COVID-19 and social distancing have disrupted life as we know it.
For your business, this means you’ve most likely decreased foot traffic or temporarily closed your doors. This will inevitably prevent you from generating expected and much-needed revenue to run your business. In times like these, it is crucial for your business to weather the slow-down and come out stronger on the other side.
Online gift cards are a great tool to help you do just that. Gift cards can help your business generate cash flows during unprecedented times and keep your business afloat.
Why do gift cards matter?
Gift cards are a tried and tested mechanism for growing your small business. They help build loyalty, increase cash flows, bring in new customers and increase overall revenue.
During the 2016 holiday season, 56% shoppers intended to purchase gift cards, according to the National Retail Federation (NRF) and Prosper Insights. According to the same research, shoppers were expected to purchase an average of 3 gift cards, with an average value of $46 USD. This research clearly shows that consumers have a keen interest in purchasing gift cards to give to others.
However, you may be thinking: the current climate is nothing like the holiday season, so why would anyone want to buy gift cards right now? While this might be true (as spending has decreased, businesses are temporarily closed and social distancing is in order), loyal customers will still be likely to support their favourite local business once things return to normal.
Now is one of the best times to launch a gift card program. Whether you are a restaurant owner, a massage therapist, a retail owner, a barber or a landscaper — gift cards can help your business surmount the economic slowdown being caused by COVID-19.
In this article, we’ll walk you through:
- How to start a gift card program
- Best practices for running a successful gift card program
- Promoting your gift card program
How to start a gift card program
There are many ways to set up gift cards programs. If you are a small to medium-sized business, using a gift card provider is typically the best option. Let’s go over these options a little more closely:
Using a gift card provider
Using a gift card provider is a quick and easy way to get a gift card program up-and-running. There are also many third party tools and solution providers that are available online. Popular examples include specialized applications (such as GiftUp!), payment processors and POS systems that have created their own gift card solutions (such as Square) and e-commerce platforms that have built-in gift card solutions (such as Shopify).
Gift carding built into your payment processor and POS: Square
Square Gift Cards is a gift card provider from the payment processor and POS solutions company. It offers a variety of configurations, including both e-gift cards and physical cards.
E-gift cards are free with a processing fee of 2.9%, plus 30 cents per transaction. This is a great solution, as it seamlessly integrates with Square’s POS and CRM features. The downside, however, is that you are already using Square to make use of the gift carding functionality. To learn more about Square Gift Cards, click here.
Third party gift card issuer: GiftUp!
GiftUp! is a free digital gift card platform that provides both digital gift card solutions. There is no monthly cost to use the service; however, they do charge 3.94% of each gift card sold. GiftUp! provides other features, such as embedding a purchase widget on any website, emails for purchaser and recipient and a dashboard for the merchant to track and manage gift cards. To read more about Gift Up! click here.
Gift carding built into your e-commerce platform: Shopify
Shopify’s gift card feature is now available on all plans to help small businesses deal with COVID-19. Two great things about Shopify gift cards is that they are built directly into the e-commerce platform and easy to set up. To read more about Shopify gift card support, click here.
To read more about other gift card providers, click here.
Best Practices For Your Gift Card Program
Designing your own gift card program includes everything from deciding which amounts you sell, how you sell, how you promote and how you close the loop on sold gift cards.
A great way to incentivize customers to purchase gift cards is with discounts or offers. This encourages customers to purchase a gift card and heightens the likelihood that you’ll see a higher amount of cards sold. Some ways to incentivize gift card sales include:
- Selling the gift cards at a discount (eg. a gift card with a $100 value is sold for $90)
- Create ‘buy one get one’ deals (eg. a $100 gift card comes bundled with a bonus free $10 gift card)
- Create post purchase offers if purchases are made with a gift card (eg. anything purchased with a gift card has a 15% discount)
- Give away free products with the purchase of a gift card
- Sell value bundles with gift cards that would otherwise cost more if bought separately
You’ll then want to decide which amounts you sell your gift cards in, as well as how you sell them. Things to consider include: whether you have preset amounts that customers can buy, if customers can choose custom amounts or if you will be selling bundles and services with your gift cards. Whatever you choose, you’ll want to make sure your program is easy to implement with your buyers.
Here are some ways to structure gift card amounts out:
- Pre-Set Amounts: You have pre-set amounts that you sell gift cards
- Custom Amounts: You allow the customer to choose the gift card amount
- Products or Services: The gift card can only be redeemed for a particular product or service
- Bundles: The gift card can be redeemed for a bundle of products or services
When it comes to closing the loop on your gift cards, you’ll need to define where, when and how a customer can redeem a card. Ensuring that you are able to communicate instructions with the customer is also a key factor in rolling out your gift card program as smoothly as possible.
Some other considerations you’ll want to address before setting up a gift card program include: reviewing the legal notes around gift carding in your area, as well as addressing any accounting considerations around unearned revenue with your account.
Promoting your gift card program
Promoting your gift cards is just as important as setting up a program and giving your customers the option to purchase them. You can do this via your company’s social media accounts (Facebook, Instagram, Twitter, etc.), your official website, email or text campaigns and even your brick-and-mortar location. Be sure to create incentives for customers to buy the gift cards and communicate them to your customers clearly.
There are also various strategies you can use to sell your gift cards more effectively. This includes selling them on your website, selling them as part of bundles with other products and services or giving them out for returns and exchanges instead of cash.
After you’ve sold the gift card, you should send buyers scheduled reminders to redeem the gift card once your business is open again. Studies show that customers are likely to spend more than their gift card value when they come to redeem the card. Reminding recipients to redeem gift cards is also a great way to attract new business and it can be cheaper than other methods of customer acquisition.
Thanks for reading!
We hope you enjoyed reading our guide for how to use gift cards to keep your cash flowing during this downtime. Using gift cards to maintain business continuity is a great win-win solution for both your business and your customers. It can help you to keep money coming in to pay your bills, all while offering discounts to your customers and securing them with currency to use towards your products or services.
Got any more questions about gift cards or any of our marketing solutions? To learn more about how we can help you during this time, contact us at OneLocal today.