Gift cards are big business: the industry estimated to be worth $160 billion this year, according to Gift Card Granny, a gift card exchange site.
While offering gift cards isn't a new idea for retailers, it’s an increasingly important tool to use to grow your retail business. Gift cards are widely given and appreciated; 74% of consumers say they like receiving gift cards as a holiday gift, according to a 2017 holiday shopping survey by Socratic Technologies and Vantiv. Holiday shoppers also planned to purchase an average of four last year, according to the National Retail Federation.
Whether you already have a gift card program or are thinking about adding the option, here are seven ways they can boost your bottom line.
7 Ways to Use Gift Cards to Grow Your Retail Sales
1. They Increase Your Revenue
Gift card sales bring in money when they’re purchased, but they also offer an opportunity for additional revenue when they’re redeemed. The average card user will spend an additional $38 on top of the card's pre-loaded amount, according to a survey by First Data.
Shoppers with gift cards are also more likely to purchase some of your higher-priced items since they see the gift card as being “free money” to spend. And here’s another fun revenue fact: 72% of people who go to a store to purchase a gift card for someone else end up spending money at the on themselves, according to Retail Touchpoints.
2. They Introduce You to New Customers
Gift cards can expose your business to people who may not have otherwise shopped in your store. Customers who already know and love your business will purchase gift cards for friends, helping to grow your customer base.
You can also give gift cards when you’re asked to make a donation to a local fundraising event. By providing a gift card in lieu of a product or service, you open the door for the recipient to use their prize and perhaps spend extra money in the process. Providing gift cards to fundraisers also boosts your brand recognition as well as creates a reputation of being a business owner who supports their community.
3. They Drive People To Your Website
Digital gift cards are becoming more popular, with an estimated value of $15 billion according to Gift Card Granny. The giver can conveniently purchase a gift card through your website, saving a trip to the store — perfect for last-minute gift purchases. The card is emailed to the recipient, eliminating the need for paper or plastic gift cards or certificates.
Nearly 40% of consumers prefer digital gift cards that are scanned from their phone over a physical card, according to research by Gift Card Granny.
4. They Encourage Loyalty and Repeat Visits
Several merchants offer gift card promotions, especially around the holidays, and they can be a great way to increase loyalty with your current customers. For example, offer a free $10 gift card to customers who purchase $100 in gift cards.
This type of offer might encourage a purchaser to spend more money, driving up the average amount of your gift card sale. You can make the bonus gift cards valid after the holidays and for a short period of time, boosting slower sales during the first quarter of a new year.
5. They Increase After-Holiday Sales
Retailers love the spike in sales that happens during the fourth quarter, but that can make January and February feel slow. Gift cards, however, often bring recipients through your doors during the lull as they spend their present after the holiday rush. That can help increase your first-quarter revenue.
6. They Help You Compete with Major Retailers
Giving a gift card can feel impersonal, but when it’s from a giver’s favorite store, it seems like more thought went into the selection. That means smaller retailers that offer gift cards can compete with or even beat out large stores.
Be sure to let your current customer base know that you offer gift cards, so you’re top of mind when they’re in the market for a special gift. Display your gift cards near the cash register. Use signage around the store that promotes your gift card options to shoppers as they browse. And include gift card offers in your email marketing and social media campaigns.
7. They Can Be Used to Manage Returns, Rebates, and Rewards
If a customer wants to return an item to your store but doesn’t have a receipt, offering a gift card is a great way to keep their dollars in your business. This can also be an option if a customer wants to return an item after your regular grace period. By providing the customer with an option, you’re more likely to keep them satisfied and coming back to spend the amount later.
Retailers can also use gift cards as a reward for employees and customers. Offer your best salesperson a gift card as a reward for their hard work, or give your VIP customers a gift card as a thank you. You can also incorporate gift cards into your loyalty program as a reward for multiple purchases with your brand.
Getting Your Own Gift Cards
To move forward with using gift cards to drive retail revenues, you’ll need to acquire the cards you want to use and create a strategy that makes sense for your unique retail business.
You can sell branded plastic, digital, or paper versions of gift cards in your store — and several services make it easy. The quickest place to look is with your current credit card processor; many offer a gift card program that integrates with your current point-of-sale equipment. For example, Shopify POS allows merchants to create digital or paper gift cards and email them to customers or print them on the spot. You can also use a tool like Giftly, which is software that allows you to create, sell, and market digital cards.
If you want to sell physical gift cards, one option is Duracard, a company that creates custom plastic gift cards that include a magnetic stripe or barcode used to load a dollar value. Duracard has designers that can create a card style for the merchant, or you can upload your own art.
Another provider is Roller, an app that allows you to sell and redeem digital and physical gift cards directly from your website. Roller offers fun gift card options that customers can personalize with photos or even videos that are sent electronically to the recipient.
Moving Forward With Gift Cards
Now that you understand how important gift card sales can be to your business, it’s time to add them to your inventory. Nearly 93% of American consumers have given or received a gift card, according to Gift Card Granny. Selling gift cards is an easy way to meet your shoppers’ demands and offer them full service. Not only are they a popular sale; they’re the gift that keeps on giving for retailers.