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Headline article image How to create gift cards - and grow sales

How to create gift cards - and grow sales

Gift cards are popular during the holiday season (and all year round). Here’s how your small business can set up a gift card system.

Gift cards. They’re good for customers – and they’re great for retailers and brands, too.

Not only that, but gift cards remain extremely popular. For the past two years, Afterpay’s Festive Forecast report has found that gift cards are among the most popular holiday gift ideas in the US - and around the world.

The benefits to consumers are obvious: gift cards offer flexibility, allowing recipients to choose what they want, as well as convenience (making them perfect for last-minute gifting).

But there are myriad benefits for retailers, too.

Gift cards help with cashflow by providing revenue upfront, and they can increase average order value. Data from US merchant service fiserv found that using a gift card increases a person’s overall spend with a retailer by an average of US$23.41. That’s because recipients tend to spend above the value of the gift card rather than leave unspent money on the card.

And of course, if recipients do underspend (or forget to redeem their gift cards) retailers retain that incremental revenue.

Why creating gift cards is good for business

  • Gift cards are popular, especially with customers buying last-minute gifts

  • Gift cards can drive incremental revenue as consumers tend to overspend when upon redemption

  • Offering gift cards helps with cash flow

  • Gift cards can boost brand awareness among new customers

  • If customers underspend or fail to redeem the vouchers, retailers retain the revenue

“Gift cards are a win-win for retailers and consumers,” says Ingrid Maynard, founder of The Sales Dr. “For retailers, it gives them an immediate transaction without somebody having to commit to a product purchase. For consumers, it puts money directly into their back pockets and gives them the flexibility to spend money however they choose, whenever they want and on items that they deem are important to them.”

And the best thing? There’s still time to create a gift card before the festive season starts.

Here’s how to create a gift card service that will help your business succeed.

Let your point of sales (POS) system do the heavy lifting

Setting up a gift card for your store – whether online or brick and mortar – is easily done via most point of sales (POS) systems.

“A lot of point-of-sales systems have the option for gift cards built-in now and offer online and in-store gift cards, which makes it really easy for retailers,” Maynard says.

Platforms like Square make creating online and physical gift cards ultra-easy, and even offer the opportunity to personalize and brand gift cards.

The other major benefit of creating a gift card via your POS system, Maynard says, is the potential customer growth.

“Point of sale systems capture information on both the person purchasing the gift card and the recipient. That creates an opportunity to develop long-term relationships with two people instead of one and work to deepen them both over time.”

"A lot of POS systems have the option for gift cards built-in now... which makes it really easy for retailers."

- Ingrid Maynard, The Sales Dr.

Consider the gift card customer journey

Before rolling out a gift card program, Maynard suggests that retailers put themselves in their customers’ shoes and consider how gift cards will contribute to the overall customer experience.

That means ensuring that the purchasing and redeeming processes are simple, that there are multiple price points, and that the design feels unique and special.

“From a purchaser and recipient perspective, you don’t want a gift card to look like a last-minute present or an afterthought.

"Customers are becoming more discerning about where they spend their money, so retailers must make sure that they’re offering a curated experience. Physically, they should be an extension of your brand and encapsulate the experience of shopping with you,” says Maynard.

To capitalize on the unique experience, some major retailers like Cotton On and ASOS offer multiple gift card designs to allow givers to choose a card that best speaks to the recipient. They also offer physical gift cards or solely e-cards, allowing a broader demographic and shopping preferences to be captured. (Older consumers, for example, tend to favor physical cards.)

Understand the legalities

Before introducing a gift card system, it’s important to comply with your country or region’s regulations around vouchers and gift cards. This usually means setting clear rules for consumers regarding expiry dates, lost cards or exchanges for cash. For example, in the United States, the law states that gift cards cannot expire for a minimum of five years from the issue date.

Being clear about the terms of your gift card is also important from a customer service perspective, says Maynard.

“You have to be really clear about the rules with expiry dates. If you’re not and if the process becomes confusing consumers can quickly feel as if they’re being ripped off and won’t shop with.

Think long-term

Driving more sales in the lead-up to Christmas is one great reason to set up a gift card program. However, it pays to think strategically too, as gift cards can also play a key role in long-term customer acquisition strategies.

A 2017 study of 2000 US consumers showed that 44 percent of consumers visited a new store after receiving a gift card to spend there. In other words, gift cards are a great way to reach new customers via existing ones.

“It shouldn’t be just about how many transactions you can get through the till,” Maynard says. “If retailers are smart, they will ask how many customers can we start a relationship with to build lifetime value with that person. To do that, you need to think about the opportunity that exists with gift cards.”

To scale your gift card even further, consider joining a gift card marketplace like Prezzee, which allows recipients to swap their gift card for any brand within its marketplace (including yours). Gift card marketplaces like Prezzee also generally offer additional amplification opportunities.

Promote your gift card options to consumers

Once you’ve launched gift cards, it’s important to spread the word. This includes letting customers know you now offer gift cards via social media channels, online and in-store.

Consider how to promote your new gift card offering, whether that means promoting it in your customer newsletter, creating in-store signs, including a link on your home page or even offering gift cards in exchange for returned products. 

“Promoting with a landing message and through the live chat pop-ups is also a great way to get the word out, and when in-store, make sure team members are educated to promote the benefits of a gift card and really drive that message of it being a great option to empower people to buy what they want for themselves,” Maynard says. “Ultimately, gift cards are a really easy solution that offers massive long-term gains.”


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