How can you get a customer to say, “Please hold my money until I’m ready to buy something?” With gift cards, of course.
Essentially, gift cards are interest-free loans, plus they almost always guarantee a sale. If you’re not offering gift certificates or gift cards, consider starting a program right away.
Another advantage to gift cards is that customers don’t usually redeem all of the value—or they don’t redeem the cards at all. Approximately 10 to 12 percent of card amounts sold goes unused due to lost or misplaced cards or purchases for less than the total value. People move out of town and forget they have the card, or they simply lose it. In such cases, not only do you get an interestfree loan, but you don’t have to pay it back!
Gift cards sell well all year round for birthdays, anniversaries, and retirement gifts—and even more so at the end-of-year holiday season.
Now that I’ve told you how great gift cards and certificates are, let me offer words of caution. If you’re just starting or you are a very small business, you need to be protected against someone duplicating your certificates. Never have a paper certificate that’s black ink on a white background—they can be copied almost anywhere. If you’re using paper, select a colored paper and print in two colors to avoid most copies. Also, include a continuous control number and keep a log of the amount the certificate is issued for.
At our ice cream store, we limited paper certificates to a maximum of $20 so that if there was any forgery, the most we could lose on one was $20. We also wrote the amount in words next to the numeral so the amount couldn’t be changed. (For example, $5 can’t be changed to $15 if you write “five” next to it.) Each certificate was signed only upon purchase to avoid theft of unsold certificates.
The newest and safest method is to use gift cards, which are available even for smaller business. They are not activated until they’re purchased at the register, so if cards are missing, they have no value. In the past, only large companies could afford these, but now there are several companies that cater to the smaller business market. Inexpensive gift card processing software is also now available, and most merchant service (credit card processing) companies also offer it.
Make sure you post signs in your store and on your website so everyone will know you offer gift cards or gift certificates. This is just another profitable way that a small business can compete with the big guys.