No doubt about it, gift cards are a powerful revenue source – the gift card industry as a whole expected to reach $160 billion by the year 2018. If you are not yet issuing and accepting gift cards, you are missing out on a big opportunity to increase sales and grow your business. Then here are the main reasons why your business needs to start accepting offering gift cards.
1. Increase Traffic
Make no mistake about it, gift cards will bring in more customers to your business. For every one gift card that you sell, it results in at least two customers – the person who purchased the card and the recipient of the card, who may also bring in a friend.
Additionally, more than 10 percent of gift card recipients had never (or rarely) visited a merchant’s location before receiving a gift card.
This is definitely more powerful than “word-of-mouth” advertising since your most loyal customers are actually paying you money to gain new business.
2. Generate higer sales
Consumers shopping with gift cards are less price sensitive as they think of gift cards as free money or a discount; most spend more than the value of the card. In fact, two out of three consumers paying with a gift card will spend 38 percent more.
Consumers shopping with gift cards are less price sensitive
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3. Reduces Charge Backs and Stocking Cost
Processing returns can be both time consuming, and expensive, since this involves restocking inventory and determining how funds will be credited back to the customers. Since customers can select their merchandise you’re reducing the amount of returns and the high cost of managing them.
4. Gives you cash upfront.
Instead of waiting to make a sale, whenever a gift card is purchased or reloaded, that cash is yours until the card is redeemed. This upfront money can be used to handle payroll, inventory, or take care of other operating expenses. Also, depending on stated Laws, you may actually be able to keep those funds on cards that have not been redeemed.
5. Besides relationships.
If you offer a well-designed gift card program, such as one where gift cards can be reloadable,
you have the ability to gather contact information and track the purchasing behavior of your customers.
With access to these types of analytics you improve your marketing efforts, boost future sales, and build relationships by keeping in-touch with the customers who have purchased or used gift cards.