It is customary for people to grab any gift certificate especially if they are for free. But how will one acquire those? What are the benefits aside from having a cash in the form of a certificate? In the sellers’ perspective, how can they maximize profit from the gift certificate that they are giving out?
Usually, business entities have the dilemma of giving out gift certificates to captivate customers or just pursue in their ordinary operations, not taking risk of venturing into another marketing style and selling strategy.
Before talking about the advantages and disadvantages of gift certificates, let us first examine the basics of a gift certificate to have a good grasp on what really is a gift certificate and how can one acquire them.
Gift Certificate Defined and How to Get One
A gift certificate is a piece of paper or similar type that can be exchanged for a specified amount of goods or services from a particular business entity. The holder of the certificate can select and decide on his or her own on what to purchase using his or her gift certificate. He or she has also the option when to redeem the gift certificate. He is entitled to something that is an equivalent of a cash price or something that has a value almost similar to a cash.
How can one acquire a gift certificate?
There are many ways of obtaining a gift certificate. One has to get involved with the perks on social media. There are social media sites which grant gift certificates as a reward for being the first one to have reached definite number of likes, for example. Another is through transferring prescriptions in pharmacies. Many pharmacies offer gift certificates for a certain value purchased. Answering surveys is also another way of acquiring a gift certificate. Other ways of securing a gift certificate include having a good credit reward in your credit card, buying products, usually cereals, which come with rewards and entering sweepstakes and instant-win games.
If you are planning to give out gift certificates to someone, you must consider some things that may be bothersome to your recipient. Here are a few of those things that you must consider. Pay attention to these things so you will be careful in selecting a gift certificate.
Selecting a store – Find out what your recipient most probably prefer and the items that are presumably his or her taste. In this way, you can grasp an idea where to acquire your gift certificate and what stores are the possible partners for this gift certificate.
Location of the store – You should also take into consideration the location of the store where your recipient can redeem the gift certificate. Choose a store that can be easily accessed by your recipient and the one that has good-quality items and affordable prices. It is quite impossible these days to find a product that possesses great quality with a low price, but who knows, you might stumble upon these rare items as a target exchange to your gift certificate. Going back to the discussion on the location of the store, if your recipient does not drive, be sure to choose a store that is near and accessible to public transportation.
Shipping charges – If the gift certificate you are giving can be redeemed online and the transactions can also be done online, or a delivery is needed, minimize the impact of shipping charges by choosing a store or a merchant who delivers goods for a lower price or better, for free.
Attract customers. More people will get attracted to your product as well as your company as a whole because gift certificates will serve as an advertisement design for them.
Increase sales. Having many customers purchasing your product could mean having increased sales. Sales could also increase when customers purchase more than the value of their gift certificate for they have to pay the additional amount in excess to their gift certificate.
Reduce fraud. Fraud can occur when customers try to make expired returns for cash. To lessen or totally eliminate this, you can use electronic gift certificates which allows partial redemption with the remaining balance stored in the gift certificates.
Expose company name in the public. Because gift certificates can also be used as a marketing tool, the company name will be exposed in the market, giving highlights to the branding and adding value to the company.
The holder got to choose what to redeem. Because it is a prepaid thing, the holder can choose what to avail of their gift certificate. They also have the freedom on when to use their certificates.
Add-on gift. Gift certificates can be a perfect gift if you are not sure on what to buy or give as a gift. It gives the recipient the freedom to choose what to buy using the gift certificate.
Convenient. Gift certificates are naturally convenient to carry, and it comes in handy in your transactions especially if you are not the type of person that carries cash with you.
Production may be costly. The production of gift certificates must be in bulk to lessen the printing costs. Also, designing the gift certificate means additional expense to the designer who will layout the design.
There are implementation costs. Some gift certificates require implementation costs before it can be issued to customers. Thus, it is treated as an additional expense to the company.
Easy to lose. Because most of the gift certificates come in handy, it can easily slip from our hands and it can be easily lost.
Some gift certificates can be used only in specific stores. There are gift certificates that are store-specific; hence, it cannot be used in other stores. This will add hassle to the customers.
Can be perceived as a lazy gift. Your gift can be labeled as a “thoughtless gift” or a “lazy gift” because it is like you did not put some extra effort in knowing the preferences of your recipient. It’s like it is your last resort if you don’t know what to give as a gift.
Other certificates have expiration dates. Before they knew it, their cards are already expired. Some customers forget the expiration dates of their gift certificates, so it is bothersome for them to find out that they cannot anymore use their gift certificates to buy specific items.
Benefits for Your Business in Giving Out Gift Certificates
Additional Upsell Opportunities
Having a gift certificate for consumers is like having an immediate cash that can be readily spent in malls, stores or shops. Additionally, research shows that more than half of the certificate holders will spend more than the amount indicated in the gift certificate, entailing them to provide additional payment to purchase an item; thus, additional upsell opportunities are perceived and in turn, there is an overall greater perceived value.
You Immediately Recover Your Investment
You can also offer a prepaid gift certificate to your customers instead of offering them with a coupon or other types of discounts. It is like they are paying ahead while not yet purchasing an item. Studies show that two out of three customers would likely spend less than half of the gift certificate’s value.
Improved Cash Flow
Gift certificates encourage customers to purchase an item that has a value more than that indicated on the gift certificate. With this, some customers will end up spending more, for they will think that they will only pay a small amount in addition to the value of the gift certificate.
Most businesses will customize gift certificates on their own, ensuring convenience and less hassle to the customers. It is usually small in size and can easily be carried anywhere. Gift certificates can also be offered online, allowing customers to customize their own certificates if they wanted to. They can also choose the amount of what to avail, depending on how much suits their budget and their preference.
Expanded Marketing and Promotional Opportunities
Gift certificates are not limited to specific customers for they can be used as an advertisement to the public for the items that are available to be purchased using the gift certificate as well as the company and the brand as a whole. Utilize the use of gift certificate as they can also function to promote the name of the company leading to the improved image of the company and higher value of the company in general. It can even attract not only clients and customers but also investors and alike who give their trust to your company.
Because gift certificates are convenient, easy to use and keep, it can also be distributed widely in greater volumes; thus, many people would be informed, and a wide range of prospective clients could be reached. But first, know your target market first so you would not spend too much on markets that are less interested in your merchandise.