If you own a retail business, you have probably been approached by several sales representatives trying to sell you a Gift Card or Loyalty Card Program. Whether it’s an independent office, a standalone Gift Card Provider, or your current credit card processor, it’s probably happened at least once to you.

Moreover, you were probably really interested in adding this kind of program, because many of the benefits are really transparent, and it’s an easy way to build your brand. But, they probably told you how much it would cost you, and you found it hard to pull the trigger because you weren’t sure that this kind of program would increase your revenue enough to justify the cost, right?

Gift and Loyalty Programs are Incredibly Effective

The benefits of gift and loyalty programs are so powerful. If you make a few assumptions, the validity of which have been shown over and over again in independent studies, and crunch some numbers, it’s really easy to see how a gift or loyalty program will pay for itself and more every single month

Increase your average transaction size, get customers to come in more often, reduce attrition and “lost opportunities” associated with your customers not shopping as often. Loyalty customers spend about 20% more than there counterparts, and their average transaction size is 15%-20% higher. Also, people are 70% more likely to tell their friends about your business if they are loyalty customers. It’s not hard to see how utilizing a program like this will increase revenue and build your brand.

One of the most effective ways to help develop and promote the brand that defines a business to customers is to make use of loyalty and gift cards. These are standard sized plastic cards that resemble credit cards and that can be used with similar card swiping point of sale terminals. The cards can also be customized with graphics that represent the business, its products, or that reflect a special occasion so they can be more appropriately given as a gift. Gift cards are made so they contain a certain value when presented at the store, meaning they can be effectively used as a payment method for merchandise purchased through the business. Loyalty cards have no intrinsic monetary value, but instead allow customers to take advantage of in-store discounts, or to accrue non-monetary benefits that can be later exchanged for merchandise or savings.

For the most part, loyalty and gift card processing is done through the same merchant processing services that also provide traditional credit card processing. In the instance of loyalty cards, there are several different processing frameworks that can be established depending on the exact function of the card. Sometimes, a processor keeps an independent database to track the accumulated benefits that a customer has acquired, while other times the card number is deferred to a local database run by the merchant that can modify prices within a register or other system. Since gift cards are handled much like credit or debit cards, they are generally processed directly by merchant services. In most cases, the full value of a gift card is transferred to the merchant when the card is purchased and not when the money on the card is spent. One possible exception is when the gift cards are branded to a major credit card company, in which case transactions are handled exactly like a debit card purchase.

There are some new technologies that can be incorporated into loyalty and gift card processing that can make the experience easier for the customer and the merchant. One option that can be used is a smart gift card. These cards have a small radio transmitter embedded in the plastic that sends out a signal which can be read from a short distance away. This makes it possible for a customer to simply wave the card over a terminal for processing instead of passing it to an employee for swiping. This type of smart technology even allows the cards to take on non-traditional shapes to help further express the brand of a business.

Not all merchant services offer loyalty and gift card processing. Depending on the area and the setup, it can sometimes be beneficial to select two separate processors for regular transactions and for gift card transactions. Other times, a single processor might be a better fit if a business has both brick and mortar stores as well as an online e-commerce site that accepts the gift cards. Whatever method is chosen, using gift and loyalty cards can help to build the image of business and can encourage customers to return to a store for the benefits that the cards provide.

Companies and businesses across the world are embracing the advantages of using gift cards. Gift cards can build brand loyalty and improve image for a variety of businesses. Retail companies, restaurants, and even service oriented businesses are now offering gift card programs for consumers.
In the fast pace of today’s modern world, many consumers have limited time for finding gifts for friends and loved ones. Gift cards offer a convenient alternative to the traditional gift, allowing the gift receiver to use any item or service offered by a particular retailer. When gift cards are purchased, a consumer has locked themselves into a future purchase from a company. Many gift card processing services report redemption rates around 90%. In the United States, a study in 2006 reported that approximately 10% of gift cards bought that year were not redeemed, leading to gains for retailers of about $8 billion dollars.
Gift cards offer many other advantages for both consumers and businesses. Traditional gift cards offered from credit card companies often carried a fee of around 5%, and a fee for purchasing the card. Many retailers offer giftcards for their company at no fee, along with a complementary written card and packaging.
Gift cards can also be used as part of an effective marketing campaign. Many gift card processing companies have evolved from simply providing cards, to increasing sales through novel marketing campaigns. Gift cards can be used to promote savings through limited time discounts and promotions.
One recently founded company has revolutionized the gift card market. This company provides discounted gift cards at 50% of their retail value for both small and large businesses. One of the most challenging struggles encountered by both large and small businesses is generating initial consumer interest. Many businesses are able to maintain repeat business from existing customers, but finding new customers can be extremely challenging. By offering discounted gift cards, customers can be introduced to a new retail store, service or restaurant at minimal cost to the company. Lots of money spent on print and media advertising results in a low response rate. When discounted gift cards are offered to consumers, the response rate can reach as high as 90%.
Small businesses can benefit significantly by advertising with discounted gift cards. Small businesses have limited resources for advertising, and marketing can be extremely expensive. The costs for print ads, television ads, and radio ads have skyrocketed over the past 10 years, with no signs of slowing down. Production costs for a television advertisement can run from $40,000 to several million, beyond the cost of many small businesses. Discount gift cards allow any business, quickly and easily, to bring in new customers at an affordable cost.