Selling gift cards can be a great investment for small business owners. The investment required to offer gift cards is small, and the payoff can be well worth it, benefiting not just your bottom line, but also your company’s position in the marketplace.
Keep Your Business Competitive
If you look around, you’ll notice that most of your competitors are probably offering gift cards. In 2003, 52 percent of large retailers sold gift cards, but that number jumped to 82 percent just two years later. Gift cards are no longer the territory of large retailers. So many small businesses have adopted them that it can be hard to find a store that doesn’t have gift cards available.
Gift cards are a popular purchase among consumers who don’t know what gift to get for someone. If your store doesn’t offer gift cards, then these consumers may choose to shop at a store that does — and they won’t have a hard time finding one. Offering gift cards keeps you competitive and helps you provide a topnotch customer experience.
Gift cards create a win-win situation for your company’s bottom line. Most recipients don’t spend the exact amount of the gift card, because doing so takes some serious planning and more math than people want to do while they’re shopping. Most of the time, the recipient spends more than the gift card is worth. The other alternative is that they leave unused funds on the card — funds you’ve already received. Either way, your business comes out ahead.
Reduce Refunds and Exchanges
No small business likes to handle refunds or exchanges. In both cases, you need to take back an item that is no longer completely new, meaning you may not be able to sell it for the same amount as before. That costs you money, and it also eats into your bottom line to have employees spend their time handling returns and restocking items. While the occasional return isn’t a big deal, exchanges and returns tend to happen en masse after the busy holiday shopping season and can be a big hassle for your customer service representatives.
When a customer purchases a gift card, the recipient can pick out what they want, making a return less likely.
When one of your customers gives a gift card to a friend, you gain a new customer. In essence, gift cards are a way for your existing customers to refer others to your business. Many of your gift card recipients may have never visited your business or even heard of you until receiving one of your gift cards. A gift card is the most powerful word of mouth your business can get, because it’s far more than a recommendation. After all, the purchaser spent money to recommend your business, and the recipient has to check out your business to cash in the gift. If you impress gift card recipients, they may end up becoming loyal customers.
Adding gift cards to your offerings has no major drawbacks, and their benefits make them a valuable tool for any company.