By David H. Martin

Even in a soft economy, the demand for gift cards continues to rise with consumer acceptance over 70 percent. Gift cards can be an inexpensive way to open doors, secure sales appointments and help close sales. They also make attractive prizes for lead-generating drawings at home shows. And since most gift cards are shaped like credit cards and feature your company logo, they fit easily in customers’ wallets or purses, which keeps your company’s name fresh in their minds. A recent visit to The Motivation Show in Chicago revealed that The Great Recession caused many companies to trade expensive merchandise and travel sales incentive awards — for less costly gift cards, now the number one incentive reward. The universal appeal of plastic gift cards could be the answer for most or all of your promotion needs. You can offer them in values from $5 to hundreds of dollars. They also can make an excellent employee reward and incentive for continued good work and loyalty.

Forget about paper gift certificates
Gift certificates, issued by local retailers and restaurants, have been around for decades but with the overwhelming preference for plastic gift cards in the last several years, are on their way to extinction. According to the research firm, Faulkner & Gray, the total gift card marketplace has shown exponential growth while paper continues to decline.
Paper gift certificates can put you at a disadvantage because they allow unused portions of the gift certificate value to be redeemed in cash, instead of goods and services.

Plastic gift cards have many advantages
Choosing the right gift card can increase response to your lead-generation efforts, and may even lower your cost per response. It can also maintain conversions to appointments and sales. And it can be an easy and affordable way to remind your customers how thoughtful you are and why you deserve their repeat business. Most cards can be co-branded with your company name along with Visa, Boston Market or dozens of other recognized names on the same card. Every time your customer or employee pulls it out of his wallet, they are reminded of your gift. Some gift cards are also reloadable, meaning you can reuse a card that has been fully redeemed, or add more value to an activated card. If merchandise purchased with a gift card is returned, you can credit the dollars for the returned item(s) back to the card, rather than refunding cash. That means the gift cardholder is obligated to use the refunded balance to make another purchase from you.

There are basically two kinds of stock gift cards: single-purpose gift cards and general-purpose gift cards. Both can be purchased and customized, with your business identified as the provider. Examples of single-purpose gift cards include Starbucks Coffee, Best Buys, TGI Friday, T.J. Max and department stores. General-purpose gift cards from Visa, MasterCard or American Express may be used almost anywhere those cards are accepted. If you are targeting a specific customer or award-winner in your organization, and you know their specific tastes, a single-purpose gift card might be preferred. The key advantage of general-purpose gift cards is the flexibility customers or employees will have.

New electronic gift cards leverage social marketing sites
Gift card purchasing and distribution online is an emerging trend, with retailers such as CVS drugstores having recently adopted online platforms (powered by a third party company, CashStar) that can be used to customize and send gift cards via e-mail.  National Gift Card, Crystal Lake, IL offers an online gift card redemption site, NGCrewards.

First Data, Atlanta, GA, recently announced eGift Social, a Facebook application that allows consumers to quickly and easily send a tangible gift (e.g. burger, milkshake, makeup) or virtual gift card to a friend’s Facebook account or e-mail address. Gift values start as low as $5 (USD) for such national names as Burger King, Boston Market and others, including national retailers. The sender (you) can access the First Data eGift Social application through each merchant’s Facebook page or website, and select one or multiple friends to send gifts to, either by adding them from Facebook or by entering their e-mail address. The sender selects which item-level product or virtual gift card they would like their friend to receive, adds a personal message and proceeds through the secure checkout process. The recipient receives a Facebook message, e-mail or both, with an alert that they have received a gift, the account number and redemption instructions. Visiting the respective participating merchant location, the recipient redeems the eGift item by using the account number at the point of sale. Consumers can also access the service directly at http://apps.facebook.com/egiftsocial.

Be aware of user fees
Before you hand someone a gift card, be sure to take a close look at the fees that may come with it. Even the new federal Credit Card Act allows a ’dormancy fee‘ after 12 consecutive months of inactivity. And the new law also allows a one-time service fee to be charged. There’s nothing remotely festive about monthly maintenance charges and other fees your gift card recipient may be tagged with. And the hefty shipping, handling and service fees charged to the gift-card giver can take a big chunk out of any budget. As appealing and convenient as gift cards may be, you’d better take a good look at the boring fine print that comes with them. While several states have passed their own gift card laws aimed at bolstering consumer protections, being a smart and savvy card shopper is still the best protection of all. Tip: store gift cards are less likely to charge hefty fees.

Some gift cards expire
The new federal Credit Card Act ruled that gift cards cannot expire before five years have elapsed unless clearly disclosed on the card. Be sure to check in advance, so the card won’t cause customer resentment later. Other gift-card programs will send recipients a replacement card with their remaining balance on it. But they will pay for this privilege. Fees on replacement cards range from $5.95 to $10 (USD). Be sure to urge your customers to use the cards within a reasonable time, or risk the consequences you will pay for giving them a ‘Trojan horse’ with hidden liabilities.ift M

The takeaway
The popularity of gift cards is exploding with over 70-percent acceptance. Even small companies have access to an incredible variety of stock cards with co-branding options to motivate and help retain customers and reward outstanding employees.

Resources

  1. Archstone Consulting’s 2009 Gift Card Trend Report. Contact: David Schutzman, Chief dschutzman@archstoneconsulting.com
  2. National Gift Card, Crystal Lake, IL offers a wide variety of co-branded plastic and online gift cards for small and medium size businesses. www.ngc-group.com.
  3. ProfitPoint Inc., Philadelphia, PA specializes in gift and loyalty card design and program development. www.profitpointinc.com
  4. Plastic Print Solutions, Minneapolis, MN is a leading provider of plastic gift cards. www.plasticprintsolutions.com

Gift cards bounce back
According to First Data Corp., a research firm, gift card sales rose sharply in the first half of 2010, compared with declines in 2008 and 2009. Prior to the recession, sales had been rising 15 per cent every year. At quick-service restaurants, the dollar value of gift cards jumped 14 percent and the number of gift cards sold rose 12.4 percent in the first six months of 2010, compared with the same period last year. The average gift card amount at quick-service restaurants increased 1.4 percent to $13.45, First Data found. At casual-dining restaurants, the dollar value of the gift cards sold rose 4.7 percent and the number of gift cards sold increased 6.1 percent. However, the average gift card amount slipped 1.2 percent to $28.54. The dollar value of all gift cards sold in the first half of the year, including at retailers, increased 4.6 percent, while the number of gift cards sold rose 2.7 percent. The average gift card amount at all merchants increased 1.9 percent to $33.73.


How dealers Can Use Co-Branded Gift Cards

  • As a door opener to secure an in-home sales appointment
  • As a reward for a successful referral
  • As a way to share promotional expenses with a local restaurant, golf course, bowling alley or theater
  • As a new kind of discount promotional medium toward a future purchase
  • As a special sales-closer discount for ‘purchasing today’

About the author
David Martin is President of Lenzi Martin Marketing, Oak Park, IL, a firm specializing in water improvement and environmental marketing that integrates old and new media. He can be reached at (708) 848-8404 or by email, dmartin@lenzimartin.com.

 

 

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