How to Create a Retailer Gift Card Program

All businesses, big and small, can benefit from gift card programs. These small, unassuming cards pave the way for significant revenue gains and customer loyalty all at once. When looking for new marketing techniques, gift card programs are an incredibly effective way to promote your business and gain a leg up on the competition.

Keep reading to learn how gift card programs work and how to set up a gift card for your business so customers return again and again.

How Do Gift Card Programs Work?

A gift card program is an opportunity for customers to purchase a card with a preloaded balance to use at your business at a later date. Gift cards resemble the size and appearance of a debit or credit card. They can be found in retail businesses of all shapes and sizes, from retail boutiques to eCommerce sites and restaurants.

To process the purchase of a gift card, employees will:

1. Collect the payment upfront.
2. Select the gift card program from the point-of-sale (POS) system and swipe the new card through the terminal.
3. Key in the dollar amount on the POS to process the payment.
4. Print a receipt for the customer that includes the card’s value.

Using a gift card is extremely simple. When a customer goes to purchase a product with their gift card, employees will:

1. Take the card and select the gift card option on the POS interface.
2. Run the gift card through the chip reader.
3. Approve the card through a merchant account processor, removing the balance from the card.
4. Print a receipt indicating the remaining card balance.
5. Hand the card back to the customer if the balance is used in full.

If the purchase eliminates the card’s total balance, customers can then cover the remaining balance with an alternative payment method, such as a debit or credit card or cash.

How to Create a Gift Card Program for Retailers

Starting a gift card program is relatively straightforward and affordable. Many retailers, especially modern operations using a high-tech point-of-sale (POS) system, will have few issues setting up gift cards.

Launching a gift card program typically requires six easy steps:

1. Select a Gift Card System

Many POS systems offer gift card integrations alongside tracking, such as a gift card’s sales or redemption history. When searching for a POS system that works with gift card programs, choose one that comes with:

• Transaction reports
• Redemption detail reports
• Outstanding balance reports

You can also create digital gift cards for your business. To do so, you’ll simply set up digital cards in your POS system dashboard. You may be able to set these up for free or pay a monthly fee for the feature, depending on your POS provider. You might also issue numbers or barcodes customers can use online or from a smartphone.

Customers will select “gift card” as the payment method at checkout to redeem their digital gift cards online.

2. Choose a Program

Generally, gift card programs come in two forms — closed-loop and open-loop. Closed-loop cards can only be used at your store, while customers can use open-loop cards at multiple locations. Most gift cards used for loyalty programs are closed-loop, though open-loop cards are also popular.

Working through a merchant bank can be an affordable way to start your gift card program since they tend to require fewer fees. It also simplifies the payment process by making verifications quick and easy. Closed-loop card payments can be used in two ways:

• As a debit card: A closed-loop debit card is often issued with a prepaid balance, though they may be linked to a separate account.
• As a credit card: A closed-loop credit card is applied for through the business, so you control credit limits, spending power and perks.

3. Create Your Gift Cards

After activating the gift card feature in your POS, you’ll need to create your gift cards. It’s essential to have physical gift cards on hand — research shows that 42% of consumers purchase a physical gift card at least every three months.

Choose from several materials, colors and interactive features for your cards when you partner with PLI Card Marketing Solutions. We know your cards are an extension of your brand, so it’s essential they reflect your company’s professionalism and uniqueness.

4. Establish Guidelines

All gift card programs must comply with local and national laws. For example, federal law prohibits gift cards from expiring for at least five years from the time of purchase. If your business is a franchise, review your company policies on revenue treatment before moving forward. Ensure you train your employees on these policies and how to process gift cards and their purchases.

5. Promote Your Gift Cards

Now that you’ve created your gift cards, it’s time to promote them! The following are a few tips for selling more gift cards:

1. Create unique packaging that make them stand out and provide a unique gift-giving experience.
2. Promote your gift cards on social media channels.
3. Cross-sell them with relevant items.
4. Talk to your customers about your gift card program at checkout.
5. Display your cards prominently on floor displays and/or counter displays. Also, include them on signage around the store and on your website.
6. Advertise your cards heavily around the holidays.
7. Set up a digital wallet for your cards to increase engagement.
8. Use gift cards as thank-you gifts to loyal or high-volume customers.

How Do Retailers Make Money on Gift Cards?

So, just how profitable are selling gift cards? Gift cards are a booming industry, with sales expected to reach $1.4 trillion by 2026. When you consider that 72% of customers will spend more than the value of their cards, it means you profit from both the card’s purchaser and the recipient.

Retailers make money on gift cards in other ways, since they:

• Generate cash flow, regardless of whether cards are redeemed
• Are highly requested gift items for holidays, birthdays and other special occasions
• Result in zero profit loss — the total value of the card purchase goes to the retailer even if it’s never spent
• Bring in new business by turning gift card purchasers into brand ambassadors
• Encourage repeat business
• Promote impulse buys
• Improve brand awareness since most gift cards are branded with your brand colors and logo, increasing revenue in the long term

Start Your Gift Card Program With PLI Card Marketing Solutions

Launching a gift card program is an easy way to grow your business and lift your sales. You can also help attract new customers and increase loyalty among your current customers. If you’re hoping to launch a gift card program for your retail business, partner with PLI. We’ll work with you to design custom-centered gift cards that show off what makes your company unique.

Whether you’re an eCommerce business or a franchise, we can help you take your business to new heights with innovative marketing solutions and support every step of the way. Appreciate card design and marketing tailored to you and speedy delivery times. Our top priority is to bring your ideas and brand to life.

To get started, contact us today.

Sources:

https://blackhawknetwork.com/sites/default/files/2021-01/BHN-ebook-Gift-Card-Facts.pdf

https://www.fdic.gov/consumers/consumer/news/december2019.html

https://www.globenewswire.com/news-release/2022/05/25/2450299/0/en/Global-Gift-Cards-Market-to-Reach-US-1-4-Trillion-by-the-Year-2026.html