Gift cards, which were initially low-cost convenience items in modern times of high-velocity retailing, have become strategic business resources. This once simple way of sending a quick gift now has become a strong way of improving cash flow, gaining customer loyalty and raising the sales volume. If you work in a small shop, a big chain store, or even have an online shop, embedding the program of gift cards will bring some practical commercial gains.
What is a Gift Card?
A gift card is a payment card which includes a fixed value of money which the recipient can use to purchase. Generally it may be redeemable depending on the type of card:
- In one store or brand (closed-loop)
- Within an array of stores or on line points of exchange (open-loop)
Such cards may be tangible (plastic) and intangible (sent by e-mail or app). Both can be used in place of cash but possess limited value to the amount loaded in them and range of accepted locations.
Why Gift card has become very popular among retailers and the general population?
One of the items being bought quite a lot throughout the year and more notably during holidays, birthdays, and other special occasions is gift cards. They are not only popular among consumers–businesses also stand to benefit a great deal.
- Upfront Revenue
Gift cards are even pre-paid. This is because it avails cash to the business instantly without consideration of when or even whether the card is redeemed. It is a special type of short-term financing that increases the cash flow without discounts or margin reduction.
- Greater customer spend
A good number of gift card recipients spend more than the amount of money on the gift card. When a customer has a 25-dollar gift card they might only need to spend 40 dollars particularly because they used the gift card along with other promotions or with personal money. The resultant effect is an expansion in the average realms of transactions.
- Better Brand Recognition
By the giver handing over a gift card, they are in effect advertising that brand. This has a potential of making your business known to a new customer who may not have thought of shopping with you before.
- Increased Sales during Season
The gift cards prove to be very popular during the holidays as well as special shopping seasons. Companies are able to conduct special offers like Buy a $50 gift card and earn a $10 bonus card so that businesses are able to get traffic or future sales.
Why Gift Cards Need to be Provided by Business.
Gift cards may also be a product in terms of business strategy, which has a high margin and low risk. This is how they assist in creating a more effective, stronger operation:
1). Acquisition of a customer
Gift cards bring in the newly acquired customers to your ecosystem. Because the recipient has not always spent his/her own money they will perhaps feel less fear to experiment, which in turn can lead to the purchase in the future and brand loyalty the consumer may have going forward.
2). Stability of Cash Flow
In particular, in the case of seasonal or cycle-based business, gift card sales can balance lumpy revenues by coming in before actual product deliveries occur and turning into cash.
3). Low Overhead
The cost of production and/or distribution of digital gift cards in particular is nearly zero. Even the physical gift cards are quite low cost to produce, in comparison to other traditional methods of marketing and promotions.
4). Smart Analytics
Contemporary gift card systems have the ability to trace spending patterns, redemption rates and times and buying habits which allows business to make better decisions regarding stock, advertising and targeting.
Digital and Physical Gift Cards
With the retail sector moving towards a more online environment, most companies have started issuing e-gift cards in addition to the conventional ones. Both find their position:
Digital gift card can be delivered within seconds and redeemed online or in retail outlets so it is ideal and perfect to use when a buyer has last-minute requirements.
Physical gift cards are not dead in terms of in-store experiences, customer loyalty gifts and corporate gifts.
In the case of businesses, holding both types provides a higher reach and flexibility in the enterprise against different tastes of customers.
Finding the Way to Do the Gift Card Program to Your Business
The use of gift card does not have to be involved. It starts with the following steps:
- Select a Gift Card Provider
Make a decision on whether to do card management on your own or to work with a third party platform that can work with your point-of sale (POS) system and stock picking.
- Design the Card
Make your card design reflect its branding design. This assists in establishment of professional and consistent customer experience.
- Multiple Purchasing Opportunities
Sell gift cards online, in-store and mobile to cover the largest number of consumers.
- Advertise Your Gift Cards
Proactively react to gifts card availability using signage, email campaigns, social media and your web site especially during peak seasons.
- Monitor and Record
Follow the selling, the redemption and the behaviors towards gift cards. Analyze this data to optimize your marketing and upselling.
Final Thoughts
Gift cards started off as a mere gift option and evolved into a business necessity. They give instant economic returns, and also they offer long-term market development and customer retention prospects. Whether it is making your brand more visible or providing an opportunity to drive up the customer average spend, appropriately planned gift card practice may become the foundation of your growth pattern.
With the future continuing to change how retail is done, companies that adapt to flexible and customer friendly ways of payments, such as gift cards will excel above the rest, not only selling products, but also selling intelligent and hassle free shopping.