A gift card program is a revenue-generating opportunity that’s often overlooked by merchants at small and medium-sized businesses. Evolve Payment has set up gift card programs for merchants of all sizes because we believe that every business can find value in adding gift cards to their product catalog. When a customer has a gift card, their average spend increases by 40%, and this isn’t limited to big box retailers. With the potential for more sales coupled with increased customer retention and brand loyalty, gift cards are a viable tool in every merchant’s arsenal.
Gift cards are lucrative because they’re flexible and operate under a “pay now, buy later” agreement, meaning that the merchant gets money immediately for a potential future purchase. From the customer’s perspective, the money is already spent with the gift card in hand, so it’s easier for them to justify a larger cart than if they paid traditionally, especially when the card was received as a gift. Out of consumers surveyed, 87% said that gift cards are convenient and easy to use, showing the positive sentiment towards gift cards. If you’re looking to bring gift cards to your business, whether physical or digital, continue reading to learn how to make the most out of your program.
Quick TipWhen we mention setting up gift card programs for our merchants, we’re referring to closed loop gift cards, not open loop gift cards. What’s the difference? Open loop gift cards are processed by credit card companies and can be redeemed anywhere (Visa prepaid cards), while closed loop gift cards can only be redeemed by the merchant on the card (Evolve Payment gift card).
Optimizing Your Gift Card Program
Use Gift Cards as Branding Tools
Branding your gift cards is a great way to get them to stand out on shelves or on your website. An eye-catching design with unique packaging, imagery, or card shapes is more fun to open as a gift, and customers will be more willing to purchase your gift card for their friends and family if it has personality. Don’t be afraid to get creative with your cards. They’re an opportunity to extend your brand and should be enticing. Although you’ll end up paying more money to customize your gift cards than if you were to buy generic alternatives, the long-term payoffs will be worth it.
Bundle Gift Cards With Promotions
By including gift cards in your marketing campaigns you can increase your customer’s average spend while simultaneously providing a good deal that will drive sales. Instead of a buy-one-get-one-free promotion, offer a $10 gift card with any purchase over $50. These numbers are arbitrary, of course, and the value of the promotion will vary depending on the merchant’s revenue goals, but replacing your promotions with an equal-value gift card deliverance will save you money, increase sales, and still be an attractive offer for your customers. This isn’t restricted to just physical gift cards either. Merchants that operate strictly in the ecommerce space can offer e-gift cards (digital gift cards) instead.
Offer Gift Cards as Cash Replacements
Gift cards are as good as cash in the customer’s eyes while guaranteeing that the money stays in your store. If you’re thinking about offering a cash discount on a product or service, offer a gift card with an equivalent value instead. You’ll lower the effective price for the customer while softening the blow to your account. Plus, you might be able to offer your customers an even higher discount since you’ll have the opportunity to recover those funds in the near future.
Another strategy to use gift cards as a cash replacement is by incorporating them into your return policy. Instead of offering customers a full cash refund on returns, give them a gift card of equal value. This will keep the money in your store while maintaining customer satisfaction and, in turn, loyalty.
Promote Gift Cards During the Holiday Season
The holiday season is the hottest time of the year for gift card sales, and holiday spending continues to grow year over year despite slow economic growth due to the pandemic. Gift cards are the quintessential gift for when you don’t know what to get someone, and even receiving a gift card from an acquaintance gives your business a head start in developing a new loyal customer.
Offer bonus gift card credit on every purchase, or give in-store credit when customers buy your cards as gifts. Offer fun and unique envelopes or other forms of packaging to give your customers one less thing to worry about while shopping for the holidays.
How to Set Up a Gift Card Program
When we help merchants set up their gift card programs, the first question we ask is “What are your revenue goals for the program and company?” Determining your goals and metrics before setting up your program will decide on the type of card and the strategy for leveraging them. Will you sell them as standalone products? Or, will you only use them as in-store credit replacements, or promotional tools?
Next, if you decide you want to sell physical gift cards, we’ll set you up with a gift card-compatible POS system and software through one of our trusted partners. Although we highly recommend that our merchants offer both digital and physical gift cards, it’s not a necessity to have both. E-gift cards are growing in popularity and will continue to do so.
Quick TipIf your customer pays for a gift card with their credit card, you’ll be charged by your processor at your net effective rate. If they buy it with cash, there won’t be a processing fee!
During our time in the industry, we’ve noticed many merchants getting discouraged or overwhelmed by gift cards. They seem like a luxury that only large businesses can afford. However, we believe this is a myth. Merchants of any size can start a gift card program that meets their revenue goals with reasonable up-front investment. If you’re interested in offering a customized gift card program to your customers, give us a call! We’ve set up programs that are tailored to your business by respecting the industry, company size, and desired metrics. It’s not too late to get started generating gift card revenue during the holidays.