No matter what business type of retail business you have, it’s a great idea to consider having a gift card program – both egift cards and plastic gift cards.
With a wide range of solutions available, gift cards are a powerful way for businesses to grow their sales. In 2014, $124 billion will be loaded on gift cards in the US, a five percent increase year over year. Although growth in this sector is expected to slow, there is immense opportunity in egift cards that will offset that slower growth.
In addition, notable figures from TowerGroup’s research that reflect this growth include open network branded cards, retailer gift cards, restaurants and miscellaneous. Furthermore, open network branded cards increased by $2 billion to $45 billion over 2013-2014. Retailer card volume also saw additional two billion dollar growth year over year for a $41 billion total. Restaurants saw no growth at $19 billion and the miscellaneous segment grew by 1$ billion to $13 billion during this period.
Gift cards are both popular and convenient for customers and “retailers can count on consumers to spend more money on gift cards than their actual face value”. While customers enjoy the convenience, businesses can earn more by having this option available.
While increasing your sales there are several other benefits that make gift cards profitable.
Gift cards allow for smaller businesses to compete with big business. When it comes to gift giving, consumers consider gift cards. For example, although your customer may prefer your coffee shop, if you don’t have the option, it’s likely they will choose a bigger brand that has a well-established program. Don’t miss this opportunity!
Customers are less sensitive to pricing when they have gift cards. A study conducted by First Data, reported that 72% of gift card shoppers spent more than the original gift card value when making purchases. With this in mind, consider offering your customers free gift cards with a small value. It’s likely that they will overspend, increasing your revenue in the long term.
Gift Cards bring in new business. According to the same study by First Data 11% of gift card receivers never or rarely visited the location of the merchant who sold the gift card. Remember that free gift card you gave away? Maybe that card increased your customer retention or maybe that re-gifted it to someone new, visiting your store for his or her first time.
In addition to the mentioned above, cards create a connection between your customers and your store and can give your business a better image or a sense of “modernity”.
Gift cards are also very customizable, easy to set up and there are various options to choose from that make these programs affordable (profitable).
Interested in learning more about gift cards? Give us a call.