The Perfect Gift for EveryoneIf you exchanged gifts this past holiday season, there is a good chance that you received at least one gift card. Gift cards have exploded in popularity in the last few years. The National Retail Federation, an industry trade group, estimated $17.3 billion would be spent on gift cards this holiday season while other industry reports put gift-card sales for the season as high as $20 billion. Typically they are offered by big retail companies such as Best Buy, Home Depot, and Starbucks. However, more and more small to medium sized businesses are starting to realize the benefits of offering gift cards.
One of the greatest benefits of selling gift cards is the potential to gain new customers. Essentially, you are letting your customers market directly for you. If Customer A gives a card to Recipient B, there is a really good chance that Recipient B is going to also become a customer. If that person has a good experience with your company, they may even become the best kind of customer – a repeat one!
Even if Recipient B never redeems his gift card, there is still an advantage for the merchant. When Customer A buys the gift card for Recipient B, the merchant receives the money from that transaction right away. If Recipient B never redeems his or her card, the merchant still has the cash from that transaction. This can happen when a recipient forgets that they have the card or loses it.
If Recipient B does redeem the card, it is likely that he or she will want something that costs more than the value of the gift card which can lead to a larger sale than if Customer A were to buy a single product for Recipient B. This pattern leads to increased revenue.
If the merchant offers physical gift cards that are customized with their logo, it can be a great branding tool. If you see the merchant’s logo every time you open your wallet, that merchant’s brand identity increases.
The type of gift cards that you offer may depend on the type of retailer that you are. If you are purely an online retailer, there are minimal benefits to offering physical gift cards if you already offer e-gift certificates. E-gift certificates can be delivered and redeemed electronically which means they are easy to fulfill and manage. If you sell both online and in brick and mortar shops, physical gift cards can make more sense. However, it can be difficult to find a shopping cart system which allows the redemption of physical gift cards in an online store. In an ideal world, both your point of sale and shopping cart system will enable customers to redeem the physical gift cards.
The bottom line is that gift cards are here to stay. They empower the end recipient by providing the utmost flexibility, are an easy purchase for the gift giver, and have many benefits from a merchant perspective. They create a win-win-win situation.
If your company is considering offering physical gift cards, Chase Paymentech offers FlexCache Gift Cards which are redeemable on merchant’s sites that use Nexternal’s ecommerce platform.
