Starting a Gift Card Program

Starting a Gift Card Gift

In the aftermath of this year’s Christmas, you may have noticed that Gift Cards were high on the giving and receiving lists. With a wife and four daughters on our Christmas gift lists, my son and I are almost aghast when it comes to finding something that isn’t as thoughtless as cash but gives these discerning divas flexibility to choose what they want.

And we are not only ones caught in the giving pickle. In fact this Christmas season in the United States Gift-card sales are expected to reach a record $27.8 billion this year, because for the fifth straight year they’re the No. 1 item on holiday wish lists, according to the National Retail Federation. It is also estimated that the total year sales for gift cards could be as high as 88 billion dollars.

“Not only are gift cards the most-requested gift item but more people are actually listening to their loved ones and buying them gift cards,” said Kathy Grannis, NRF’s media-relations director.

Some 31% of consumers said in an NRF poll in mid-December that they had bought gift cards — and that was before the last-minute Christmas Eve gift-card shopping frenzy. That was higher than last year’s 29% and 2009’s 27% who wrapped gift cards. This is a very important week for retailers not only because they want to clear their shelves but to promote their new merchandise,” said NRF’s Grannis.

So that being said, and the shimmer of Christmas lights are just about faded for the holiday season, let’s talk about gifts cards for your business; Why have them, How to start up a program and how to maximize sales.

Why start a Gift card program

Gift cards not only bring new customers into your shop, but they also help to retain your existing ones. Think of it as a reward program for your own business. Your existing customers come in and if you are doing a good job on product presentation, customer service and atmosphere you are hopefully keeping them.

Offering gifts cards are a way for these customers, not only to become a marketing executive for your business, but to pay for the privilege. As they take these coins, cards or other paraphernalia you are offering for your gifting concept, they are more than likely giving them to someone who has never tasted your frozen desserts or food before. What better way is there to spread the good word about your business and make money at the same time? For those who are regular customers receiving these cards, it retains their loyalty to your place and your product.

Total Research and Marketing Corp came up with these facts to bolster the argument;

  • Consumer spending is on average 6% higher for companies that offer gift and loyalty card programs
  • Gift and Loyalty cards can increase average purchases and visit frequency by over 25%
  • Programs are more effective when the gift and loyalty function can be accomplished on one card.
  • Companies that track purchase behaviors for marketing purposes are more successful in selling gift and loyalty cards.

I know we are just getting the taste of ham, turkey and plum pudding out of our systems, but Christmas isn’t the only time where gift cards are prevalent. Birthdays are the number 1 event for gift card purchases, followed close by family events such as Mothers Day, Fathers Day, graduations and other party events.

How to Start a Program

There are many different ways to commence a gift card program depending on your finances and what type of equipment, registers or POS systems processing your sales. The choices range from simple printed paper cards to fully scanned and traceable analytics which track your customers every spending habit.

Paper Cards

Mr Cs CardsThe simplest way to commence a program is to print up some gifts cards on special stock cardboard with your name and logo, a place for a record number and a denomination. This is how we started doing our gift card program very early on. It’s not as flashy as a swipe card with your logo on it, but it was a short term answer to many requests from our customers for something they can give to loved ones.

Tracking gifts card sales are probably the most important function of the program, not only for your inventory, but also for tax and sales reasons. When we first implemented our paper card program, we had a space on the card to record the “card number” and bought a rotating number stamp to imprint on each card. Each click of the stamp rotated the number in ascending order. Then we simply kept a excel spreadsheet with each card number, when they were purchased and the dollar amount with a column for when the card would be eventually redeemed. Even though this was an inexpensive way to get into the gifting process, I was honestly surprised as to how many customers both bought and redeemed our gift cards.

Admittedly, paper cards and certificates are easier to counterfeit – and although you may not think that your local criminal masterminds are targeting your cards and certificates as their next big heist, most teens can manipulate a computer and printer set up better than most of us put together.

Electronic Cards

Electronic swipe card companies claim switching from paper certificates to plastic cards can result in 200% growth in related sales because they are more visible and widely publicized everywhere. Admittedly, this year before Christmas, everywhere you looked for check outs or other gift ideas, there, standing proudly, was a display with 100’s of plastic electronic gift cards from a multitude of different shops and businesses. Plastic gift cards have become the norm for retail gifting these days.

Custom cards are always available in single color and 4 colors layouts. Having a multi-colored logo on the front of your card is always more attractive to buyers. A simple business card holder with your gift cards located near the register is a great impulse buy for grannies and grandpa’s as well as mums and dads. teachers, coaches – let’s face it – everyone.

Most companies have a minimum purchase to get underway, usually anywhere between 100 and 250, but remember, in nearly all cases this is a re-loadable card that can be re-used by either the customer or you, as the business owner. The beauty of these electronic card programs is that the merchant company you partner with for your POS or register systems provides the tracking and reporting. Most provide detailed monthly statements and real time reports available on the merchant’s websites with a log-in ID and password.

For the most part, if you already have a merchant company that handles your online banking through the register, their sales department will handle your gift or loyalty card inquiry. For as little as around $100, companies can send you a “Starter” pack , which, for example, may come with 100 cards, card holders and envelopes, point of sale posters/stickers, table tents and enrollment forms.

Coins

Staring a Gift Card Gift 2I had come across gift coins before in other businesses; however when we purchased our store in St Louis Missouri, the ice cream shop that was in our building before us did a great job of promoting the sales of customized gift coins. They sold them in $1 dollar denominations and anything over $5 came with a small velvet jewelry bags. These coins looks great to the receiver – much more inventive than a paper or plastic card. Obviously they are harder to track, and there is a little more to the set up cost and to  establishing an inventory of them.

Custom coin companies can charge around $250 per side to create a die for each and charge per coin based on volume. You can pay anywhere from .50c to .75c per coin and the minimum is usually about 1000. As you can see, there is an expense to the coin side of the coin, but the visual nature of a bag of shiny gift coins gives your business a competitive edge when it comes to the gifting process.

Gift Card Rules

Of course anything as simple as selling gift cards or coins to your customers always requires some form of government regulation and in many cases there will be some rules and regulations put in place to not only protect your customers, but also yourself as a business owner.
Remember, that there are always a percentage of customers who, for some reason will never redeem the value on the card. This may be due to expiry dates, dormancy or just sheer forgetfulness. Rulings by government legislature can counter this by extending expiration dates or mandating the issuing of replacement cards.

The US Credit Card Act states that the use-by dates and any associated fees must be listed on the card, and requires issuers to apply a 5 year expiry by law. If the card is reloaded, then the 5 year term renews at the time of reloading. Be sure that you and your customers are aware of the limitations and regulations of use before launching your program. Info can be found at your local, state or federal budget or finance offices.

Promotion of Gift Cards

Do you know who the chocolates and snack food is for, that is put out right in front of the register at the service/gas station? It’s for me – and every other impulse buyer in the world, and I am in good company.

As a definition, Impulse buying is when a consumer or customer makes a purchase without giving the purchase price any thought. That being the case, as I have mentioned, having your gift cards located in a holder or presented close to the register is the best way of promoting your program. Table tents and other calls to action at the table or around the shop will also help in sales.

Some of the best promotion of your program however, can be done outside your store. Taking a handful of cards with a minimal amount loaded on them (perhaps $2.50) and taking them to local community hubs such as schools, sporting facilities or churches can kick start a program within that organization. Offering a reward or an achievement program with a re-loadable card may cost you $2.50 to start, but could literally net you hundreds of dollars in future sales – per card!!

But don’t just take my word for it – walk down to your supermarket checkout aisles and see how many companies are offering this service and getting a slice of the retail pie. Even though you have committed to a New Year’s Resolution to avoid it, I would suggest that this slice of pie that you can’t afford to turn down.

Don’t forget to log on to www.theicecreambloke.com for regular ice cream videos and more.

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