Top Tips For Offering Business Gift Cards
Business gift cards can reap positive rewards for your business. You may be looking into launching a gift card program for many reasons. This article is published in spring 2020 and perhaps you are exploring a gift card program because the Coronavirus COVID-19 pandemic has temporarily shut down your business and you are looking to generate cashflow and engage with your customers.
The good news is that there are many programs and options available for local business owners looking to offer gift cards. And there are many good reasons to launch a gift card program!
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When your small business launches a gift card program, it can reap many rewards.
Business Gift Cards Enhance Your Company’s Cash Flow
When a customer buys a gift card, they are giving you cash before you provide a service or product. This gives your business additional cash on hand that you wouldn’t otherwise have and gives you additional capital to invest in your products and services. After all, who doesn’t want to collect payment up front?!
Gift Cards Result in Spending Uplift
A study commissioned by FiServ found that “74% of customers regularly buy gift cards from small businesses.” Customers will even come to your business to spend just cents according to this FirstData survey. And several studies have shown that customers holding gift cards spend more than the average customer.
Gift Cards Make Your Product More “Giftable”
According to PaymentsJournal, 82% of those surveyed prefer “receiving a gift card or stored value card over other incentive options like discounts, checks or merchandise.” Depending on your product, customers may not think of it as able to be given as a gift unless you offer gift cards.
Gift Cards Encourage Customer Loyalty
Gift cards can function as a standalone loyalty program or can integrate into your existing loyalty program. For instance, you might offer a 5% bonus for any dollars loaded onto a gift card to incentivize their use and reward customers for their loyalty to your business. In addition, some gift card programs have features that can integrate into your POS or loyalty technology to provide users with rewards, the ability to order on an app, and other features.
Gift Cards Can Introduce Your Business to New Customers
When gift cards are given as gifts or won as part of fundraisers, they are a great marketing tool. The gift giver is introducing someone else to your business. They can attract new customers to your business that wouldn’t have otherwise stepped in the door. These customers may end up spending more than what is on the gift card and if they are pleased by the experience, they may return!
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There are several gift card options for your small business.
Call Your Point of Sale (POS) Vendor First
The first call you should make is probably to your POS Vendor. They may have an “off the shelf” gift card program as one of their features that you can roll out quickly, painless, and sometimes for free. Even if their program does have fees, you should see if you can get them to throw it in for free. Many POS vendors will offer their small business customers the option to roll out a physical gift card program that seamlessly integrates with the POS system and payment processing at checkout. They may also have features like branded cards or ability to integrates across your business locations.
Make Your Own Gift Cards
If your POS vendor does not offer a gift card feature or if you do not want to use it, you have other options. The cheapest option is to manufacture and print your own gift certificates on paper. One downside of this is that it’s less user friendly for you and for the customer. Gift certificates may tear or get lost more easily, they’re challenging to handle at checkout alongside your normal transactions of cash and credit card payments, and customers may get frustrated trying to keep track of the balance.
Use A Gift Card Vendor
Another option is a vendor that has a gift card platform Some may integrate into your existing POS and some may not. Many of them have enhanced features like the ability to plastic physical cards with a magnetic strip or barcode. These may be reloadable custom gift cards with your unique brand or logo. Some may offer just digital gift cards that are only sold online and can be used for ecommerce. Some gift card vendors will enable you to join up with other businesses, perhaps in your neighborhood, to offer a gift card that can be used at all of your storefronts. This option will probably be more expensive than using a gift card solution provided by your POS.
How to Make Your Gift Card Program a Success
Get your cards out there!
Make sure the gift cards are visible on your website and in your store. Create attractive displays and make sure customers are aware of the program. Train your employees to offer gift cards and point them out for customers browsing for themselves or for gifts.
Donate to Silent Auctions or Fundraisers
This is a great way to support your community and get your gift cards into the hands of customers who might otherwise not know about or visit your business. Donations are also sometimes tax deductible.
Offer a Discount or Incentive
Consider offering a bonus or incentive for buying a gift card. For instance, you might offer a free gift, a 5% balance bonus or a 10% discount for buying a gift card to incentivize purchases. Once a year, you might run a BOGO offer!
Start Using Gift Cards First Before Issuing Cash Refunds
Where possible, encourage customers to take a store credit in the form of a gift card in the place of a cash refund. This helps keep money in your business and keeps customers coming back! You might also offer a discount here, such as a 5% balance bonus, to provide a positive nudge to customers to make this choice.
Make Sure You Stay Apprised of Gift Card Laws
Gift Cards Must Not Expire for 5 Years
Under the Federal Credit CARD Act of 2009, the funds on gift cards and gift certificates have to stay available for 5 years after purchase. After 12 months, you are entitled to charge an inactivity monthly fee, but that may be received poorly by customers. States and local municipalities may have additional laws as well.
Below A Certain Balance, Customers Need To Be Able to Exchange For Cash
In CA, customers have to be able to redeem for cash if the balance is <$10.
The Balance On Gift Cards Can Be Considered Abandoned Under Certain Circumstances
Certain states will consider the balance abandoned after a certain amount of time. A full list of relevant state laws pertaining to gift cards can be found here.