3 Proven Ways to Drive Gift Card Sales and Increase Your Profit
You’re only as strong as your last sale. That’s why attracting and retaining customers is the top priority for any small business.
Implementing a gift card program does just that by killing two birds with one stone—it increases sales and drives customer loyalty.
Does your small business offer customer gift cards? If not, then it should.
According to Gartner, gift cards are projected to generate $160 billion in sales in 2018.
A 2017 holiday shopping survey by the National Retail Federation of almost 7,000 consumers found that gift cards topped consumer wish lists at 61 percent, while 59 percent were planning to give gift cards.
“Gift cards continue to be the preferred gift to give because of the convenience to give a gift card as a gift and not have to overthink it,” says Ana Serafin Smith, senior director of media relations at the National Retail Federation.
As gift cards continue to grow in popularity, the biggest beneficiary might very well be small business owners. This is because the value of the card translates into not just guaranteed sales for the business, but also increased sales.
“Overspending the amount of a gift card is the new normal,” according to a study by First Data. In 2016, 75 percent of gift card recipients spent nearly $28 more than the value of the card, up from 69 percent the previous year.
When you consider the number of gift cards you can potentially sell and multiply that by $28, that’s a lot of money to be made.
If you don’t already have a gift card program, you could very well be missing out on an easy avenue to attract customers and boost sales per transaction.
In a competitive landscape, small retailers need to produce, market and promote gift cards in order to attain up to 20 percent more sales, beyond the value of a gift card.
Here are the ways you can better market your gift cards:
Create a Campaign to Tell Customers All About Your Cards
In order for your customers to know about your gift cards, you’ve got to make your card visible and spread the word across all marketing channels. Macy’s, for example, does a great job at displaying its gift cards left, right and center in stores, gift card kiosks, on its website and its app.
On its stand-alone gift card page, Macy’s provides different ways for customers to purchase and package gift cards (Source)
HOW TO PROMOTE IN STORE: Make it easy for customers to find your gift cards in store. It could be something as simple as putting up signs that say “Ask about our gift card promo” or “Give the perfect gift card,” either at your checkout counter or around high-traffic areas of your store.
HOW TO PROMOTE ONLINE: As busy customers increasingly look for ways to send instant gifts electronically, offering e-gift cards has become a prerequisite for any retailer that wants a slice of that growing pie.
With e-gift cards, customers don’t even have to come into your store to buy your card; they can simply go to your website and make a purchase. Your job is to make it easy for them.
Like Ginger Bay salon, you can feature a “gift cards” tab on the navigation bar or homepage of your website so shoppers know where to go to make a quick and easy purchase. The Missouri-based salon leaves no stone unturned by offering its customers different purchasing options (e.g., gift certificates that can be printed/sent via email or traditional gift cards).
Ginger Bay prominently features gift cards on its navigational bar and homepage (Source)
Here are other ways to further drive e-gift card sales on your site:
Create pop-up boxes or banners: These can be especially effective right before special seasons such as Christmas or Mother’s Day when your customers are looking for gift card options.
Leverage your email marketing list: Send out a gift card-focused promotion leading up to any big holidays.
Promote your cards on social media: Channels such as Facebook, Twitter, Instagram and Pinterest serve as excellent platforms to get more visibility for your gift cards. They can help you expand your audience to potential customers that aren’t on your immediate radar.
Consider targeted advertising: Social media sites such as Facebook allow you to directly target advertisements to specific locations or demographics.
Offer Buy-One-Get-One-Free Promotions
Driving sales through gift cards requires more than just telling customers about it. You have to provide a compelling reason through promotions.
One way you can do that is by offering a free gift card when your customer purchases a gift card of a certain value. “Rewarding the giver creates the opportunity to bring two gift card shoppers back to your store,” says Shelley Hunter of Giftcards.com.
If it turns out that the customer bought the card just to get a freebie, Hunter says they’re still more likely to end up spending more than the value on the card.
HOW TO PROMOTE IN STORE: It’s hard for customers to resist a value, as Katy Beck, Ginger Bay’s director of sales and marketing, found. By simply offering a $20 voucher toward any service or product of choice with a purchase of a $100 gift card, the spa was able to exponentially increase its gift card sales.
Beck advises small businesses to test the waters before diving headfirst. “Make sure to state on the offer that the gift card they get with purchase cannot be used on the same day, otherwise you may run into the problem of not being able to sustain your offer,” she cautions.
HOW TO PROMOTE ONLINE: One Canadian pizza chain went above and beyond in its buy-one-get-one-free promotion, and reaped the rewards through viral word-of-mouth:
Case Story: How Una Pizza Generated Over $115,000 in Gift Card Sales
Una Pizza’s promotion for Canada’s 150th birthday (Source)
The promotion: To celebrate Canada’s 150th birthday, customers who purchased a $150 e-gift card received a free second e-gift card valued at $150. There was no limit to how many gift cards could be purchased and no expiry date.
How Una Pizza promoted it online: In the lead-up to Canada Day, Una Pizza teased its customers with the promise of a huge flash sale on social media and its website.
When the 24-hour campaign launched at midnight on July 1, the announcement was shared across social media channels, creating a viral effect reaching its customer base and beyond.
The result: Over 750 e-gift cards were sold, totaling over $115,000 in sales.
Sell Specialized Gift Cards for Special Occasions
A 2017 annual holiday spending survey conducted by Prosper Insights & Analytics predicted an average consumer spend of over $967. As extraordinary as that sounds, that’s a 3.4 percent increase from the previous year.
The survey also found that for the eleventh year in a row, gift cards remained the most sought-after gift during the holidays.
That’s why small retailers would be remiss to ignore the opportunity to boost sales through holiday-themed and occasion-specific gift cards.
Take Grotto Pizza, a family casual dining restaurant from Delaware. With most of its locations on the beach, the restaurant wanted to find a way to boost visits during winter months and create a promotional campaign to increase visits during the holiday season.
To incentivize additional spending during the holidays, Grotto offered a bonus 20 percent discount to the value of any gift card purchased in store and online. On top of that, customers also got an extra $10 free with every purchase of a $50 gift card.
Grotto Pizza’s 2017 holiday season gift card promotion (Source)
The offer starts two weeks before Black Friday and extends through New Year’s Eve. Redemption of the gift card kicks off January until March, covering its entire off-peak season.
“The gift program works; we don’t just see a one-time spike from an offer,” says Vinnie DiNatale, Grotto’s director of marketing. The promotion increased gift card sales by 20 percent in its first holiday season, and 30 percent the following holiday season.
Beyond the growth in gift card sales, Grotto has also been able to strengthen loyalty, with customers continually thanking the restaurant for extending the 20 percent reward during the holidays.
“We wanted to do something nice for our guests, and the slower winter months are the perfect time to do that,” he says. “We get some of our best results from our loyalty customers. It’s an offer they now look forward to each year as a benefit of the loyalty program.”
HOW TO PROMOTE IN STORE: Depending on the products you’re selling, you’d want to prepare for certain holidays or occasions. For example, if you’re running a women’s clothing store, gift cards for Mother’s Day would be a perfect fit. Selling fragrances and candles? You may want to consider preparing Christmas gift cards.
HOW TO PROMOTE ONLINE: During the mad frenzy of the holiday season, the “convenience factor” of simply purchasing a gift card cannot be overstated.
One of the key benefits of e-gift cards is that they can be purchased at the last minute (did you forget that Christmas present for your baby nephew?) and emailed to the recipient. And for gift givers who don’t want to deal with holiday crowds or last-minute shopping, buying a gift card online is a the perfect solution.
Takeaways and Next Steps
Gift cards provide a powerful way for small businesses to compete: If you’re not on the gift card bandwagon, it’s time to cash in. Gift cards are not just for the national chains. By implementing a series of sustained marketing strategies, gift cards have demonstrated that they can be profitable for small businesses too.
Don’t rest on your laurels: The important takeaway here is to remember to promote your gift cards year-round. Smaller businesses frequently make the mistake of “simply putting a gift card display on the counter—or worse—putting a stack of gift cards underneath the register,” says Shelley Hunter of GiftCards.com.
“When in doubt, I suggest following the example set by large department stores in making sure your gift card is visible and available in as many places as possible.”
Want to start your gift card program today?: If you don’t already have a POS system in place, you should start with that. Our short questionnaire will give us a better idea of what your business needs are so we can provide you with a shortlist of the best software for your business.
If you do have a POS system, be sure to speak to your vendor about how they can implement gift cards through your software in order to make your company gift card-ready, setting you up for increased profits and greater customer loyalty.