Gift Cards - Benefits and Value for SMBs
Jul 24, 2014
If you own a business and don't already offer gift cards, it's time to rethink things. Regardless of what you sell, chances are that plenty of people would be interested in buying gift cards from your company. Without making them available, you're missing out on an amazing array of benefits and, most likely, are falling behind the competition. The bottom line is that there's no good reason not to offer gift cards. Not convinced? After considering a few basic statistics and learning about some of the top benefits, you’ll likely feel differently.
Gift Cards are Booming
A quick glance at gift card statistics that were compiled by GiftCardGranny.com is quite revealing, to say the least. Did you know, for instance, that more than two-thirds of U.S. consumers have purchased at least one gift card? With that in mind, you can expect to attract a decent amount of attention by offering them to your customers. If you already offer paper gift certificates, you'll be interested to note that businesses that switched from paper certificates to plastic gift cards saw a 50-percent to 100-percent increase in gift card revenues.
How Do People Use Gift Cards?
Sure, gift cards are popular. What does that mean for your business, though? For starters, the average gift card user spends an extra 20 percent above and beyond the value of the gift card he's using. You can expect to not only earn revenues through the sale of gift cards, then, but also through the resulting "overspending" that occurs.
Consider this as well: 61 percent of gift card users spend more than the value of their cards. Of those consumers, 75 percent spend 60 percent more than the value of their cards. Put simply, most people come into the store with a gift card that's worth a certain amount, find something - or multiple somethings - that total up to a lot more and go ahead and make purchases anyway.
On the flip side, 40 percent of gift card users don't use the full value of their cards. This isn't a bad thing for a business owner like you. After all, you don't have to reimburse people for the unused portions of their gift cards, so you're not losing anything at all.
The Top Benefits of Offering Gift Cards
Even after considering all of those compelling statistics, you may still be on the fence about offering gift cards. After all, many business owners feel somewhat intimidated by the idea of getting their own gift cards and aren't sure the return on their investments will be worth it in the long run. With that being said, however, gift cards bring many incredible advantages to the table for businesses of all sizes and scopes. A few of the most exciting examples include:
- Increased Sales - By offering gift cards, you offer yet another way for people to buy things from your business. You already know how important it is to give people options, and gift cards are perfect for this. Another business might offer similar products to yours, but someone who has a gift card for your store is overwhelmingly more likely to buy what they need from you.
- Enhanced Loyalty - This point is touched upon in the previous example, but there's no harm in driving it home here: Gift cards help to establish, maintain and enhance customer loyalty. Knowing that your business offers gift cards may help convince some customers to stick with it, and having a gift card from your business almost guarantees that more business is coming your way in the future.
- New Customers - Once you start offering gift cards, odds are that many regular customers will then buy cards for friends' and relatives' birthdays and other occasions. Someone who may have never shopped with you before or who never knew of your store's existence could be brought into the loop with a gift card.
- Improved Brand Awareness - By using custom designed gift cards, you can increase brand awareness. Furthermore, people often carry around gift cards for long periods of time. Every time they look at your card, they'll be reminded of your company. Talk about free, easy, effective advertising!
- Earn Interest - From the time a gift card is purchased until the time it is used, you are essentially earning interest. This is a great way to improve your bottom line.
- Exceptional Security - It's somewhat understandable to be concerned about security when it comes to paper gift certificates. In the case of gift cards, though, you can't beat the security. They have to be activated in the store to work, for instance, so it's not like someone can snatch them, grab them and then use them later. Unlike paper certificates, there's no easy way to forge a gift card, either.
- Benefit from "Slippage" - In the context of a gift card, "slippage" refers to the unused portion of the balance. As noted previously, around 40 percent of gift card recipients never use the full value of their cards. Because you don't have to reimburse the recipient for the unused portion, you basically make better profits on whatever they ultimately use the card for. The unused amounts may not be substantial, but they certainly add up a lot over time.
Gift Cards: Easy to Use and a Boon to Any Business
Getting started with gift cards couldn't be easier, so there's no good reason not to start offering them. The upfront costs of getting started are minimal as well. Once everything is up and running, you will immediately start enjoying all of the benefits that have been highlighted above as well as many others. Chances are that you react favorably when seeing that a store you like offers gift cards, and your customers are likely to feel the same way if you starting offering them. Don't wait another minute; start offering gift cards today!
businessstrategy, emv, giftcards