Why You Should Be Offering Gift Cards to Your Customers

In our fast-paced, digital world, one of the few things that's remained the same in most retail industries is that customers typically want one thing above all others - value.

There are lots of different ways that you can create value for your target market: You can offer in-store promotions to increase foot traffic, you can use giveaways to draw attention to your brand, or you can even use price reductions to undercut your competition.

Northsail take a lot of pride in offering reliability and top-quality services as added value for our clients. They know that they can rely on us to finish every project on-spec, on-budget, and on-time. Anytime we don't think we can exceed their expectations - we simply won’t take it on. That's part of the reason we offer a 6-month guarantee on every project.

Another way that you can immediately start creating value for your business is by offering gift cards.

But what are gift cards? Why do they add value? Are there different types to consider? Northsail is here to help you understand everything you need to know about gift cards, so you can add them into your brand's offerings.

Gift cards are in essence any pre-paid amount that can usually be used for any products or services carried under your brand, and can be transferred from one person to another - hence the 'gift' portion of their names.

They can come from businesses of all shapes and sizes, from mom and pop shops to big national chains. They may or may not have expiration dates or an inactivity fee, depending on their rules of use. Some have preset sizes, others allow you to set custom amounts when you purchase the card.

In recent years (especially since the start of the Coronavirus outbreak), many people have begun shifting their purchases online to the digital ecommerce landscape, and gift cards have become more popular than ever.

Giving gift cards to someone allows them to pick out their own favorite item from whatever brand you've selected, rather than simply accept whatever present you've purchased for them. They're also a popular choice for business professionals, as a thank-you for their clients after they finish a project.

While gift cards are nothing new, they've certainly evolved since the inception of the internet. Now, they have a number of forms in which they appear, each with their own value for the customer and for your marketing strategies.

Contrary to what you might think, there are actually a couple of different types of gift cards that business owners can offer, depending on what type of value you're trying to create for your customer base.

Let's discuss some of the different variations:

Physical Gift Cards vs Digital Cards

Traditional gift cards (often a paper gift certificate) were the way to go, since it allowed you to actually wrap the card on its own or alongside a holiday card.

This allowed gift givers the opportunity to actually hand the recipient a physical card, which they could watch them open. In some cases, customized gift cards allow givers to set a specific gift card balance, usually ranging from a cost of $25-$500 depending on each brand's unique process and limits.

However, this isn't always the case now. Many businesses are shifting away from the traditional retail physical card model and moving into the digital age by offering virtual gift cards.

The ones that are staying have given up on old paper gift certificates and have moved into magnetic strip cards, similar to a credit card or debit cards, which are easier to protect against fraud and theft.

These digital egift cards allow customers to easily share them to family or loved ones through their email address, without worrying about things like postage, time spent in transit, or being lost in the mail.

All they have to do is enter the recipient's email address, and they'll have their egift card in seconds. It's incredibly quick and easy.

Unfortunately, just like worrying about gift certificates vanishing in the mail, egift cards come with similar concerns. Our emails have evolved to automatically sort out anything that could potentially be junk mail, and sadly, sometimes those filters catch egift cards on their way to their inbox.

It's important to tell people that you're going to be sending them a egift card, preferably immediately after you've completed the email setup process. This way, they know to watch for egift cards in their junk mail and spam folders.

Seasonal Gift Card Purchases

While seasonal gift cards can be both in-store physical cards or online digital gift cards, what makes them unique is how they're marketed and the times of year that they make their appearances.

Most stores can run seasonal gift certificate marketing promotions during the winter holiday season, or when they're celebrating the store's retail anniversary. However, there are a whole slew of other holidays that can be taken advantage of, in order to promote customers to purchase seasonal gift cards.

Stores that sell sweets might run Valentine's Day or Easter seasonal gift card promotions. Alcohol suppliers might suggest seasonal gift cards to celebrate St. Patrick's Day or a cannabis dispensary might run seasonal promotions around April's 4/20 celebrations.

Taking advantage of industry-fitting seasonal promotions is a fantastic method for making the most of popular events and holidays, while encouraging customers to purchase your gift cards for themselves or loved ones.

Now that you know a bit about some of the different types of gift cards, let's talk about some of the major benefits your business can see when you begin offering your customers the option to purchase gift cards.

Increase Brand Awareness

When a customer shares a gift card from your business with a loved one, they're creating brand awareness for you.

More than that, by putting their own name alongside your brand, they're essentially vouching for your brand and the products/services you offer, even if they don't expressly gush about your business to the gift card recipient.

All the trust and credibility that those people bring to the table is then shared with your brand when they give away your gift cards.

You can also run egift card promotions through social media sites, which are great for not only building customer loyalty, but also for gathering email address data for your customer directory.

Build Brand Loyalty

In addition to all the awareness that gift cards bring to people outside of your target demographic, they're also phenomenal for helping to establish strong brand loyalty.

Rather than give money that can be spent anywhere as a gift, people purchasing gift cards from your business are saying to their recipients, "you absolutely must shop here" - very literally.

This immediately helps people establish instant loyalty with your brand, because they know that they're going to be shopping with you in the near future. You can also encourage repeat customers to work towards a gift card code through points they earn in regular transactions.

Giving gift cards almost guarantees that the recipients will be visiting you to use those cards. This is easily the most effective way to get consumers outside of your normal reach onto your website or through the doors of your retail store.

A lot of the trepidations that we have about shopping with a new business for the first time are set aside when we have gift cards to use. This gives you a unique opportunity to connect with these consumers when their normal marketing defenses may be slightly lowered.

They're going to be happy to see you, because they have money they want to spend specifically with your business. It's your job to turn those potentially one-time purchases into long-lasting customer relationships.

If you can wow them while you have their attention (in-store or online), you'll have a much easier time establishing strong, long-lasting loyalty from that customer.

Increase Your Conversions

This is perhaps the biggest benefit to offering and promoting gift cards to your customers, since sales are basically a given. You can also have customers work towards a gift card code through your loyalty program.

Regardless of how they get it, the only way for customers to use a gift card is by purchasing products from the brand in question. Even if some of the consumers that end up with your gift cards don't fall into your normal target market, they'll still have to use the gift cards to purchase from you.

This ends up being doubly beneficial for your business.

If the customer in question truly can't find anything they want from your business, they'll either leave the gift card in a drawer, or re-gift it to someone who might be more inclined to use it.

You've already gotten paid for the gift card, so even in the rare cases that it goes unused, that's just extra money in your pocket for nothing.

When the card is re-gifted, it means there's another opportunity to impress a different potential customer or intrigue them with your offerings.

There's really no loss for you, regardless of the recipient's choice.

Encourage Brand Affinity

This is another important benefit that you can only take advantage of, if your other marketing materials are on-point for establishing brand affinity.

Once you have a new or potentially interested consumer inside your store, their journey through your space in-store or online should allow them to feel a strong connection with your brand's values.

We live in a world where brand values become more and more important each year. People care about supporting businesses that reflect parts of how they see themselves.

Gift cards get eyes on your brand to give you the opportunity to build that affinity. What you do with that attention will determine how effectively you retain their business.

Facilitate Repeat Purchasing

When you're able to make a deep, emotional connection with a customer (either a long-term, repeat customer, or someone who's just discovered you through their gift card), they'll be much more likely to return to your business in the future to spend their own money.

In some cases, customers may even start asking friends or family members to purchase gift cards from your business to give to them for holidays or celebrations, so that they can return to your business with more 'free' money.

For the few months after the winter holiday season, many retail stores suffer drops in sales and have substantially less traffic than they do throughout the rest of the year.

Gift cards are a great way to encourage people to purchase them through November and December, so that the gift card recipients will likely be stopping by to cash them in during the January and February months.

Then, if you run successful promotions or contests in the New Year, you can convince these customers to spend above their gift card limits, and kick in some extra out of pocket.

Prevent Gift Certificate Fraud

While gift certificate fraud is much less of an issue in today's modern world than it was a couple of decades ago, security issues do occasionally happen.

That's why when you're going to consider offering gift cards through your business, you should have a plan to prevent unauthorized gift card transactions. Ensure you're using magnetic swipe cards and non-repeatable digital codes during the checkout process, rather than hand-written gift certificates made out on request.

The unfortunate reality is that whenever you leave the opportunity for someone to take advantage of your business, there'll always be people who will try.

Hand-written gift certificates are much more easily duplicated or forged than magnetic strip gift cards or non-repeatable codes. Even if a single code is stolen, it's easily replaceable for the affected customer, and the stolen code should be trackable within your POS system.

It definitely takes more time to arrange these more secure gift card options, but there's no question that the extra effort far outweighs the dangers your business could face otherwise.

Generate In-Store or Online Traffic

As we mentioned, gift cards are a great way to increase foot traffic in-store or online after busy holiday seasons, when businesses tend to slow down for a couple of months.

In addition to driving traffic during the slow season, gift cards are a great way to promote a new or expanding business.

Try handing out a few small gift cards to local businesses around your store location. Or, consider giving them to people you know will benefit from your products or services.

Making a little effort (and some small expenses) encourages people to take some time and evaluate everything you have to offer.

Then, once you have them online or in-store, wow them with your marketing. Turn them from curious to excited. Give them reasons to want to visit you again and again.

Gift cards are the key, but you need to open the door.