Published December 1, 2009

4 Jolly Benefits of Gift Cards for Your Business

Consumers love gift cards. They offer a way to receive a personalized gift without having to take it back for an exchange. Retail gift cards are big business, especially around the holidays. Does your business offer gift cards? Here's why you should consider it.

More Profit on Your Bottom Line

Stores that use retail gift cards are more likely to see better sales results. A 2004 survey performed by the market research firm, First Data, showed that 82 percent of small to mid-sized businesses who use retail gift cards experienced increased sales. The firm also states that to enjoy the most revenues from retail gift card sales, a business should begin marketing them in November and also aggressively promote them two weeks before Christmas.

One reason for the increased sales was a higher profit margin. Customers who shop with gift cards for your business are more likely to buy full-priced items rather than sale items. Also, gift card bearers usually spend more than the amount on the card. In 2008, the average was $23 spent above the retail gift card amount.

Return Customers - Not Returned Merchandise

Receivers of gift cards for business are more likely to shop at your store, even if they never have in the past. With a gift card for your business, they will come by to redeem it, and in most cases, will spend more than the gift card amount. Also, they are more likely to visit your business more than just the one occasion to redeem the card. You can even make the retail gift cards reusable. Offer to reload the gift card after it is spent so they have more incentive to return, or use the card as a way to save store credits or refunds.

Customers who make purchases through gift cards for your business are less likely to bring them back for exchanges. It is estimated that almost 9 percent of holiday gifts are returned. You can avoid the expense of handling returns by having customers use their gift cards.

Don't Worry of Selling Out of Stock

Display your retail gift card near popular items. If your inventory goes out of stock before the end of the holiday sales season, your customers are more likely to buy a gift card in lieu of the item they wanted.

Interest Income from Unredeemed Balances

Another benefit your company can experience from retail gift cards is additional interest income. When a shopper buys a gift card, you have the cash in hand. Even though that money is unearned until it is redeemed, you can still deposit it in an interest bearing account and collect the interest. This is a great way to leverage the power of cash to add more profit to your business.

As you can see, there are tremendous financial benefits to your business by offering retail gift cards. Give your customers an easy way to give gifts. Encourage return shopping. And leverage the money you receive from gift cards for your business. Your bottom line will appreciate it.