Many card issuers like American Express, Visa, and MasterCard now offer prepaid gift cards, popularly known as loop cards. These cards allow the recipient to purchase goods and services from any retailer that accepts credit cards from the issuer. Closed loop cards which are only accepted by specific merchants are increasing in popularity. For small business owners, this shift in favor of closed loop cards serves as a major business opportunity. It is also an ideal opportunity to compete with other national brands and use a local presence to appeal to shoppers who want to engage in gift giving.
2. Increase average order sizes.
According to CreditCards.com, most gift card recipients spend almost 40 percent more than the face value of the card. Research also goes ahead to show that about 973 million dollars of gift card related revenue go unused despite regulations on gift card expiration dates. The strategic issuing of gift cards in denominations likely to attract gift givers depending on the occasion increased marketing program efficacy while simultaneously influencing the average order of gift card sales. Unlike other items sold by the brand, gift card sales do not result in refunds or exchanges post sale. This is a major win-win for small business owners as it results in profit maximization and reduces the likelihood of experiencing any lost sales, customer complaints, and chargebacks.
3. Increase the brand’s appeal.
Insite new customers to the brand who may not have otherwise shopped with you. Add on premiums like one would expect to find in traditional marketing campaigns to enhance customers perceptions on value are allowed on gift cards. For example offering a free 10 dollar gift card on the purchase of a gift card offers the equivalent of 10 percent off on any purchased item. Since gift cards can be offered physically or digitally they are easy to fulfill and allow the serving of customers regardless of physical location or how quickly they need to present the gift.
4. Align your brand with gifting occasions.
Most gift card sales take place during the festive season like Christmas. While birthdays trigger almost half of gift card sales and 20 percent of gift card sales being offered as “thank you” gifts. It is important for small business owners to structure their gift card sales in line with these occasions in order to reap big. It is also important to present your brand as a year round gifting destination.
5. Leverage your existing payment tools.
As technological advancements of using mobile payments and apps continue to take over, digital gift cards have become even more popular. Digital gift cards are very easy to incorporate into mobile payment tools that one may use to process online customer payments. This allows the issuing of gift cards without spending any money on printing costs and managing physical gift card programs. Digital gift cards allow customers to;
– Shop online or in stores.
– Track their gift card balances.
– Link their gift cards to preferred loyalty programs.
Gift cards impact the marketing strategy of any small business while allowing them to broaden their prospects, strengthen customer relations and enhance brand profitability. They also offer small businesses the chance to compete with other established national brands.
Featured Image: DepositPhotos/ fzsolt1234
