Why accept gift cards?
The short answer is, because if you’re not, you are effectively now throwing away as much as 20% or more of your potential business! If you are a retail merchant or restaurant there are some serious and important things you need to know about gift and reward card acceptance.
First of all gift or stored value cards boast your store traffic. They get more people in the door, and keep people coming back longer. If you are unfamiliar with stored value cards here is how they work. Your gift card merchant supplies you with cards and usually displays envelopes. You sell (or give away if you prefer) gift cards in whatever denomination you want. Let’s say a customer wants a $50 gift card, you simply collect the money from the customer run, the card through your credit card machine and put $50 on it. The card can then be redeemed at your store anytime for that amount. Similarly a reward card puts “points” into an account each time it is run through during a purchase. Suppose you offer 1 point per $1. A $100 purchase results in a 100 points on the card which the customer can redeem on future purchases at the value you determine.
Here at Total Merchant Services we recently had a restaurant merchant simply mail out a thousand or so $5 gift cards to everyone within a 5 mile radius of the restaurant. The result? Within a week a 25% increase in customers and after the promo an ongoing increase of nearly 10%. And considering that the cost of the campaign consisted primarily of the redeemed gift cards, which are part of a larger purchase, the campaign paid for itself notwithstanding the increase in traffic.
This is a great example of how a gift card program can become a rewarding advertising campaign, but if we dig a little deeper we can find some other more subtle benefits. Let me give you an actual personal example to illustrate. My wife recently got a $50 gift card to a local restaurant in a neighboring downtown area. We went there to give it a try and use the gift card, however the bill only came to $42.50. So we used that up but kept the card, so guess what? You got it! We went back again for another dinner and spent what was left on the gift card plus the balance of the ticket. So for the restaurant it was a win/win. They sold the card for $50, they got nearly $90 of business back from that card and since the food and service were excellent, they gained a new customer!
Another benefit of gift cards, or their first cousin reward cards is it forms customer loyalty. If someone has a gift or reward card in their wallet, the store becomes a destination for that customer not an impulse. Once a consumer frequents an establishment two or more times a habit begins to form. Psychologists could give you a more detailed explanation but the end result is, you have created repeat visits and loyalty through your gift or reward card campaign.
Aside from the increase in business that you will receive, there is often a wind-fall profit associated with a gift card. It works like this. Someone buys a gift card from you and gives it to a friend or relative, but for whatever reason the card is never redeemed. Maybe it’s lost or forgotten about , but the bottom line is unredeemed gift cards are a 100% pure windfall profit for you!
In conclusion when you consider your advertising strategy, before you commit all you resources to radio, TV, brochure or newspaper ads, consider a much more effective, targeted method of advertising with immediate and permanent results – gift and reward cards!
Eric Anderson
Regional Sales Manager
Total Merchant Services
sales@accept-credit-cards.com