Why do retailers offer gift cards

Why Every Small Business Should Have A Gift Card Program The

Gift certificates are great marketing tools that attract new customers and help maintain cash flow at virtually no cost to the company.

In addition to cost of sales, gift certificates generate immediate profit on initial purchase, allowing retailers to collect interest for financing other operations until the value is redeemed.

In addition, any remaining funds that are not used can be claimed as pure profit. Hence, every small business should set up a gift card program to increase brand exposure and profitability.

What is a gift card program?

A gift card program offers customers a certificate with a fixed monetary value that can be issued in one or more companies. Most retailers offer gift certificates through all sales channels, from in-store to online.

However, each company can set its own rules when it comes to redeeming the card. For example, some companies only allow customers to redeem their gift card in-store, while others accept certificates on all platforms.

Advanced point-of-sale (POS) systems are programmed with an integrated gift card program that enables companies to accept these card payments immediately. However, there are different types of programs to choose from-

  • Open loop gift cards can be used anywhere and are typically issued by major credit card networks including Mastercard, Visa, American Express, and Discover.
  • Closed loop gift cards are specially made for retail stores, so customers can limit themselves to buying goods from a specific company.

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Benefits of a gift card program

Gift certificates are among the most popular gifts people give one another, which makes it a $ 100 billion industry. This tool not only helps companies increase sales, but also creates a convenient way of shopping for customers.

Every small business should consider implementing a gift card program to

Gain a competitive advantage

Most, if not all, of the major retail chains offer gift certificates that require recipients to spend the value on their goods. This leads to a significant increase in sales, especially after the Christmas season, as many people have gift cards for their favorite shops.

To compete with large businesses, small businesses need to set up their own practical programs that make it easier for customers to obtain and use their gift cards.

Outsell of traditional gift certificates

Most small retailers begin by offering paper gift certificates that simply print the dollar value on the front of the slip.

Since these are easy to forge and steal, many companies keep them in their tills, so buyers have to formally inquire about the certificates. Therefore, first-time visitors may not be aware that gift certificates are available for purchase. At

however, new gift cards require cashiers to program the amount on the card before it can be used so that retailers can advertise their program without theft. Modern gift cards are also made of plastic and usually have the store's logo on them, making them difficult to replicate, lose, and damage.

Studies show that companies that switched from paper to plastic gift cards increased their gift card sales by up to 50%.

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Increase that

Order value studies show that 72% of customers who use gift cards spend more than their card value, of which 25% bought items they didn't want to buy.

This means that gift card holders are often less price sensitive when shopping because they feel like they are not spending their own money. As a result, customers are more willing to pay full price for an item, even if it means overwriting their gift card amount.

Acquire new customers

A gift card sale involves two consumers, the buyer and the recipient. If either party is a new visitor, the gift card can potentially lead to a new, loyal customer. If this cycle continues, companies can only consistently win new customers from their gift card program.

In fact, studies show that 11% of gift card recipients have never or rarely visited the store before receiving the card, and more than 33% have changed their purchasing behavior as a result.

Build relationships

With rechargeable gift cards, small businesses can build lasting relationships with customers. The

In addition to interacting with the retailer to make a purchase, recipients must also check their balance and reload their card. This offers several ways to promote targeted campaigns to encourage additional purchases.

How to Maximize a Gift Card Program

Businesses can maximize the revenue from their gift card program by-

Giveaway cards

Retailers should promote their gift cards through all distribution channels to increase brand visibility. Companies should advertise their program in high-traffic areas, including-

Sale of eGift cards

Electronic gift cards are quickly becoming popular with consumers as recipients can upload them to their devices to complete mobile and contactless payments.

This also allows customers to virtually order gift cards and send them to other people, reducing plastic and paper waste.

Loyalty member reward

Some POS solutions integrate the gift card and loyalty programs so that companies can reward frequent buyers. Retailers can set a spending benchmark and send gift cards to customers who meet and exceed the target. By incentivizing purchases, companies can increase sales and customer loyalty.

Gift cards instead

Giving Cash By offering gift cards in lieu of cash for customer returns, companies can promote sales and minimize lost profits. This tactic also stops cash flow in the store and prevents thieves from returning scams.