The holiday season is the time to open your purse strings for loved ones, isn’t it? What you decide to gift someone can actually be a stressor. Gifts require a lot of thought put into them. It has to be affordable for the one buying it. Why not reduce the stress your customers face during the all-important holiday season? Yes, we are talking about gift cards. The good thing is that gift cards aren’t a seasonal fad. It can be used throughout the year and has the same effect.
Physical vs. digital gift card:
Physical and digital gift cards are available, and both come with a variety of benefits and features. Digital gift cards do not exist in the physical form and come with a unique code that can be used when shopping. Physical gift cards are popular (it also reminds you of a time that has gone by) because it is like a souvenir for their recipients. Which gift card do you want to give? You can offer both gift cards based on your business requirements or gift card goals.
Let’s look at why gift cards are crucial for growing retail businesses:
- Increases brand awareness:
Offering gift cards to customers is one of the best ways to increase brand awareness. Customers who love your products will naturally share their experiences with friends and family. Gift cards can be an important factor in helping you gain word-of-mouth marketing.
- Build deeper relationships:
Gift cards are an easy ticket to have a deep and long-lasting relationship with your customers. When a customer leaves after buying a gift card, they are likely to revisit the place, at least to extinguish their balance in it. You can also ‘gift’ gift cards for customers who spend a fixed amount on your business.
It can also be used to settle disputes. How’s that? Imagine there is a disgruntled customer who is peeved at a situation caused because of carelessness on your part. You can appease their anger by offering them a gift card for the grief caused. They are sure to return to your store, and you can offer them a much better experience this time.
- Acts as an extra sales channel:
It can be considered as one more avenue for businesses to earn revenue. Customers who walk in to buy a specific product can be goaded to purchase gift cards for their loved ones. You can easily persuade customers to buy gift cards for others, especially during the holiday season.
- Acquire new customers:
Email marketing, social media channels, and all the latest ‘shiny objects’ in marketing are good at bringing in new customers. Still, gift cards are your trusted foot soldiers. They can consistently get you new customers beckoning without any pomp or show.
Whenever someone presents a gift card to their loved ones, they will walk into your store or visit your website to purchase from you. The likelihood of them being new customers is extremely high. They will spend on you, and the opportunity to provide them a fantastic experience gives you a chance to get a lifetime customer.
- Retains customers:
Not only do gift cards help acquire customers, but they are also great in helping you retain your existing customers. Gift cards act as your go-to solution when providing credits. Store credits mean the customer will come back to your store to use the gift card. By doing so, you can ensure that none of the returns result in a loss of sales. You get to keep the money in your store by offering gift cards for returns. It also gives you one more opportunity to impress your customers. According to the Holiday 2020 Gift Card Gauge, 81% of customers are interested in receiving gift cards in the form of store credits.
- You can personalize them:
Many ask, “What is this hullabaloo about personalization?” Imagine being given a card from your favorite with your name emblazoned on it. That’s wonderful, isn’t it? Customers would jump at the prospect of being able to give a gift card that has their loved one’s name on it. Personalization is all about treating your customers with a little more love.
When you use gift card software like 99minds, you can personalize it to the hilt. Add your brand elements. If you want to release holiday-themed gift cards, that’s possible too. The main aim is to provide a special experience for your customers who intend to shop with you. Go above and beyond and allow your customers to add personal notes or pictures to the gift cards.
- Customers spend over the value:
What are the odds of a purchase coming out to the exact amount on the gift card? Seldom. Most gift card recipients spend more than the value on the gift card. If they underspend it, they are most likely to come back. It is a win-win for the retailer either way.
Several studies confirm that customers who buy with gift cards spend more. Here’s an interesting statistic from First Data’s 2018 Prepaid Consumer Insights Study. The study suggests that consumers spend $59 more than the original value of their gift card. This is an increase from a $21 increase just a year ago.
- They pay full price:
Customers who shop with gift cards are more likely to pay full price for the products. When someone buys via cash, they will be hesitant to shell out a lot. Since gift cards are often prepaid, the hesitancy to bargain drops. When customers pay the total price of an item, it increases the profit for the retailer.
The economics of unredeemed gift cards:
There is another reason retail businesses should invest in creating gift cards for their brand. More than $45.7 billion in value was the balance of unredeemed gift cards between 2005 and 2015. Yes, you absolutely read that right. That’s almost $3 billion every year.
Yes, unused gift card money is sent back to the retailer or bank.
Well, 6% of gift cards are never used. Let’s say you sold $1,00,0000 worth of gift cards for a year. That’s $60,000 you get back after the card expires. Do you get the math behind it? Yes, it is easy math. But can you wrap your head around the fact that you are literally getting free monies!
The global gift card market is set to hit $1.9 billion by 2027. With no decrease in the fascination for gift cards, it would be a travesty for retailers not to invest in them. Retailers need to implement a gift card strategy to reap its innumerable benefits. If you are a retailer, we hope this article helped give you clarity on adding gift cards to your business strategy. Gift cards are a chameleon of sorts. They can act as a sales partner or can be used as a marketing tool.
If you want to add gift cards to your retail business, do not worry about how or where to start it. The team at 99minds would be more than happy to get things started for you.