Consumers spent more than $23 billion on gift cards last year. We've pinpointed the best strategies for small businesses to help gift card sales soar.
Consumers spent more than $23 billion on gift cards last year. We've pinpointed the best strategies for small businesses to help gift card sales soar.
For retail stores looking forward to the holiday retail boost, gift cards can be a significant bonus. Last year, consumers spent $23.6 billion on gift cards during the holiday season, with an average of $40 spent per card, according to data from the National Retail Federation. Here are some tips to help you capture your share of the gift card market this season.
Doubling Your Gift Card Sales: Sell Packages
Sure, gift cards can be perceived as a quintessential cop-out gift, pegging the gift-giver as lazy or impersonal. While that may be true of the preloaded value cards that big chain stores put out and that can be found in virtually every drugstore now, small businesses have the advantage of developing gift card offerings that are good for more than just cash on a card.
If you want to establish significant gift card sales at your business, you need to sell an experience, says Seth Gardenswartz, the VP of Business Development at SpaBoom and CoverBoom, a provider of online marketing tools and services to small businesses in the spa and restaurant industries. Everyone is pressed for time with their holiday shopping, so if your business is offering a unique experience with a gift card—from a prix-fixed meal, to an hour of cooking lessons, or a relaxing afternoon at a day spa—you're going to become a solution for the busy shopper and score that sale, says Gardenswartz.
Think about the types of experiences that you can offer customers through your business, and then create gift cards for several different price points. A fixed-money amount for a gift card limits the gift giver in what they are able to spend. Typically people have long holiday gifts lists and a budget for how much they want to spend on each person, but they will be more likely to spend $150 if they know, for example, that they are buying someone a deluxe spa package, says Gardenswartz. "Often times, the people who are buying gift cards are not your regular customers. So if they don't know anything about your business, then they aren't going to know how much to spend," he adds. "Providing customers with the opportunity to purchase different types of packages helps them feel like they are providing a more personalized gift."
It's helpful when putting together your various gift card packages to think about how each can appeal to people who aren't in your typical customer base. One example of this is in the spa industry, which is dominated largely by female clientele. However, many spa owners report that it is usually men who are buying spa gifts for the women in their lives and need some direction about what to buy.
But if you'd like to sell gift cards without a specific dollar amount attached, there's another benefit: They are exempt from the Federal Card Act. An amendment to the Card Act of 2009 went into effect in August and states that non-denominational gift cards are not subject to the federal laws in regards to expiration dates. Experience gift cards follow state law for the maximum amount of time until expiration. For more information about your state law, see the National Conference of State Legislatures.
Doubling Your Gift Card Sales: Clean up Your Website
Do not underestimate the role that convenience plays in the purchasing of gift cards during the holidays. While not everyone buys their gifts online, most people will at some point be browsing the Web for gift ideas during these final weeks, and the more they come across your website while shopping, the better. Anyone can easily go to the big box stores for the standard gift offerings, but most people would rather give a gift that's local to the recipient and shows that they put some thought into the purchase. Here's where small businesses have the advantage to shine. "Set your business up to play on that local field," says Gardenswartz. Make sure that you are showing up in search results for a local query. Optimize your website to include the name of your city or neighborhood so that when someone searches "coffee shop" and "Garden District" your business shows up in those listings.
Research data from Spa Boom indicates that onethird of gift-card purchases originate from outside the state of where the business is located. Your business will be more likely to get the sale from someone who is interested in finding a local market for their friend or family member if you claim your listings, says Gardenswartz. Make sure that your business is filed under the right neighborhood and there is the correct address information on sites like Google Places, Yahoo Local, and Yelp.
Getting people to arrive at your website is only part of the process, though. When it comes to service or retail businesses, Gardenswartz says the simpler your website, the better. "If you have music on your website, or it requires Flash, or has a 'click to enter' button, get rid of those things immediately," says Gardenswartz. These fancy website extras are only deterrents, and often result in people leaving your site before they even go inside.
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Doubling Your Gift Card Sales: Create a Campaign
Most customers won't think of you as a place to buy gift cards unless you put that information out in every part of your business presence. One of the easiest ways to let customers know that you offer gift cards is by using signage. The sign could say something as simple as "Ask about our luxury salon gift card package," or just "Buy a gift certificate today." You want all of your company materials to repeat the same message as well as provide information for where customers can purchase gift cards. Putting a sign up at the front desk or the checkout counter is great for getting people to notice. "We didn't shy away from opportunities to let people know about our gift cards," says Christine Cook, a spa industry consultant and former spa director at re:fresh spa in San Francisco, which was absorbed by 24-Hour Fitness last year. "You can put up a lot of signs and it's not going to be offensive or intrusive, it's just informational," she says.
Aside from putting signs in your place of business, making use of things like easels and sandwich boards to help direct people to your store can also be successful. "If you're in a location where there is a lot of foot traffic, put signs outside your shop that give people a reason to visit you," says Ann Adams, owner of Terrace Retreat, a day spa in the Dallas area. Gift cards are at least 20 percent of the business at Terrace Retreat, according to Adams. "Also, make sure that anyone who is working the cash register reminds customers on their way out about your gift card specials," she says.
Another quick and easy way to remind customers about gift cards is to mention it on your message machine. "We have a message about gift cards being available for purchase on our voicemail year round," says Katy Beck, director of sales and marketing for Ginger Bay Salon in St. Louis, a 2010 Winning Workplace. "That tells our customers that even though our doors are closed, they have an option to buy a gift."
And don't forget that a big part of your gift card campaign also involves the internet. No campaign can succeed these days without announcements made via your website, email newsletters, and through your social media networks. "When customers arrive at our website, our gift card offer is the first thing you see," says Beck. "Especially around the holiday time, our homepage will have the announcement of any gift card specials front and center."
Doubling Your Gift Card Sales: Provide Promotions
Simply putting up signs or telling customers in an email that you offer gift cards isn't enough to actually increase sales, though. You want to give customers a good reason to buy a gift card, and that can be done pretty effectively through various promotions. "Everybody wants a deal, and much like you run discounts or specials throughout the year, you can also run promotions with your gift cards," says Gardenswartz. SpaBoom clients have had a lot of success running buy-one-get-one-free specials with their gift cards, or a gift with purchase. At Terrace Retreat, Adams usually runs a yearly special around the holidays—for customers that buy $100 worth of gift cards, they receive a robe of $60 value. "People are more likely to buy a gift card if there is some perceived value for the purchaser," says Adams. One promotion that worked particularly well for Ginger Bay Salon was purchase $100 of gift cards and receive a $20 voucher towards a service or retail item of your choice. "We saw a huge spike in gift card sales from that," says Beck. But she cautions against over-discounting. "You want to be careful when you're offering promotions like buy one get one, that you have the cash flow to handle a huge spike in redemption rates," Beck says. "Make sure to state on the offer that the gift card they get with purchase cannot be used on the same day, otherwise you may run into the problem of not being able to sustain your offer." If your business hasn't offered a gift card promotion before, Beck advises to start small and test the waters.
Gift cards are great for selling small items or miscellaneous services that may not be available for purchase, like a hair wash and a scalp massage. When you package that together, you have something to promote and it's attractive as a gift card because it's not something that the customer can go into the store and buy, says Gardenswartz.
Timing is also crucial when it comes to offering gift card promotions. You may want to time your email newsletter that details a gift card promotion you have going on to land in your customers' inbox on Thanksgiving or Black Friday. According to the National Retail Federation, 77 percent of retailers sold gift cards online last holiday season, so it's important that your promotional offerings be visible on the Web during that high traffic shopping time. Another thing to be aware of is the timing of other holidays, like Hanukkah and Kwanzaa. This year, Hanukkah is the first week of December, so retailers can most likely expect a spike in sales during that time from those who celebrate. You may even want to do a special promotion geared towards other holidays as well.
It's also important to know the USPS cut-off date for holiday delivery. According to the USPS website (http://www.usps.com/holiday/shippingcalendar.htm), this year's cut off for sending gifts parcel post is December 15, in order to be delivered in time for Christmas. But, because most people don't have all their holiday shopping done by that point, last-minute shoppers are a great group to market gift cards to, especially in the final days leading up to Christmas. According to SpaBoom, 50 percent of instant gift card sales take place within 48 hours of Christmas, with December 24 being the top day to purchase a gift card online. Companies that have a system in place that allows customers to do instant delivery with gift cards are going to capitalize most on selling those final days of the season. Businesses that offer an instant online product, can add up to 25 percent to their total annual gift card sales, says Gardenswartz.
"We are seeing that more of our customers are shifting to purchasing instant gift certificates," says Beck. Last year was the first year that Ginger Bay had the option of instant gift cards, and there was a 6 percent increase in sales, according to Beck. Now, the year-to-date instant gift card sales (prior to the start of the holiday season) has increased to 16 percent. "Instant gift cards have really helped us a lot because we can be available to our customers 24/7," says Beck.
Cook experienced a similar increase when she was spa director at re:fresh. "I was constantly surprised by the sheer number of sales that took place at the last minute," says Cook. "Once we started providing instant gift cards sales on our website, we actually ended up selling a lot on Christmas Day." Companies like SpaBoom and CoverBoom work with businesses to create an instant gift card program through their website. "Customers are grateful for the sheer convenience of it because they have the choice of sending the certificate in an email with a personalized message, or if they are seeing the person they can print out the certificate and hand it to them," says Gardenswartz. "Either way, there is an element of personalization to it because you can write your own message and choose the background for the certificate."
Doubling Your Gift Card Sales: Build Your Lists
If you only did one thing this year to increase your gift card sales, that one thing should be to build your list of customers, says Gardenswartz. Your customers are always your best salespeople, so the more of them that know about your gift card options, the more likely you'll see increased sales in that area. One of the best ways to build your email list is through the people that come into your store. Not everyone likes to give up their personal information because most people's in-boxes are overloaded with unnecessary information. Make it worth their while to sign up for your email list by offering them some incentive, such as a 10-percent-off coupon for the next time they come to the store, advises Gardenswartz. A considerate employer will also have a double opt-in for their email list, so the subscriber has to accept that they have been added to your database.
Also, when you send out emails to your list, you don't want them all to be about sales and promotions. That will bombard your customers, and turn them off to wanting to purchase anything. "If you're a small business, you can send 15 emails a year and if every one of them says 'deal' in the subject line, eventually that's just going to end up in their trash folder," says Gardenswartz. "With email marketing, now more than ever, you have to give people value." That means putting fun facts in the email, like how cold you have to keep your baking room for the chocolate to set at the optimal temperature, or giving relevant tips like five factors to consider when choosing a toy for your toddler. At the bottom of those emails, you can always promote your deals, but at least your customers are taking away some useful information, and will be more likely to open those deal-only emails when they come. Including a "share" button on any email deal or promotion you post is a very easy way to let your customers spread the word for you. All of your marketing materials should have visible places where your customers can follow you on Twitter or friend you on Facebook. Once they are part of your network on those social media sites, it's a lot easier to push a button to promote a deal they liked to their own network of friends.
Another way to build your email list is by teaming up with other local businesses in your area to promote one another. This works especially well when the business locations are in the same strip mall, or on the same street. You can keep promotional flyers for the other business, and you can also include promotions for another business in your customer emails. Make your patrons feel special and tell them in your message that because they are such good customers, you wanted to let them know about another deal around the corner. When those new customers come in, you can add them to your own list. "re:fresh was a block away from the biggest firehouse in the city of San Francisco," says Cook. "I would always walk in there and tell the fireman to come get gifts for their family. It's not too late to go talk to other local businesses about working together to promote," says Cook.
It's also not too late to throw together a few quick events, which is something that Cook advises her clients to do during the holiday season. "You can put together an event geared towards the holiday season, for example, how to do your makeup for holiday parties, or taste our holiday wines," she says. "Once you have people in the store, they will be in the mindset to buy gifts."
Lastly, corporate clients are great people to have on your list. Offer a special promotion like 10 percent off to your corporate clients who may be buying gifts for their entire staff. It's great to have corporate gifts with your brand on it, because when those gifts are given out at the holiday, at least a portion of those who receive them will seek out your business sometime in the future, says Gardenswartz.
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