The global gift card market size is estimated to grow at a CAGR of 13% in the forecast period of 2020-2023. With sophisticated technologies popping up, offering gift cards to customers is becoming easier. The features present in some of the gift card tools incorporate user psychology and automation features that promise to work wonders for your sales registry.
Also, who doesn’t love gift cards? Gift cards can be given at any time. It doesn’t have to be seasonal, which makes it even more appealing.
Retailers offer gift cards to customers, therefore encouraging them to shop more at their store. That’s a win-win for the business. Unlike a coupon where you offer a discount, gift cards bring the customer to your store, online or offline, again and again until the amount is fully redeemed. With each interaction, your customer forges a relationship with you. Well, we assume that you treat your customers well to build a relationship.
Here are 9 reasons why you should use gift cards for your business:
1. Increases brand awareness:
Your friends might have recommended a brand for you, but you were always skeptical about it. Tada! A gift card for $100 lands on your lap and opens themselves to new customers who might have never tried them otherwise or never known the brand either.
You are also reinforcing the love that a customer has for your brand by letting them prepay a gift card to give it to their loved ones. With your brand identity and other aspects visible clearly on the gift card, you get more exposure and brand awareness.
2. Reduces the risk of fraud:
Gift cards make the customer feel safe about their money because the balance is updated automatically when they make a purchase. More importantly, the balance can be verified at the store. Imagine the ignominy of finding that the gift card which you thought had money in it shows zero balance. Thankfully, that scenario will never happen.
3. Safe and convenient:
Lugging around a piece of paper, however light it may be, is certainly not someone’s idea of worry-free shopping. Saving a physical gift-card can be cumbersome for the average shopper. It is still better than paper certificates, although both are prone to loss, theft, or duplication. With the kind of technology that is available today, you can easily get your gift card redeemed with the help of a simple QR code at the point of sale in a store. Everything gets over in under a minute. Talk about convenience.
4. Cash upfront:
Nothing like having money in the bank, isn’t it? Your customers are paying in advance when they buy a gift card from you.
Here’s a set of stats that has the word “profit” surrounding it:
- 10% to 19% of gift card balances remain unredeemed.
- 6% of gift cards are never used.
- All of this adds up to more than $1 trillion in the past 10 years.
It gets even better for businesses.
When someone purchases a gift card, it isn’t considered as revenue until it is redeemed by the customer. This is called accrual accounting. Gift cards have a period of time during which it will expire; in some cases, it won’t expire at all. Companies designate this money as a liability, and after a point, these liabilities become breakage income.
This means that the company is getting money for free. FREE!
Walmart made a whopping $1.9 billion in breakage income in 2019. Other retailers have made billions of dollars for free just by selling gift cards since most of the money isn’t redeemed.
5. Build customer loyalty:
Making your customers stay with you is more profitable than getting existing customers. It is easier to sell premium offerings to existing customers if they are satisfied with you. Easier to upsell and cross-sell too. Gift cards are a great way to increase loyalty as it helps in building strong relationships with the customer.
While providing gift cards to your customers, provide a bonus or an extra coupon if they reach a certain spending limit, they will surely redeem the gift card. And come for more.
6. Increase your sales:
The best thing about gift cards is that customers keep coming back to your store to redeem the full value of the card. Sometimes, they even end up paying from their pocket after exhausting the limit. Coupons take away the value of the product; there is no opportunity to create a relationship. It is a one-time connection, but gift cards have the opposite effect.
When a customer keeps coming to the store many times to redeem the gift card, they are tempted to add more items that they would have noticed when they visited your store the last time. Make the gift card reusable by offering to reload it, and regular customers will be more likely to take upon it.
7. Extra sales around the holidays:
The holiday season is full of people who are under pressure to buy meaningful gifts for friends and family. There are many last-minute shoppers who end up buying gift cards since it is the easiest thing to do while still coming across as thoughtful. Offer both physical and online gift cards for the convenience of your customers. People who cannot afford to rush to a store will buy the gift card online, while those who are in your store will buy it as an afterthought when all their efforts to find a gift fails.
8. Gives you insightful data:
Gift cards allow you to collect important data that helps you understand your target market, buying patterns, average purchase rate, and so on. Since it is linked to your email ID, you can communicate further with your customers. Pass them more offers based on your understanding of their usage patterns so far. Collect customer feedback to understand the likes and dislikes of your customers.
9. Easy returns:
Processing returns can be difficult if you aren’t familiar with it. Also, it is time-consuming, wastes a lot of resources, involves restocking inventory, and deciding how to credit back the customer. The customer knows that it will take a lot of time; therefore, the customer decides to charge cashback.
But with the help of gift cards, you can offer to top up the gift card instead of indulging in a long-drawn refund process that takes up the time of the customer and the business.
Is there a gift card software that can increase your bottom line?
Of course. There are different types of gift cards based on the size of the company and the industry you are in. 99minds is a promotions and loyalty program that helps businesses create loyal customers.
99minds’ gift card solution integrates with your website, email, social media, banking systems, and more. Our objective is to help businesses build their brand, while strengthening the relationship with your customers. Our tool can create dynamic promotional coupons that are targeted to the interests of your users
If you are looking for ways to increase your sales, no matter where you sell, either online or offline, gift cards are the best option in front of you. Scale your sales with the help of our gift card software that can help your business to achieve incredible traction.
Want to learn how gift cards can help your business? Get on a call with the good folks at 99minds who will help you with a strategy to increase your profits.