Gift cards are a primary option for gifts. More times than not people love receiving gift cards over the actual gifts. First Data’s report titled: 2018 Prepaid Consumer Insights Study [download]. In the report they asked 2,000 consumers about gift cards. They found over 50% of their annual gifting budget goes toward gift cards. Another 40% of consumers surveyed preferring gift cards over traditional gifts. That’s powerful stuff. Gift cards can be an effective tool for capturing more revenue. It also help in attracting new customers, and building loyalty. To get the most value out of gift cards, you need a solid strategy.
Here are some tips on executing a successful gifts cards program to help you grow your business:
1. Get in the holiday shopping game − even if you’re not a retailer
Many non-retail sectors see increases in sales volume during the holidays. Holiday shopping is still a retailer’s game. During the 2018 holiday shopping season, many factors are set to lift U.S. holiday sales. Some reports as much as 4.8 percent versus 2017. That’s up to $720.89 billion dollars, according to the National Retail Federation.
For small retailers, gift cards are a potential Goliath-slayer. They can help them compete for holiday shopping dollars. It’s predicted that U.S. gift card sales alone will reach $340 billion in 2018. Gift cards also put non-retail businesses in the gift-giving mix. If you are a restaurant or service-based small business, you can capture holiday dollars by offering gift cards. To do this, you’ll first need to create physical or digital gift cards. If you’re a Clover customer, you can use Clover Gift Cards and easily set up either or both types of gift cards, complete with custom branding.
Once created you need to be intentional about marketing them to customers. A step that is crucial for success. Send a series of emails to your customer list announcing the availability of gift cards. Recommend them as a convenient and personal holiday gift-giving option. Publish updates about your program on your social media accounts is a must. Post signage inside your business. Include signage in your restaurant. Optimal locations like counter, host stations, bar and/or dining room tables, register area, waiting areas, and on your window. And train your staff to offer gift cards to patrons while they’re checking out or paying their bill. Up the ante with a prize to the highest-referring employees.
2. Have an in-store upselling strategy for gift card redemptions
You’ve sold gift cards and have the upfront revenue to show for it. It’s a great start, but the promise of gift cards for adding sales lift to your business doesn’t end there.
That’s because of the redemption process. When the recipient comes to your business to buy, it offers your business an opportunity. An opprtunity to earn even more revenue and attract more customers. First Data’s Study shows, on average, that consumers spend $59 more than the original value of their gift card. That’s what makes it so great when they redeem it.
Roll out the red carpet when customers redeem their gift cards. This will further endear them to your business. Retail stores might keep nicely-wrapped accessories behind the counter. This will help add to the new customers’ buy. This strategy can also work for appointment-based businesses. Consider offering sample items that customers can use to extend the life of the service. If you’re a restaurant, you can add a complimentary appetizers, desserts, or drink samples. These are all things that help improve the gift redemption experience.
3. Intentionally promote repeat visits
Gift cards are a great opportunity to encourage repeat visits among new customers. That increases the lifetime value of the customer. Making the ROI larger on the investment for your gift card program. Don’t leave this up to chance. Here are specific actions to convert gift card redeemers into loyal customers.
Leverage gift cards to build loyalty. First Data’s 2018 Prepaid Consumer Insights Study showed that 61 percent of consumers surveyed said they prefer to receive a gift card as a reward for loyalty over a coupon or bonus.
Since they are using a gift card to buy, you’re in a great position to add them to your loyalty program upon redemption. For example, if you offer $5 dollars in store cash for every $100 spent, and your new customer has used their $100 gift card, then add a $5 credit to the same card as a “sign up bonus” for your loyalty program. The nice thing about this tactic is that while it will feel like an additional bonus to the recipient, who didn’t pay for the card in the first place, it will be business as usual for you.
Sign them up for communications. Your staff can also encourage gift card users to sign up to receive texts, emails, and/or mail. You can then offer an exclusive deal or bonus points to shoppers who have enrolled for the first time. (If they’re already on your mailing list as a gift card user, you can set limitations, so certain deals do not apply).
There are two primary benefits to this tactic. 1) You’ll capture their contact information. Which offers you an opportunity to reach them with new promotions over time. 2) You will force them to sign up with you before offering additional perks. This increases the likelihood that any additional deal will promote higher lifetime value for that customer. Increasing the return on investment for your business.
4. Track your performance, adjust and repeat
Our customers who use a Clover have most of the data they need from the dashboard. It’s a way to see how these tips and tactics work for your actual business, and to understand what adjustments you’ll need to make in order to improve the program over time. If you are using a traditional Credit Card terminal you will have to create a tracking system to review. Remember: While the holidays can offer a nice boost in gift card activity, gift cards are a great marketing and loyalty tool that you can implement year ‘round.
Here are two gift card program numbers that you should track for starters:
Redemption percentage. What percentage of gift cards sold are being redeemed? Again, while gift card sales represent upfront revenue for your business, redemption is where the real action is, offering an opportunity for you to collect additional revenue. Remember: People usually spend more than the original value of their gift card.
Average ticket size for all customers vs. gift card customers. This number is a great metric for gauging how much spending differs between these two customer types. We have to talk about lifetime value again here: If spending is relatively low during the initial visit, but that new customer comes back and spends with your business again, that could mean in terms of lifetime value, your gift card program is well worth the investment.
For more helpful insights about how consumers are using gift cards, and specific ways that gift cards can help grow your business, download Clover’s full infographic, “The Power of the Gift Card.” Not using a Clover Point of Sale you can contact your Card Payment Solutions USA Agent for the best way to take advantage of a gift card program.