Gift cards have been a great way to bump up your business bottom line for years. Small Business Trends contacted Ray Clopton, CEO of LocalGiftCards.com. We wanted the goods on what SMBs need to know about this important business tool.
Clopton started with a brief history.
“Gift cards used to be a plastic card with a magnetic stripe like a credit card. They were loaded with a dollar value and given as a gift,” he writes. “These were redeemed later at a specific store or restaurant.”
As business owners might already know, all that changed with the Internet.
“Today, gift cards can also be digital – either sent by email or text message. That makes them an even more convenient gift option. Especially amid a socially-distant holiday season.”
He goes on to explain why they are important by saying give cards help a business generate revenue upfront. And small businesses get additional sales when these cards are redeemed.
In the past, businesses pointed to the amount of money left unredeemed as another benefit. Clopton says even that’s changed with new laws.
“ Recent legislation has made it easier for consumers to redeem gift cards for longer periods of time,” he says. “That’s increased consumer trust in the product.”
Still not sure about getting involved with gift cards? Consider another real benefit is customers almost always spend more than the original value.
“Plus, people often use gift cards to introduce friends and family to brands that they themselves love. So it’s also a great way to gain new customers,” Clopton writes.
Three Main Kinds
There are three main kinds to choose from. Plastic can be displayed in brick and mortar stores. E-gift cards are sold online and often sent by email. Then there’s the ones sold online and sent via text.
The versions sold online can be stored digitally so there are more secure than the physical cards which can be lost.
Clopton explains how their ROI goes beyond incremental sales.
“Gift cards give businesses revenue through different channels – online marketplaces, Facebook pages, company websites and more. They are also great for special promotions like: buy $100 in gift cards, get a $10 bonus e-gift card.”
After Hours Shoppers
These digital versions are also perfect for last-minute and after hours shoppers.
There’s a checklist when small businesses are choosing a provider. Start by listing the benefits you’d like to offer your target market.
- Look for a provider that offers options you can add to your website easily. There are still plastic only companies that need complicated e-commerce setups.
- A good gift card provider should also have plug-and-play options easily integrated with social media.
- You should be allowed to sell gift cards in omnichannel environments, both online and in local drugstores and supermarkets too.
Security is another must have.
“The key is to select providers that protects against fraud and lets you sell through different channels,” Clopton says. Small businesses need to choose their gift card program provider carefully. Many processors don’t offer online digital gift card sales or anti-fraud features.”
He has a cautionary tale for business owners looking to cash in on local sales.
“These days, many consumers know that shopping locally is best for the community. But when they go to buy gift cards online, they find that the option isn’t available.”
That can push shoppers away to buying gift cards from large chain stores or restaurants.
Finally, there are some traditional businesses like coffee shops, retailers and restaurants that do well with gift cards. However, all businesses can get something from them and their promotional power.
“We’ve seen dentists, landscapers, and handyman services use gift cards to run successful promotions and gain new customers,” Clopton says.