Small businesses looking for an opportunity to unlock new revenue and encourage customer loyalty shouldn’t overlook their gift card strategy. Consumers consistently purchase gift cards to recognize a wide range of occasions, and even buy them to treat themselves, and their purchases are not slowing down. In 2023, 69% of consumers purchased the same amount or more in gift cards as they did the year prior, according to the most recent Annual Prepaid Consumer Insights Survey from Fiserv.
Gift card programs are cost-effective, require little effort to launch, and can provide significant benefits to small businesses.
The key benefits of a gift card program
- Convenience: Unlike food or clothing, gift cards are not taste specific, and they put the power of choice into the hands of the recipient. They save gift buyers time, with 76% of shoppers saying they prefer to buy gift cards rather than taking time to buy physical merchandise. And they are convenient for small businesses as well. It’s easy to set up gift cards for sale, whether it’s through an in-store display or online.
- Sales Driver: Not only do gift cards get more shoppers through the door, but they also drive sales, as 79% of consumers typically spend more than the gift card’s original value upon redeeming them. Bonus promotions that provide gift cards of smaller dollar amounts along with purchases of larger gift card amounts can also drive repeat business from gift card buyers.
- Versatility: There are endless ways that gift cards can be sold and packaged for promotion, and they never go out of style. Seasonal holidays provide year-round opportunities to market gift cards, with Mother’s Day and Father’s Day, graduations, and the winter holidays all among the top five occasions for buying gift cards, led only by birthdays.
Executing a successful gift card strategy
Small businesses looking to kickstart or update their own gift card programs can keep a few of these best practices in mind:
- Better in pairs: Small businesses can add legs to a gift card program by bundling gift cards with other items. Pair a bottle of wine with a gift card, box a gift card with a greeting card, or offer ready-made gift card sets. Gift cards can also be combined with an experience – for example, ceramics shops can offer a class experience with a gift card to spend in-store. This makes the gifting experience feel more complete for the giver and offers extra revenue opportunities for the business.
- Show them off: It’s not enough to just implement a gift card program; potential customers need to know it exists. In store promotion is a great place to start: 65% of buyers will purchase gift cards directly from the retailer where the gift card will be used, and 46% expect to find gift cards near checkout lanes. With that in mind, ensure gift cards are displayed in an expected, prominent place, whether that’s a host stand, a checkout counter, or near an entrance. Consider adding gift wrap to the display, too, for an even easier shopping experience.
- Go beyond the store: Small businesses can drive awareness of their gift card program beyond their physical locations with digital communications via advertising or social media channels. This approach can be especially effective if the business offers digital gift cards that can be linked for purchase directly within social media content.
- Reward the best buyers: An offer of a free item, service, or gift card with the purchase of a gift card of a certain amount can boost sales by rewarding the buyer. Offers could include a free coffee with the purchase of a $30 gift card, a $10 gift card with gift card purchases over $100, or free greeting cards or gift card boxes with gift card purchases of $50 or more. These rewards can encourage loyalty from a customer as they spend all year long.
- End-of-chain engagement: Sometimes a simple reminder at checkout is all it takes to increase gift card sales. Small businesses should encourage their staff to suggest gift cards to shoppers, especially those who may be leaving empty handed, and make sure staff know how to load, use, and refund gift cards so they can provide a seamless customer experience.
Managing a gift card program
After implementing a gift card program, it’s important to utilize technology solutions to manage it efficiently. Small businesses can streamline management of a gift card program by choosing solutions that allow them to:
- Activate and redeem physical or digital gift cards
- Handle refunds and rebates
- Track gift card sales across multiple locations
- Access comprehensive reporting
- Simplify billing and processing
Whether a small business is already capitalizing on a gift card program or considering adding one, there are many ways to improve current offers. Tiny changes can have big returns, particularly as customers continue to seek the convenience and flexibility gift cards provide. As small businesses plan for the future, a robust gift card program can help their business grow.
Sam Lituchy is head of Gift Solutions at Fiserv, overseeing the delivery of gift and loyalty program solutions to businesses, including those leveraging the company’s Clover point-of-sale platform.
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