Gift cards may not immediately come to mind as a hot product to start selling in your store or restaurant, but they’re actually a great asset to any business.
Not only does selling gift cards help a business increase sales, but it can also be an important branding tool. They’re also a quick, easy decision for indecisive customers. If you’re on the fence about selling gift cards, this post will show you how cost-effective and convenient it can be to sell them for your small business, helping you unlock its full potential.
What Is a Gift Card Program?
A gift card program allows businesses to sell gift cards for their merchandise to their customers. Gift cards can be bought at the register or online. Some retailers allow you to redeem the cards both online and in-store, while others will only let you redeem them in-store or online.
They’re a popular option for all kinds of businesses since it’s so easy to start selling them, and they’re typically well-received by customers. If you use one, you can even start selling them directly through your point of sale (POS) system.
There are two kinds of gift cards to consider when starting up your program: open and closed loop gift cards. Both of these options can benefit retailers and restaurants, but generally speaking, closed-loop cards are the best for a small business.
Open loop gift cards are cards that can be used anywhere. When you walk into a big business or a department store chain and see American Express and Visa gift cards for sale, that is an open loop gift card program since you’re able to use them pretty much everywhere. Closed loop gift cards are cards that are made especially for your store. Since they benefit small business merchants the most, they are the focus of this post.
Why Would a Business Want a Gift Card Program?
Selling gift cards can be a big help to any business without too much effort on the part of the business owner. For one, it’s an easy decision for a customer. Think about how difficult it can be for customers to decide what to buy when you have so much great merchandise. With a gift card, there’s no need to choose. Just pop some money on a gift card and whoever is receiving this card can choose what’s best for them. The National Retail Federation even predicted that more than half of shoppers during the holiday season in 2016 would give gift cards.
Gift cards are also a guaranteed way to boost sales. Studies show that customers are willing to spend more with a gift card versus spending their own money and, on average, spent over $30 more than the value of their gift cards last year. And the type of gift card you sell can also make a difference. Selling plastic gift cards instead of paper gift certificates can increase gift card sales by 35-50%.
Giving a retail gift card as a gift can bring in new customers, too. Let’s say one of your best customers gives their friend a gift from your boutique. If the friend likes the gift enough, they might later visit your boutique and buy something else. The key word here is “might.” There’s no guarantee that a gift from a friend will lead to any measurable impact on your revenue. On the other hand, if your customer gives their friend a gift card to your boutique, they have no choice but to visit your shop to redeem it. This is linked to a direct increase in sales. 44% of people in a study visited a store that was new to them because they received a gift card and even more people visited stores more often after they got gift cards.
Gift cards can also be a strong form of building brand awareness for a business. You don’t typically see cards plainly labeled “gift card” in people’s wallets. A gift card has a store’s logo, name, social media, and contact information on it. Plus, an increase in gift card sales means a potential increase in the number of people seeing your gift cards. You never know who will see a gift card from your store and be curious enough to look you up. So whenever a potential customer looks in their wallet, they have a reminder that you’re a retail destination.
They’re also very cost effective. Plenty of gift card programs don’t have any start-up fees. All you pay for are the physical cards themselves and customization. You don’t have to sell a certain number of gift cards to keep your program going and selling closed loop gift cards means there’s no fee to you. However, you may have to pay a certain percentage when selling open-loop gift cards, and that fee will be dependent on what company you’re getting them from.
Because gift cards are so easy to sell and use, it’s important to pay attention to the laws surrounding them. Not being responsible with how gift cards are used within your store can not only drive away customers but get you in trouble with the law.
Comply with Gift Card Regulations
Gift cards are still a form of payment, and that means that there are laws surrounding how they can be used in your business. For example, having a transaction fee for a gift card is fine, but it’s against the law to not inform the customer of that fee or any other fees a gift card has. Fees are also applicable to gift cards that haven’t been used for a year or more, and those fees are often deducted from the card via a monthly charge.
Also be aware that expiration dates on gift cards can only take effect five years after the date the card was activated. Federal laws and state laws may differ, however. Be sure to look into what those laws are according to your state and run your program accordingly.
Promote Your Gift Cards
Remember though that gift cards don’t sell themselves. Customers have to see that you offer gift cards before they think of buying one. Plenty of retailers have a gift card displays right by their retail POS. That’s a great way to grab a customer’s attention. Having gift cards with various designs and specialty designs for the holidays are sure to draw attention to themselves.
Putting a graphic up about e-gift cards on your website can also be a great advertisement to customers about your gift card program. All they have to do is fill out a short form for the card to be emailed directly to whomever they choose. Online gift cards also mean faster sales since customers don’t have to leave their phone or computer to use them. A couple of taps or clicks is all that separates them from viewing the gift card and visiting your online store.
Also, consider having a promotion or incentive with the purchase of a gift card. Many businesses give a certain percentage or dollar amount off another purchase when you buy a gift card. You can also give a gift card with the purchase of other merchandise. This increases customer loyalty and customers are compelled to come back through your doors to see what you have in store.
Your gift cards can also promote other aspects of your business. If you have a loyalty program, make sure your staff and cashiers mention it to whoever is using a gift card so they can earn points and perks even when they aren’t spending their own money. Since a loyalty card is usually a free option to the customer, they can be more likely to sign up and turn them into loyal customers.
Sell Your Gift Cards with Your POS
Your POS can manage so many aspects of your business it only makes sense that it can also help you sell gift cards. ShopKeep customers have the option to sell gift cards directly through their POS. ShopKeep gives you the option to order your gift cards directly from them and getting those gift cards ready for sale just takes a few steps in BackOffice.
Selling gift cards through your POS is also a great way to cut down on fraud. Years ago it was too easy for people to walk into stores, slip gift cards or at least the barcode and PIN numbers into their pockets and walk out. Then, they could use that information to shop online or on another trip to your store leaving you without the profit from that sale. Luckily, advancements in technology mean that now gift cards have to be activated at the register for them to work properly.
It’s also really easy to track purchases and a buyer’s journey within your store with gift cards. When you sell a gift card through ShopKeep, you can track if and when a gift card has been used. This feature makes sure you’re always aware of how your gift card program is performing and where you can improve.
SEE ALSO: How to Sell Gift Cards in Your Store
At first, it may seem like you’re just selling money to your store when you start a gift card program, but that exact idea is what makes gift card programs so successful. Each gift card is a mini billboard for your store that encourages people to give you their money. PIck the right gift card program for your business, and everything else will fall in line.