Gift Cards – the Perks they Present to Your Business
Did you know that 8–10% of purchased gift cards remain unused? Gifted vouchers are often forgotten into wallets, left into the pocket of a jacket hanging in the closet, or thrown in the trash by accident.
This sounds cynical but it is basically free money for a retailer, so investing in gift cards is definitely a sure-shot.
There are multiple reasons to why every retailer should implement gift vouchers, but the main three arguments are that they:
- Increase turnover;
- Increase gross margin;
- Brings in new customers.
Let’s take a closer look to how your business can benefit from gift cards.
Cards worth betting on
When you sell a gift card, you immediately receive a payment without even providing a service or product. It doesn’t actually matter when the voucher is redeemed – whether it is the next day, in five months or never – you have already made a successful sale.
Research confirms that customers’ spending habits change significantly when gift vouchers are involved – they buy more expensive items or services from you than they normally would, according to ID Superstore claims. Gift Card Granny states that 72% of the shoppers who come in with a gift card choose a product or service that exceeds the card value. Statistically, the average additional payment is 30% of the voucher’s value.
Of course, there is the small portion of people who won’t use the voucher’s full amount – in those rare cases approximately 20% of the card’s value remains unspent. This is pure gain for the retailer.
Customer loyalty and newcomers
Gift cards are directly tied to the business, and only redeemable at the place where they were issued. For your store, this means when a customer that comes in with a gift card has the intention of buying something and spending money in your store. A good trick to keep them coming back would be creating a customer account or offering a discount on the next purchase.
Since the voucher holder chooses a product or service of their liking, there will be no hassle with returning or exchanging the item – an excess burden that retailers often face after the holidays.
According to ID Superstore’s research, 11% of people receive a gift voucher from a store that they rarely or never visit. Considering this statistic, it is high time to implement gift cards for those who still haven’t done it. It is an effective and zero-cost way to bring in new customers who could potentially become patrons of your business.
Also, gift cards help promote your company; it is just like a business card in the customer’s wallet, reminding them to stop by your store sometime.
Popular gift cards
The boom of gift cards being purchased during holiday season doesn’t seem to be fading. Their popularity is unrivaled among both gift givers and receivers, and it has been for years. According to Gift Card Granny, Amazon gift vouchers were bought the most last year – almost 24% of the respondents mostly buy these; followed by Walmart, Target and Starbucks gift cards.
WalletHub, which mostly focuses on financial consulting, created a ranking based on their last year’s data, which confirms the voucher retailer’s statistics in general terms. According to the website, the first place was shared by Amazon and Visa gift vouchers, followed by Walmart, and the 4th and 5th place equally shared by iTunes and American Express. WalletHub’s Top 10 also listed Target, Starbucks, Disney, Sephora and eBay.
How to promote gift card sales?
Integrate gift cards with your reward system. For example, give bonus points to the buyer of the gift card – that way they are motivated to come back as well.
Let your customers design the vouchers. Gift cards with a desired picture or custom design make them more personal as a present, and hold a greater emotional value to the receiver as well.
It’s worth remembering that gift cards are not only purchased as gifts – it is also an investment or savings method in a way for a lot of customers. This means a gift card for shares in some of the most successful companies. So recipients can start their investment journey.
Market that grows 10% per annum
According to the world’s largest retail business association, National Retail Federation’s (NRF) last year’s survey, 80% of people buy some kind of a gift voucher during holiday season. An NRF survey in 2015 stated that 58.8% of the respondents wanted this as a present – and it has been the most requested gift for the past 9 years.
Blackhawk Newton’s statistics states that 95% of American households has bought or received gift vouchers. Every year each household purchases 5 gift cards totalling $256 on average.
Reasons for giving gift cards (% of all the presents)
Source: Gift Card Marketing Guide, First Data
In another intriguing survey back in 2010, Consumer Insights listed the gift cards that get used the fastest. According to this, the gift vouchers that are put to use in less than a month are those for gas stations, grocery stores, and discount stores. Gift cards for cafés, restaurants, fast food places get used approximately 1-6 months after the card was received.
Based on the research company Gartner’s prognosis, 180 billion dollars will be spent on gift cards in 2018. However, Global Market Research estimates a formidable 10% growth per annum for the entire gift card market – and for this trend to continue at least until 2025. The unstoppable growth is caused by the substantial innovations that have seized the entire commerce sector. For instance, there is now a digital gift voucher available on the market, as well as e-cards and web platforms where unwanted gift vouchers can be cashed in on the secondary market.
Retail stores, spas, beauty salons, restaurants, cafés, stores selling furnishings, and many others, use gift cards to improve sales and attract new customers. This is no longer an advertising stunt that was once the privilege of bigger companies – today, this has become the growth strategy for every business.
How to create gift cards for your store using Erply?
Now that you have mapped out the gift voucher market, and you have the overview of its magical statistics, it is easy for you to start devising your own system. Implementing the card system becomes a hassle-free experience with Erply POS software that does most of the work for you.
Three easy steps for introduction
- Create a new product group “Gift Cards” in Erply POS.
- You have two options, either set a price for the card or leave it open – in case you want to do it during the sale.
- Assign the variable “Product is a gift card with a serial number” to the card. POS system will ask this during the sale. The serial number can be printed on the card or found on the magnetic card’s stripe, or it can be the unique combination of the date and time of the sale that gets manually added or written on the card.
Erply will take care of the rest
- The program automatically saves the card’s status, value and information into Erply system, under “Inventory – Gift Cards”.
- When the person who received the gift card comes to the store and pays with the voucher, the program deducts the necessary amount. If the bill amounts to less than the card’s value, there is available balance left that can be easily found and checked later on as well.
- POS also keeps an eye on the gift card’s validity.
Meanwhile, you are left with the joy of developing your own gift card system and designing beautiful vouchers. Erply POS makes sure that it all work smoothly.
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