People love gift cards, and they’re only getting more popular. In 2015, 93 percent of Americans said they’d either given or sent a gift card; by 2018 the gift card industry is expected to reach $160 billion. That’s huge, but does it make sense for your small business to offer them?
At first glance, they seem a losing proposition — you sell a $50 card to be redeemed for $50, and you have to pay to have them made. But before you write them off, consider the following as you prepare to meet holiday shopping demands.
Additional spending. According to gift card statistics, people spend an average of 38 percent more than the value of the gift card. It’s hard to purchase something for the exact price of a card, and many will end up spending more as the card feels like “free money.”
New customers. Receiving a gift card to your business may prompt someone to visit for the first time to try your product or service. It’s like a personal referral, with a cash incentive for follow through.
You can compete. With so many other businesses offering the cards (an estimated $26 billion was spent on gift cards last year during the holidays), you may be missing out on a piece of that. For nine years in a row now, gift cards have been the most requested holiday gift. So if they’re on someone’s shopping list and you don’t offer your own, consumers have plenty of other places from which to choose one.
Continued engagement. Not only is that gift card in their wallet a continuous advertisement for your business, e-gift cards in which recipients activate the gift card, check the balance or add to the balance on your website, offer countless engagement opportunities.
Lost and unused cards. In 2014, more than $750 million gift cards went unused, and 40 percent of consumers say they’ve lost a gift card. That sounds like free money for businesses, and it is in some states. But beware that’s not always the case. Some states have enacted legislation in recent years that expands expiration dates and in some cases the state collects unused gift card balances for consumers to claim.
In general, gift cards can be the gift that can keep on giving for businesses. Even if it’s too late to have yours ready for this holiday season, now is the time to start the process, as before we know it Valentine’s Day will be here.