Generate Sales & New Customers with Gift Cards

It’s no secret that gift cards are a great way to “bring in new customers, grow merchant loyalty and generate sales.” However, there are two other benefits that may extend the value to your business:

• Data-gathering capabilities.
• Minimizing the cost of conducting business.

One town is taking it a step further:

“A group of business owners in [Carmel] California is beginning to create a citywide gift card program that would, if all goes according to plan, increase their marketing channels and offset charges for credit card processing.”

The benefits:

• Reduce the number of credit card transactions.
• Eliminate monthly gift card subscription fees.
• Data collection, provideing marketable data on tourists and consumers.
• Promotion and rewards, providing businesses with new channels for exposure.

There is of course, always the chance that gift cards will go unused – or become a moment of serendipity for bearers of these cards who discover them tucked away months after they receive them.

While gift card use is up – it is now a $26 billion dollar business – there are other ways it can turn to your advantage. While you are solving customer needs by supplying them with a flexible way to give a gift, statistics suggest that “…someone will use a $50 gift card to make a $36 purchase, leaving $14 on the card… the retailer banks the difference.”

According to the editor-in-Chief of JCK, the jewelry industry’s leading trade publication, many consumers apply their gift cards towards larger purchases, spending more than the amount on the gift card.

Perhaps you have offered paper gift certificates for years, and don’t see the value in investing in a new system. However, as with so much of marketing:

“It's a great example of how just a slight twist on things can result in a big swing in the way people buy your product.”

James Surowiecki of the New Yorker describes gift cards as a “socially tolerable version” of giving cash, and illustrates how it is one of the few ways in which the value of the money spent on a gift, equals the perceived value that the receiver feels about it.

But then there are some interesting statistics that illustrate the potential of gift cards:

• More than two-thirds of consumers (75.5%) will buy a gift card this season.
• More than one-half of consumers (52.3%) want to receive a gift card as a present.
• The average consumer will spend (15.6%) of their holiday budget on gift cards.