Since their introduction to the world in 1996, gift cards have essentially become a part of everyday life. You see them at grocery stores, pharmacies, department stores, online, the list goes on. And these gift card “malls,” as they’ve come to be known, are filled with almost every brand imaginable; from the largest international brands to local favorites.
But what makes these tiny, plastic (or, in many cases, digital) cards so valuable for so many businesses, regardless of their size? Well, with global gift card sales projected to hit $1.9 billion by 2027, now is the time to find out. Here are 7 of the biggest reasons your business should be taking advantage of the benefits of a gift card program.
1. Gift Cards Increase Your Sales
The first — and probably most important — benefit of gift cards is their ability to boost your cash flow. This happens for a variety of reasons, including the simple fact that gift cards introduce a new sales channel to your business that is able to earn revenue now for a sale that has not actually been redeemed yet. In essence, you get money now, but don’t have to worry about supplying a product until later. This creates added short-term revenue that can be incredibly helpful, especially for small businesses.
Secondly, many customers actually spend more than what the gift card is worth. In fact, 65% of consumers will spend 38% more than the actual value of the gift card itself. They see a gift card not just as a way of purchasing something for free, but as a means of getting an item they want at a lower price. So in cases where a gift card is sold for $100, the recipient of the card often times spends around $138, putting another $38 in your pocket.
And lastly, the gift card alone likely won’t be the only source of additional revenue you’ll notice. A study by Retail Touchpoints has discovered that 72% of shoppers who visit a store to purchase a gift card for someone else also end up spending some money on themselves.
2. Gift Cards Promote Your Business
Think of your gift cards as a free, traveling advertisement. Anyone who has one effectively becomes a brand ambassador. And each time they pull out their wallet, gift card, or digital code, not only are they reminded of your brand, but so is everyone around them.
Many brands have also found success in pairing their gift cards with their rewards programs. This allows them to strengthen their connections with their customers by giving them free, branded currency as a ‘thank you’ for their loyalty.
3. Gift Cards Reach New Customers
Gift cards are a way for your loyal customers to expose your brand to their friends and family who may never have shopped with you before. This can bring large numbers of new customers to your business and — if they enjoy their experience with you — increase your number of returning customers.
One thing about this process that can act as a huge benefit for you is context. When the card is given as a gift, there is a positive connotation with it. As such, this good feeling can extend to your brand, as well. For a short time, your business will be directly associated with this gift for the customer, which can help you build a strong relationship with them.
4. Gift Cards Are Secure
One important — though perhaps less exciting — aspect of gift cards is security. Traditional gift certificates have proven to be incredibly susceptible to loss, theft, and damage. However, digital and physical gift card, on the other hand, utilize more modern protections in order to keep the customers’ information and balances in their own hands.
5. Gift Cards Communicate Your Brand Experience
Think about your storefront. As soon as someone walks through your doors, the design, layout, and decor of your store are directly communicating your brand experience. And your gift cards can and should act in the exact same way. With one simple glance at a gift card or even its packaging, you are able to effectively relay information about who you are and what customers can expect from you. This extends even to digital gift cards, where the process of sending, receiving, and using gift cards can be used to create positive feelings towards your brand. In turn, creating a stronger base of future customers.
6. Gift Cards Target Holiday Shopping
The busiest and most profitable time of year for essentially any business is the holiday season. So it’s only natural for brands to search for any and every conceivable way to maximize this period, and gift cards have continued to show that they are one of the best. In fact, in a recent study, 84% of U.S. shoppers indicated they were likely to purchase at least one gift card during the holiday season. And still another study showed that gift cards ranked 3rd in terms of the most-wanted holiday gifts.
7. Gift Cards Appeal to Younger Customers
Targeting a younger demographic is always important, though can often be tricky. But did you know that Millenials and Gen Xers are the two largest demographics when it comes to buying gift cards? For some perspective, Millennials alone account for 37% of gift card purchases, while Gen X makes up another 28%, making gift cards an extremely viable option for bringing in a younger clientele.
Maximize Your Gift Card Program with Prizeout
In short, gift cards can help you increase sales, promote your brand, expand your customer base, and more. But with Prizeout, we can help you take that all of that one step further. We’re an online marketplace, where brands offer bonuses to bring in customers.
This bold new form of advertising is not only effective in terms of results, but also cost. Brands on our platform don’t pay us a single cent for anything except the sales they make, which cuts out the sunk costs of empty clicks and impressions that come with traditional advertising. Reach out today to learn more about how Prizeout can help you grow your business.