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If you’ve ever shopped at a nationwide big-box retailer, or even a smaller, family-run retailer, you’ll find that they offer a huge variety of gift cards for sale. Almost all grocery stores, drugstores, and even some convenience stores have displays chock-full of just about every gift card imaginable – except their own.

That’s right. Most small businesses have never implemented gift card programs of their own. They may have some kind of store credit system or gift certificate system – especially if they commonly deal with returned items – but for a very long time, almost all small businesses have been priced out of gift card programs.

Because of this, they’ve never implemented a comprehensive gift card system of their own. So while you can buy just about any gift card imaginable at a local grocery store, you’d be unable to find a gift card for the store itself.

Even small businesses that don’t sell other gift cards encounter this problem. Around holidays like Christmas, Valentine’s Day, or even during personal occasions like birthdays or anniversaries, customers may come in looking for gift cards to purchase for friends, family, and other important people in their lives.

Then they’ll be told that their favorite vintage clothing store, brewery, or other small-to-medium sized business doesn’t offer gift cards. They’ll leave disappointed, and the small business will lose an easy sale.

Things are about to change, however. Local services have long relied on discount programs like Groupon, LivingSocial, and other promotions to drive sales, but have overlooked gift card programs.

However, advancing technology and increasing numbers of small businesses using gift card systems has resulted in the costs of gift card implementations falling quite a bit over the last few years, making them a fantastic choice for any small businessperson looking for a competitive edge that will help them compete with regional or national chains.

Let’s go over the top five ways that gift cards can build hyperlocal small businesses in 2017, and then briefly touch upon the two most common gift card programs used by small businesses.

  • Gift Cards Let You Compete With National Stores

Your customers may love your store, but convenience is still at the forefront of their minds when it comes to gifts. Even if your vintage clothing store features unbeatable deals, unique items that can’t be found anywhere else, and a dedication to paying forward its profits towards other local small businesses, you’re going to lose out on sales to bland national chains if you don’t have a robust gift card program.

The reason is simple – not matter how much a customer loves your store, they can’t buy gift cards if you don’t offer them, so they’ll turn to another store that does. They may still support your store all the time and be a very loyal customer, but you’ll never be able to convert them into a gift card customer.

Implementing a gift card system allows you to compete with national stores and other, larger chains that offer their own gift cards. This doesn’t just improve your sales – it improves your market position. A well-designed, smartly implemented gift card system makes your store and your brand look, more professional and competitive, no matter the size of your business.

So by implementing a gift card system in your store, you can:

  • Sell more to your existing customers
  • Build up brand loyalty
  • Increase your brand’s positioning in the local market
  • Appear more professional

And these are just a few of the benefits you can enjoy from implementing a smart gift card program.

  • Gift Cards Always Outsell Gift Certificates

Gift cards are often a “snap-decision” item. A consumer sees a gift card for a merchant and decides that they would like to buy it – whether for a gift for the holidays, a loved one, or any other situation. The slick design, easy display, and cost-effectiveness of gift cards allows them to be a great way to help drive sales of store credit, which is great for you – you get the benefit of increased profits when the card is sold, rather than when it’s redeemed.

You may be wondering where gift certificates fit in all of this. Well, gift certificates aren’t exactly top sellers. You can’t just display them anywhere in the store because they’re easy to fake if they’re stolen, which can lead to some serious shrink issues. You have to keep them in the drawers of your POS system, or some other safe place where they won’t be lost.

Human nature being what it is, this leads to an “out-of-sight, out-of-mind” situation. Customers may not even realize that you offer gift certificates, and your customer service representatives likely won’t remember to remind your customers about your gift certificate offerings, even during holiday seasons.

Gift cards avoid this problem because they are:

  • Easy to display and market on endcaps and next to registers
  • No value until activated at a POS station
  • Well designed and attention-grabbing

By putting your business front and center, on displays where your customers can see your gift card offerings, you can simply and easily increase sales of store credit, and enjoy many more sales than you did with an older, simpler pen-and-paper gift certificate system.

  • Customers Spending Gift Cards Are Less Price Sensitive

Spending a gift card doesn’t “feel” like spending money. If we gave you $100 cash and told you to spend it all, right now, you probably wouldn’t feel great about doing it – you may want to keep some, save it for later, or wait for prices at a store to drop to get the most out of your money. You’d be more likely to look through clearance racks, look for discounts, sales, and other ways to save as much money while shopping as possible.

However, if we gave you a $100 gift card and told you to spend it all, you’d probably be more than happy to. The “gift” part of a gift card is crucial, here. Most people simply are more likely to spend money when given a gift card. It’s not “real money” and they didn’t pay for it, so they are less likely to wait around and wait for deals.

72% of gift card shoppers spent more than the face value of the gift card they received when shopping, according to a First Data consumer study. Not only are customers more likely to spend the entire value of the card, they’re more likely to augment the value of the card with their own cash.

This lack of price sensitivity is an extremely good thing. Remember, your store gets the full price value of the gift card upon sale – if a customer buys items that are usually more expensive and don’t sell as well, you’re basically making more money on the transaction.

A consumer wouldn’t have paid $150 for a particular dress or electronic item if they were doing a cash transaction, but would be likely to pay $100 in a gift card and make up the rest with their own money. The same study by First Data reported that 25% of consumers purchased an item with gift cards that they typically hadn’t planned to spend money on.

All of this leads to increased profits, happier customers, and a more competitive small business.

  • Bring In New Customers

There are two ways that you can bring in new customers to your small business with a smart small business gift card strategy.

First, the givers can be turned into loyal customers with smart rewards programs for gift card purchases. If they aren’t already patrons of your store, they may be swayed to begin shopping there more if they purchase a gift card and you offer them a special promotion, like a 10% off select merchandise coupon with the purchase of a gift card, or extra in-store credit when a gift card is purchased. By doing this, you reward the buyer of the gift card and increase the likelihood that they will keep shopping at your store.

The recipient of the gift card will also be likely to become a shopper at your store, too – especially if they’re impressed with your products, service, and offerings. The First Data study referenced above also shows that 11% of gift card receivers had either “rarely” or “never” visited a merchant’s location before receiving a gift card, and over one-third of these gift card recipients changed their behavior to go redeem the card.

This means that gift cards are a powerful way to gain market share, among both loyal gift card buyers, and recipients who may never have made use of your store’s products or services.

  • Increase Customer Loyalty

Egift cards and other reloadable gift card offerings are a fantastic way to boost consumer engagement, but any gift card program is a great way to increase customer loyalty.

Gift Card Shopping

Customers will visit the store to buy or reload gift cards – and chances are that’s not the only thing they’ll do, once they get through your doors. Customers who come in to buy a gift card are quite likely to pick up some other items as well. Recipients of gifts cards may also come in to check out store sales, check the balances, inquire about your services, and perform other actions that will increase the profile of your store, and make them more likely to return in the future.

For businesses looking for a comprehensive loyalty solution, gift cards can be integrated into a consumer rewards program that offers percentage-based discounts, points that can be redeemed for merchandise or discounts, and other loyalty programs like email based marketing.

These sort of rewards programs can increase your sales, increase customer loyalty, and help your small business succeed in a market dominated by larger competitors.

The Two Simplest Gift Card Implementation Strategies  

There are two primary methods by which a small business can implement a gift card program. They are as follows:

Closed-loop programs from merchant banks – These are the simplest, most cost-effective gift card programs. Talk to your credit card processor or local merchant bank about a small-business gift card solution. Often, they’re willing to implement a solution for nearly nothing at all, because these programs don’t make much of a profit, and are easy for them to run.

PROS

  • Inexpensive or Free – Most banks are willing to implement a simple gift card solution just to keep your credit card business.
  • Easy Integration – Your terminals already accept the credit cards processed by your merchant bank, so you likely won’t have integration issues with your current POS and credit card terminals. If you do, your bank or credit card processing company will help you out.
  • Works Across All Locations – Your merchant bank probably already tracks each customer purchase by location, so it’s easy to track gift cards used in each location. Some third-party solutions require different accounts for each store, or a custom internal system to track redemptions or gift card sales.

CONS

  • Simplistic Card Design – Given their low cost, these programs generally don’t offer any kind of customization options for the cards. They’re usually just branded simply, with the name of your company.
  • Minimal Features – These cards can be hard to market, and don’t allow much more than balance checks, purchase, and redemption, making them hard to integrate with loyalty programs. They also can’t be redeemed online, or be sold to others.

Vendor-based closed-loop program – These vendor-based systems are offered by third-party gift card specialist vendors, and you can either contract directly with a vendor or ask your credit card processor about their preferred, existing partnerships.

PROS

  • Custom Designs – These companies often have designers in-house to create brilliant, professional gift cards.
  • More Social, Electronic Cards – Since these companies are gift card specialists, they often include social and electronic integration, smartphone-based cards, loyalty cards, and other tools that can be used to grow your small business.
  • In-Depth Reporting – These companies provide fantastic analytical reporting tools that can help you build relationships with your customers, and understand their shopping habits.
  • Flexibility – It’s easy to switch credit card processors or banks if you have a third-party gift card solution – this is not the case if you work directly with a bank or credit card processor to sell your gift cards.

CONS

  • Expensive – Since gift cards are the entire business of these vendors, they charge more. Fees may mount up – and they’ll be covered by gift card sales – but these programs are still much more expensive than merchant bank solutions.
  • Poor Integration Can Be An Issue – Programming your credit card terminals for a third-party vendor can be difficult, or even require you to buy new terminals or POS systems.
  • You’re Committed – After you partner with a gift card provider, you have to stay with them for existing gift cards to be honored – it isn’t easy to break ties. After selling a certain amount of cards, you’re pretty much stuck with your current gift card vendor – for better or worse.

The best solution depends on your particular needs. However, if you’re truly looking for a comprehensive gift card solution, we recommend researching third-party vendors and finding a great one – you’ll enjoy more sales, more consumer loyalty tools, and you’ll get better analytics to help you understand the habits of your customers and your local market.

Looking To Sell Your Unwanted Gift Cards?

The gift card market is huge – whether you’re a local business, or a giant, international conglomerate. Often, more gift cards are sold than can be used by the individuals who receive them.

That’s why gift card buyers have become a popular online business – if you have a gift card that you don’t want, turn it into cold, hard cash!

EJ Gift Cards is a leader in the world of direct gift card buyers. While we don’t accept most hyperlocal small business cards, we accept hundreds of other gift cards from major merchants. Our simple, step-by-step process allows you to get a quote for your gift card quickly and easily, and we pay you via PayPal – no waiting around for a check in the mail.

So check out our website, get a quote, and sell your gift card for cash, delivered to your account.It’s just that easy.