift cards increase brand awareness
You can design your gift cards to match your company logo and brand. Gift cards serve as small advertisements that remind customers of your business ever time they open their wallets. And as customers purchase your gift cards to give to friends or employees, your brand gets even more exposure.
5. Gift cards are a great way to encourage customer loyalty
You have a gift card program… you have a loyalty rewards program… but did you ever consider connecting these two key programs in your company’s promotional and sales arsenal? Small Biz Trends found that 60% of consumers have received a gift card as a reward incentive, and 90% liked that reward.
One easy way to do this is by offering gift cards in various denominations at different rewards levels of your rewards program. Research has found that gift cards are the number one method (45%) by which consumers would like to be rewarded for participating in brand loyalty programs. That’s because gift cards have a higher perceived value than simple discounts, so offering gift card incentives are more successful at turning a customer into repeat business.
So, instead of offering loyalty program members a free cup of coffee after spending $50 at your café, for example, offer a $5 gift card. In this way, your rewards program member will have more flexibility to get what he or she wants for the reward and is more likely to spend over and above the gift card amount.
Another way to tie together your loyalty program and gift card program is by running a sweepstakes. Each time a customer swipes their loyalty card, they’re entered to win a big-ticket gift card. This type of promotion builds excitement and loyalty around your brand, bringing shoppers back in your stores time and again for more chances to win the enticing gift card.
6. Gift cards help boost your promotional muscle
In addition to boosting your brand, you can also use gift cards in your promotional efforts to reward customers and encourage return visits. You can use gift cards as giveaways or reduced-price gift cards (a $50 gift card for $40) as purchasing incentives. Shoppers are increasingly motivated to purchase digital gift cards, with 47% of shoppers more likely to buy an e-gift card instead of a plastic gift card if it’s part of a promotion.
The appeal of gift cards for consumers
It’s no secret that practically everyone loves gift cards – and their popularity is steadily growing with the young generations of shoppers. 89% of millennials want gift cards for holiday gifts, and a full 73% would rather receive a gift card from a favorite store instead of receiving a specific gift.
Self-buying gift cards… it’s a thing!
Did you realize that many consumers admit to regularly buying gift cards for their own personal use? It’s true; more than a third of U.S. consumers say they frequently buy gift cards for themselves. Self-buying gift cards most commonly occurs to take an advantage of a special loyalty deal or discount (45%), or to help with budgeting (35%).
Since many people are at least open to the idea of buying a gift card for themselves, consider including marketing messages that encourage customers to treat themselves with a gift card – even if it’s an add-on bonus to a gift card they’re purchasing as a gift. Sweeten the offer by offering a gift card for the giver.
Store gift cards no longer viewed as thoughtless gift
Once upon a time, consumers may have viewed gift cards as an impersonal, thoughtless gift that a shopper grabbed at the last minute. These days, gift cards are much more personal and impactful. One way you can differentiate your gift cards and make them meaningful gifts is by offering eye-catching designs with a variety of themes and occasions. Custom gift cards with clever copy are a great way to deliver a fun, memorable stocking stuffer.
Some businesses even offer larger gift cards than the standard credit card-sized cards. These cards seem more substantial and special, which often encourages the recipient to use the gift card more quickly than a gift card that fits in their wallet and can easily be forgotten.
Sell your gift cards as an experience
Especially when shopping for holiday gifts, everyone is pressed for time. So, if your business offers a unique experience with a gift card – such as a prix-fixed meal, an hour of cooking lessons, or elegant afternoon tea – you’ve just created a solution for the busy shopper that makes a great, personalized gift for a wide variety of recipients.
To do this, think about the types of experiences that you can offer your customers at your business, and then bundle experiences at several different price points – shoot for three to five different gift card experiences. A fixed-money amount for a gift card helps a gift giver who comes to your location with a set amount to spend in mind. Most people have long holiday shopping lists with a budget for how much they’re aiming to spend on each person. However, they will be more likely to drop $150 on one person if, for example, they are buying a deluxe spa package gift card.
Cast a wider target audience net
When you’re marketing and advertising your gift card program, don’t make the mistake of only considering your target shoppers. Make sure you also market to the people who would be buying gifts for them. If you run a comic book store, for example, capture the attention of those who would be purchasing gift cards – perhaps girlfriends or parents – for your average shoppers.
Consider this: the people who come to your locations in November and December to buy gift cards aren’t necessarily your usual shoppers. They are coming because someone has requested a gift card from your business, so they may know very little about your business, what you offer, and how much your goods or services cost. Providing a menu of several gift card packages helps gift givers feel like they are providing a more personalized gift, while staying within their budget.
Another way that a gift card makes a thoughtful gift is when your gift card is paired with a complementary item or service. Partner up with another local business to offer complete gifting packages at a few different price points for the holiday shopping season. For example, if you run a spa, package a massage and facial with lunch and a glass of wine at a local café – for an instant “mom’s day out.”
Appeal to last-minute shoppers with gift card offers
Offering gift cards – particularly digital gift cards – appeals to last-minute shoppers who are short on time to finish checking off their shopping list. Remind shoppers that gift cards can be redeemed after the busy holiday shopping season, when shopping crowds have died down and there will be plenty of fresh merchandise and deals. Holiday gift cards are most likely to be used during January or February, so additional funds spent above and beyond the loaded gift card value can help you boost sales during these traditionally slow winter months.
What’s more, offering the option to purchase digital gift cards on your website or social media channels allows shoppers to skip the holiday crowds that they’d have to tackle to buy a plastic gift card or paper gift certificate.
Another way to appeal to shoppers low on time is by making sure you stock gift cards in an attractive display at your cash registers that catches your shoppers’ eye. Include envelopes, gift card bags, or gift card cases with the cards so the purchase is a one-stop-shop for rushed shoppers. If you run a restaurant, stock gift cards at your hostess stand. Hang up signage throughout your brick-and-mortar location reminding your shoppers of the convenience and ease of purchasing gift cards – along with any current gift card promotions you’re running.
Make your gift card program work harder for you
If you already have an active gift card program, consider these best practices to make it work even harder.
1. Promote your gift card program in and around your business
Remind customers of your gift card program by giving them visibility in-store, online, and through a gift card distribution network. During the holiday season, include a message on your phone system’s hold line reminding callers that you offer gift cards – particularly if you’re running a special or promotion.
Another way to promote your gift card program is through community involvement, such as donating a gift card to a fundraising raffle or partnering with a school for a fundraising campaign using your gift cards. In one scenario, the organization buys gift cards from your company at a discount – perhaps 20% below face value. You are paid upfront for the gift cards, and the organization sells your gift cards at face value or even at a 10% discount, keeping the difference. Take advantage of the marketing buzz and positive, local exposure you’ll receive for partnering with local charities or schools – and turn supporters into new long-term customers.
2. Use social media to market your gift cards
Brand loyalty on social media is powerful. For example, 71% of Millennials want a gift card from a brand they follow on Facebook. What’s more, 51% of Millennials are interested in sending digital gift cards through social media channels.
When consumers need to buy a gift for someone – perhaps their boss or a distant cousin – and need inspiration, they turn to their social media account to see which retailers or restaurants they’re fans of. Advertise your digital gift cards on your social media platforms or create organic posts that can attract consumers to purchase a gift card right then and there. Consider running boosted posts or Facebook ads to make sure your top-notch gift card posts get lots of screen time.
You can also use gift cards as an incentive to grow your social media fan base. For example, offer a gift card to every 1,000th follower of your business page, or put everyone who tweets a specific hashtag into a drawing for a high-value gift card. Use your social media followers to help create a buzz around your business and to get your brand trending in your local community.
3. Use Facebook to sell, sell, sell
Facebook ads allow you to develop gift card ads, and then deliver them to a very narrow demographic of Facebook users – your perceived target audience. You can select to run ads to users by location, interests, and other factors. However, when you’re talking gift cards, you want to be sure that you are running ads that target the gift givers. Facebook ads show up on the right sidebar of the Facebook desktop experience when a user is browsing their news feed.
You’ll need to create ads specifically for Facebook using an easy graphic design tool – you don’t have to be an expert to get started. We recommend using a canvas size of 1,000 x 1,000 pixels – and then resizing as needed across your social media platforms. Include copy about any current gift card specials you’re running, as the “call to action” that allows the viewer to immediately purchase an e-gift card or traditional gift card on your website. Make sure you simplify this process, so there are as few of barriers to purchase as possible.
Just like all types of marketing, consider Facebook ads an ongoing, evolving process. You should track your Facebook ads to see how they’re performing – and use this feedback to inform your next ad campaign. You’ll do this in your dashboard that shows the number of click-throughs each ad receives. Use this information to tweak your ad copy, imagery, and audience.
Another way to use Facebook to sell your gift cards is by creating a custom page tab on your business profile. This makes it as easy as possible for customers to get through the gift card purchase process. This custom page tab acts as a mini web page that you can fully customize. You could create a tab that simply says “Buy gift card,” and that page contains information about the gift cards you offer, along with a link that sends customers directly to your gift card booking page on your website. Setting up a custom page tab does take a little technical know-how, so check out the Facebook Developers site to learn more.
4. Use gift cards in promotions
Work to attract customers into your business – or encourage existing shoppers to spend a bit more – with gift card-related promotions. For instance, offer a $10 gift card for every $50 a shopper spends, or a $25 gift card for every $100 spent. Another promotion idea is sending shoppers a low-value digital gift card (think $10 or $15) via email that they’ll have to come into your location to spend. When they come to your store, they’ll very likely spend more than the value of the gift card. You will need to be thoughtful with this type of promotion, since it can impact your bottom line.
One very effective sales strategy is to use gift cards to help your employees upsell your customers. Offer a free $20 gift card for every $100 spent, for example, and your customers will be more likely to grab a few extra items to hit that threshold and score the gift card. And, if they end up gifting that gift card, that could be a brand new customer exposed to your brand and coming in your doors.
5. Use online search and advertising to boost gift card sales
Did you know that a full one-third of gift card purchases originate from outside the state where the business is located?
In many cases, this means that an out-of-state friend or relative is performing an online search to locate a quality business from which to purchase a gift card that’s local to the recipient. Your business is more likely to get the sale from someone searching for a local gift card if you claim your online listings. This means visiting sites like Google Places, Yahoo Local, and Yelp to make sure your business is filed under the right neighborhood and has correct contact information (including website and social media pages) listed.
Another way to capture online searchers looking for gift cards is, of course, through paid ads. Set up a Google Adwords campaign to show your special gift card offers and website when a web searcher searches for a relevant key word or phrase. Make sure you or someone on your staff is then dedicated to reviewing statistics and data on how these ads are performing, so you can adjust copy and imagery, as needed, and maximize your online advertising budget.
If you haven’t already, you should also make sure your website is search engine optimized – known as SEO – for people searching for gift cards for your business type. Optimize your website content to include the name of your city or neighborhood, so that when someone searches “coffee shop” and “Garden District”, your business shows up towards the top in those search results. If you are new to SEO, consider seeking out the expertise of a marketing agency that specializes in this important aspect of your company’s digital presence.
6. Offer plastic gift cards
The days of hand-written paper gift certificates are gone. Research indicates retailers who upgrade to plastic gift cards typically see a 50% to 100% increase in sales.
7. Offer e-gift cards
These cards make it easy for customers to purchase gift cards on your website without having to visit your brick-and-mortar store. You can easily set up a digital gift card program on your company’s website in just a couple hours, compared to ordering and having to wait for plastic gift cards to ship to you. Shoppers of all ages also appreciate the instantaneous nature of e-gift cards. They can literally purchase an e-gift card at the last minute (gasp – Christmas morning!) and instantly emailed to the recipient, saving the embarrassment of forgetting to pick up a gift for someone.
In an InComm research study, consumers share reasons for why they’ve purchased digital gift cards:
- Instant delivery (62%)
- Easier to send (42%)
- Easier and quicker to purchase (32%)
- “Cool gift” to give (28%)
- Easier to redeem (26%)
- Environmentally friendly (21%)
- Harder to lose (21%)
- Recipient prefers digital gift cards (18%)
That same study took a look at shoppers’ favorite types of merchants from which to purchase digital gift cards:
- Restaurants/casual dining (54%)
- Department stores (44%)
- Online-only retailers (35%)
- Entertainment, including music and movies (32%)
- Electronics (31%)
- Coffee shops (30%)
- Fast food (24%)
- Grocery (21%)
- Home improvement (18%)
As you can see, shoppers love giving and receiving electronic gift cards from a wide variety of merchant types. 56% of consumers would like to keep gift cards stored on their smartphone, which makes the card easily accessible and decreases their chances of losing it. And, the younger the shopper, the more likely they are to appreciate receiving a digital gift card: a whopping 74% of 18 to 24-year-old shoppers are interested in keeping gift cards on their phone.
Build your customer marketing database
Today, with the growing importance of email marketing, taking every opportunity you can to build your customer database is important to success. A gift card program can help with this. For example, when a shopper purchases an e-gift card, capture their information (at minimum, name and email address), as well as the recipient’s information and add this information to your database so you can continue marketing to both the gift card giver and receiver with new offers.
Still deciding whether gift cards are right for your business? Ask yourself these six questions to determine if they are a good fit for you.
Gift cards draw in more customers, encourage repeat business and increase your average sale. If you're not accepting gift cards you're missing a tremendous sales and relationship building opportunity.