| With the holiday season quickly approaching it may be | | | | As a result, people spend more. Someone with a $50 |
| time for you to consider how a gift and loyalty card | | | | restaurant card will usually indulge in a dinner for two, |
| program will benefit your business | | | | spending $120. Another shopper in a retail clothing |
| Gift and loyalty cards can provide a powerful way for | | | | store with $15 left on his or her card will splurge on an |
| smaller companies to compete.It is estimated that | | | | item that is $15 more than they would otherwise be |
| combined gift card sales will reach $100 billion in 2010. | | | | willing to spend. |
| The fact is, what you get out of a gift and loyalty | | | | A person who has a FREE $5 gift card is more likely |
| program will depend on the effort and commitment | | | | to visit that retailer instead of another store. What's |
| you invest. | | | | more, they will probably use the gift card to buy |
| Gift and loyalty cards can be a powerful way to grow | | | | something for a friend or colleague. |
| sales and retain customers. Today, even smaller | | | | Strategies to make your gift & loyalty programs |
| companies can take advantage of these benefits, but | | | | successful |
| they must be ready to implement them creatively and | | | | Gift and loyalty card strategies can get quite |
| aggressively. | | | | sophisticated. However, you don't want to rely only on |
| In this guide we will help you understand the costs, | | | | a display at the cash register to promote your |
| profitability and psychology of gift and loyalty card | | | | program, this approach is used by large companies |
| programs. We will also outline some creative, | | | | that invest in costly marketing strategies to drive |
| real-world examples where smaller companies have | | | | people to their locations. |
| used gift and loyalty cards to compete against larger | | | | Suggestions for small companies include adding cards |
| chain stores. | | | | to mailings, instruct sales people to offer cards to |
| The Cost of Gift & Loyalty Card Programs | | | | customers, offer cards to other businesses as holiday |
| Upon review - some gift and loyalty cards programs | | | | or promotional gifts, offer special discounts to card |
| can seem expensive, that is not the case if you | | | | users, promote your gift cards on your printed |
| understand how they work. Once you understand | | | | marketing material (window signs, menus, flyers, ads |
| what the costs of the program will be, it is then easy | | | | etc.) and use gift cards as charitable donations. |
| to implement a profitable campaign for your business's | | | | Smaller businesses need to employ more creativity. |
| gift and loyalty card programs. | | | | The trick to having a great gift and/or loyalty card |
| Setting up a Program | | | | program is to never let a card balance run out. This is |
| Consider a typical small business that has ordered 250 | | | | called "cycling" in the industry. A savvy merchant will |
| cards. The cost for 250 custom printed cards can be | | | | work aggressively to continuously cycle their gift cards, |
| as low as $199.00. To track the card activity a | | | | because as long as there is an amount on the card |
| business can setup the gift card program to work with | | | | then customers feel the need to come back. |
| their POS terminal in the following ways: | | | | If you allow the card to reach a zero balance then the |
| - Your customer purchases the gift card, using cash or | | | | customer has no benefit to return to your business. |
| a credit card | | | | Cycling enough times creates an unconscious habit in |
| - Scanning the barcode on the card or swiping the | | | | your customers over time to shop at your location. |
| card in a POS retail terminal activates the gift card. | | | | Successful Strategies in Action |
| - You input the purchased amount onto the | | | | You should have 2 goals when planning your gift |
| cardholders account (called the 'load value'). | | | | & loyalty campaigns: |
| - Both the customer and vendor receive receipts. | | | | 1.Increase your customer base |
| - When the customer makes a purchase the card is | | | | 2.Maintain your existing and new customer base. |
| scanned or swiped through the POS terminal and the | | | | Let's look at a few real life strategies that have been |
| amount of the purchase is entered. The system | | | | successful gift & loyalty Campaigns. |
| deducts this amount to form the new balance on the | | | | Florist Increases Sales with Delivery Gift Card |
| account. | | | | Strategy |
| - A receipt is printed, containing the purchase data | | | | A florist we worked with knew that most of the |
| together with the balance that is still available on the | | | | flowers they were delivering were to people who |
| card. | | | | could become potential customers. The company |
| - The balance can also be viewed through the | | | | wanted to try to increase their customer base to |
| point-of-sale terminal. | | | | include the people receiving the flowers. |
| Typically 20% of gift card holders do not spend the | | | | After working out their "cost of goods and services" |
| card's full value - the remaining balance goes to your | | | | they determined they could maintain profitability and still |
| bottom line | | | | include a free $10 gift card with each delivery. They |
| A business can also use the cards as a promotional | | | | tastefully added a free gift card with every flower |
| tool by activating the cards with a specific value and | | | | delivery and soon saw a dramatic increase in orders |
| using them as incentives to attract new customers or | | | | due to their gift card campaign. |
| bring current customers back again. Customers who | | | | Children's Clothing Retailer Challenges Larger Chain |
| return to your store usually spend 30% more than the | | | | Stores with Savvy Strategy |
| card's face value. Gift cards can be used as payment | | | | A clothing retailer who was finding it challenging to |
| for returned items. Dollars remain on the card, where | | | | compete against larger chain stores used a loyalty |
| the customer can use them for future purchases from | | | | rewards strategy to turn things around. |
| you and nothing comes out of the till. Breakage and | | | | The owner trained his staff to ask new customers if |
| uplift increase profits | | | | they had shopped at the store before. If the answer |
| Gift and loyalty cards have indirect benefits. Not | | | | was no, the sales person would offer them a key tag |
| everyone will use all of the money on their card and | | | | with a face value of $5. |
| many people will spend more than the value of the | | | | The free key tags were a big motivator. The store |
| card in your store. | | | | owner observed that patrons would begin to shop and |
| In fact, studies have found that people will usually | | | | would buy something due to being given a gift or |
| spend 30% more when using a gift card, which is | | | | discount (This is a sales technique called the 'reciprocal |
| known as "uplift" in the industry. | | | | agreement'). |
| An important note about your legal requirements | | | | Using cards as rebates on products instead of holding |
| As cards become more popular, it is important for | | | | a sale. |
| business to be aware of new legislation that may | | | | A sale gets people in the store, but it doesn't |
| affect your gift or loyalty program. For example, The | | | | encourage them to return. Rebate gift cards do both. |
| US governments recently passed card legislation that | | | | For example, a high-end jewelry store giving out $50 |
| prohibits expiry dates or fees on gift cards. Under the | | | | gift cards during the holiday season to shop browsers, |
| new legislation expiry dates can only be used on a gift | | | | to mall visitors, to other businesses and by mail, will |
| card if the card is given away during a promotion for a | | | | have a much higher chance to boost sales compared |
| specific good or service. When implementing your | | | | to just holding a traditional sale. |
| program, make sure that you comply with existing or | | | | Gift and loyalty cards have been used successfully by |
| emerging legislation. You can read the new | | | | retail outlets, automotive repair shops, massage |
| government rules at: federalreserve.gov/consumerinfo | | | | therapists, beauty salons, restaurants, home |
| wyntk_giftcards.htm | | | | improvement companies, accountants and many other |
| The psychology behind gift & loyalty programs | | | | businesses in most consumer industries. |
| One the most basic psychological benefits behind gift | | | | This is no longer a business marketing method that is |
| cards is that people perceive the value on the card as | | | | limited to larger companies, but a strategy that you can |
| "free money" or "found money". The psychological | | | | put to work in your business immediately. Custom |
| effect is similar to that of a credit card, only much, | | | | programs start at as low as $199 and can be |
| much stronger. | | | | configured to most any budget. |