6 Business Benefits of Gift Cards
The holiday season is approaching, and business owners are preparing to maximize their profitability in the coming weeks. Gift-card retailing has become an increasingly important strategic tool in achieving this objective right across the retail and hospitality spectrum.
According to the National retail association, last year U.S. consumers spent nearly $27.5bn on gift cards. Additionally, the global gift card market continues to grow at a steady rate and is forecasted to double in value by 2024. This is great news for store owners, given that gift cards provide significant additional benefits to retailers at a time when they are most needed.
In terms of marketing, a successful gift-card strategy can be simple to execute with minimal cost and effort, and can continue to deliver long after the holiday season is over. Successful gift-card implementation by business owners can deliver significant and measurable benefits as follows:
An elementary but crucial benefit at a time of increased outlay for stock, bonuses, vacation cover and other expenses that can combine to stretch resources over the holiday season. Gift-card retailing provides an important fillip to ensure retailers mitigate risks and remain in the black over the holiday season.
A recent first data survey has shown that not only does the average redemption sale exceed the value of the gift card by an average of $23 dollars, but in many cases, the redemption is completed over two or more store visits, in order to fully deplete the gift-card.
The same first data survey tells us that customers who redeem gift vouchers are 11% more likely to buy premium or higher priced purchases than they normally would. Additionally, most gift voucher sellers gain the residual benefit of many cards that for one reason or another, are never redeemed against a purchase.
New customer acquisition
Gift vouchers can play an important role in a store’s customer acquisition strategy. The more gift cards that are sold, the greater the chance that the recipient is not a current customer, since many regular customers will buy gift cards for their friends and family. Gift card sales can deliver significant numbers of new customers, and begin the transition towards customer loyalty and customer advocacy.
Improved stock clearance
Since most gift cards are redeemed in the immediate post-holiday period, they enable vital stock reduction during the post-holiday period sales.
Once gift cards have been integrated into the product offering, there is minimal maintenance required, and they have an infinite shelf-life. They can be purchased year-round for birthdays, and offer a promotional opportunity for other holidays such as Mother’s Day and Valentine’s Day.
Gift cards allow retailers the opportunity to ensure that they maximize their share of wallet from existing customers while opening an avenue of new customer acquisition. From a branding perspective, strong bespoke packaging and card design offer a great platform to reinforce your brand to both parties involved in the exchange of gifts. The ritual of gift-giving is brimming with positive, endorphin-fuelled emotions and there are very few opportunities to connect with your customers in such a profound way.