In our last blog, we highlighted some of the main benefits of selling gift cards in your store. Among them was the fact that gift cards themselves are great products to add to the line of items that you already have to sell. They make for very easy shopping decisions, especially for last minute shoppers who are looking for gifts for their loved ones. But, as we pointed out, there are many other reasons to add gift cards to your product line.
Here are three:
1. You automatically profit with every sale. When you sell a gift card, you are immediately earning money for selling no actual product at all. Obviously, the card is representative of a future sale. The card itself ensures that you receive the money in advance of the actual sale. Some gift cards, however, never get redeemed. That’s automatic profit for you! As well, many gift cards are never redeemed in full.
“Close to half of all gift card recipients fail to spend the full amount on their cards,” informs Beth Duff on TransFirst.com, “This partial redemption phenomenon, known in the industry as ‘breakage’, amounts to billions of dollars of pure profit every year for the merchants who sold those cards.”
“When you sell a gift card, you get paid in advance of any products or services rendered,” agrees Vantiv.com, “You keep the cash until the card is redeemed. Not many marketing strategies will immediately improve cash flow like gift cards do.”
2. You can use them to advertise your business. When you offer gift cards, you inject little plastic flyers/pamphlets into the world. They work similarly in that your brand image/logo becomes more widely seen with each sale. Your gift cards provide little reminders to the general public that your innovative, forward-moving, up-with-the-times enterprise is open for business and ready to serve!
Vantiv.com shares the same opinion. “Gift cards are a cost-effective advertising vehicle, giving your business top-of-mind presence,” reads the website, “They’re like a wallet-sized billboard reminding customers to visit you, and they cost a lot less than a life-size billboard.”
3. You can use them as ways to offer refunds to ensure repeat business. If you’re looking for a surefire way to encourage return visits to your store, utilize your gift cards as ways to offer refunds. When you offer gift cards to customers, you can implement a policy that offers customers refunds on gift cards instead of in cash and/or on their credit cards and debit cards. That way, they’ll be required to spend the refunded money in your store on a future date.
Duff points out that placing refunds on gift cards is a great way to both ensure repeat business and minimize the potential for fraud. “Some merchants issue store credit on their gift cards, which ensures the customer will return and spend,” she writes, “It also limits their exposure on fraudulent returns.”