Gift cards are one of retail’s hottest commodities. So much so that by 2026 the global gift card market is estimated to reach $1.4 trillion. And it’s no wonder; consumers love their convenience and businesses have nothing but benefits to gain such as:

• Better brand awareness
• Increased customer traffic
• Higher average transaction/order values

The bad news? Few brands capture the maximum potential of these benefits for their business. Don’t be like them. Learn how to launch a gift card program that takes sales to the next level.

What You Need To Create A Gift Card Program

You probably have everything needed to start a gift card program for your business, like:

• A merchant account. When a customer pays for your products or services via credit/debit card, this is where the money goes. Odds are you’ve got one.
• A point-of-sale (POS) system. This includes the physical POS device that scans cards and its software. If you already accept cards you’re good to go. Some POS systems may need gift card redemption capabilities to be activated.

How To Choose A Gift Card That Works For Your Retail Business

Gift cards vary in form and function, and these variations can carry major implications for your business. So let’s look at how you can choose the type that suits you best.

Open loop & closed loop gift cards

Open-loop cards allow shoppers to purchase from anywhere that accepts major credit companies such as MasterCard and Visa. Closed-loop cards can only be used at a specific business or its subsidiaries. 

In this article we’ll be discussing closed-loop gift card programs.

Digital Or Physical Gift Cards For Retailers: What To Consider

Knowing how each type of card could affect your business will help you decide if and how to use each. Consider the following regarding digital and physical gift cards.

Digital gift cards

Digital gift cards have been around for nearly 2 decades, but their popularity has skyrocketed in recent years as a result of the Covid-19 pandemic and improved user experience via mobile devices. The global digital gift card market is expected to grow at 15.8% by 2030.

Pros

Unmatched convenience

Crowded store vs. cosy couch? Not a tough choice. Customers love how easy digital gift cards are to buy and shop with. Among those who prefer digital cards, immediate delivery and ease of sending/purchase were the top reasons for that preference. This can expand your market, giving out-of-town or less mobile customers a way to purchase and redeem from your store. 

Extremely cost effective

Digital gift cards cost your business virtually zilch, especially if you design your own. No printing or delivery costs, available on-demand, and zero risk of over-ordering supplies. 

Impossible to lose

Every year, £250m of gift card value goes unredeemed within the UK because it’s either lost or forgotten past its expiration date. Since digital gift cards stay in one place, go wherever you go and can be added to a digital wallet, they are much less likely to be lost.

Environmentally friendly

In the UK alone, roughly 2 billion single-use plastic cards are produced each year. Providing customers a digital gift card option is a simple way to make your business more eco-friendly to an increasingly eco-aware market. In fact 45% of digital gift buyers cited environmental concerns as their reason for steering clear of physical cards.

Source: Blackhawk Network

Cons

Feels less like a gift

Gift cards may seem impersonal compared to a traditional gift, but they still allow us to give and receive something tangible. Digital gift cards remove this element which can turn people off when considering purchases for loved ones. 

Smaller market

Unsurprisingly, digital gift cards are most popular with Millenials and Gen Z. But to their older, less tech-inclined parents and grandparents, e-gift cards can seem too complicated and inaccessible.

Reduced in-store traffic

Purchasing and redeeming gift cards are a fantastic way to get people into your store to buy more. Digital gift cards reduce customer traffic which can lead to lower average transaction/order values.

More susceptible to scams

Gift card fraud is rising worldwide. In the US, $148 million in value was stolen in just the first nine months of 2021. And while scammers can target physical cards as well, digital gift cards carry the added risk of being accessed electronically by hackers or directly via device theft. 

Physical gift cards

Despite the digital revolution, 54% of people actually prefer physical gift cards to their virtual counterparts.

Pros

Preserves the giving sentiment 

Physical gift cards not only satisfy that desire to exchange something material, they also provide more meaningful personalisation and design options, making them more memorable. 

Brings more people into your store

While physical cards can often be redeemed online, they still require people to visit your store for purchase, and increase the odds of in-person redemption as well. All that equates to more customer traffic, higher transaction values, and better brand awareness for your business.

Provides versatility 

Think beyond holiday exchanges. You can use physical gift cards as an alternative to cash returns, an attractive incentive for in-store mailing list sign-ups, and a great way to promote bonus or loyalty programs.

Reinforces brand identity

Unwrapping beautifully branded packaging and repeatedly seeing your business logo in their wallet has a greater impact on consumer minds compared to seeing it displayed on a screen.

Cons

Harder to purchase

Physical gift cards are less convenient to purchase and pick up.  And in 2022, ‘easy’ often trumps ‘ideal’, even from customers who would prefer to buy from your store. 

Easier to lose or forget

The average person owns several cards; it’s no wonder that in 2021, $21 billion remained unredeemed in the US alone.

More overhead costs

What costs money to print, takes time to be produced, and can be difficult to accurately gauge when it comes to ordering the right amount? Yep, physical cards!

Not so great for the planet

There’s no way to put it nicely: plastic gift cards are horrible for the environment. If you consider that 10 billion are produced each year and most are used once and disposed of, you can imagine the toll it takes on landfills across the globe.

How to optimise each type of gift card for your customers

Give digital cards a more personalised touch & promote hybrid shopping options

Address consumers #1 complaint with digital gift cards by providing customisation and personalisation options. You can allow customers to create their own on your website and send it straight to friends and family. 

Also, make it possible for gift card-holders to shop in store by allowing printable options and accepting digital wallet payments on location. 

Offer eco-friendly cards and online purchasing

Convenience is the top reason people turn away from physical cards. Some companies remedy this by selling physical cards online, and others even allow them to be sent directly to recipients.

But what about the environment? Pretty incompatible with physical cards. Until you realise that you can ditch the plastic and switch to sustainable gift card options. Paper gift cards are perfect for this. They look Gen Z, yet feel like a gift to everyone. And the best part? They’re 10-40% cheaper than the single-use plastic cards your business is already using.

Curious about how making the switch to sustainable can skyrocket your gift card sales? Find out more here. 

The takeaway

The popularity of digital gift cards continues to grow; physical cards are still preferred among customers. Each comes with unique advantages and downsides that should be considered.

You’ll need to sort out the following issues before you can offer them to customers. 

Sourcing: Who will produce your gift cards or how will you create your own?

Equipment: Which software will you need to optimise physical/digital gift card use?

Advertisement/Display: How will you effectively promote gift card sales of each type?

How to Implement A Successful Retail Gift Card Program

You’ve got your cards and the equipment you’ll need to process them. So…now what? Unfortunately, this is where many businesses go wrong when creating a retail gift card program that brings in maximum results. Top mistakes include:

• Promoting gift card sales ineffectively
• Limiting usage to holidays and gift giving
• Falling behind on consumer trends

Promote Your Retail Gift Card Program (The Right Way)

First step to bringing in gift card profits: sell gift cards. First step to selling gift cards: customer awareness. Here’s how you can optimise gift card purchases in and out of your store.

Make gift cards easy to find in your store

Your best bet to better gift card sales isn’t sophisticated marketing campaigns. It’s the humble in-store display. So where and how should you make them visible to customers?

At check-out

It’s cliche because it works: taking advantage of customer waiting times at the register is a proven way to sell gift cards. Make sure they’re eye-level and accompanied by a sales display. 

As part of seasonal or event decor

Pairing gift cards with a larger, seasonal setup instantly takes customers from awareness to intention. And don’t be afraid to place other gift options in the mix–it can actually convince shoppers to go for a gift card rather than nothing at all. 

Among gift-oriented merchandise

Improve customer experience (and revenue) by placing themed gift card displays among popular gift categories such as house decor (wedding gift), baby clothes or toys (baby shower), or college essentials (graduation). Fewer flustered shoppers, more gift card sales!

With help from employees

Get staff on board with promoting gift cards at different touch points throughout the store. Employees can kindly remind customers that gift cards are available when they ask for help finding an item, while waiting for a dressing room, or at checkout. A fun way to promote gift cards sales among staff is to create a contest. Whoever sells the most…wins a gift card!

Source: Blackhawk Network

Get the word out on gift cards digitally

Just as with in-store displays, visibility is key when promoting gift cards online. But online, getting your gift cards in front of customer eyes is only half the battle. The other half? Smart, multi-channel digital marketing. We’ll show you how. 

On your business website

Most web visitors don’t come to your site looking for gift cards, however, seeing them promoted there plants a seed of awareness. Advertise throughout your website with:

• Banner ads
• A main menu category
• Product listings
• Pop-up ads

You can use banner ads to advertise any discounted gift cards or combine their promotion with lead capture via opt-in popups. Additionally, offer gift cards to customers in exchange for signing up to your newsletter or loyalty program: grow your mailing list and profit? Yes, please!

Another clever way to boost gift card sales through your site is to display product-specific gift cards within the corresponding sections. As with in-store displays, doing this makes gift giving a cinch for frustrated online customers.

Through email marketing

Those promotional emails we loathe to receive are actually the most effective marketing method today, even for gift cards! Check out these ideas on how to see results from the inbox. 

Discount promotions

Is it counterproductive to sell a gift card for less than its value? No (and we’ll prove it). On average, 2/3 of gift card buyers will spend over 38% more than the card’s value. If you offer your mailing list a 48-hour sale of gift cards at 15% off, they’re driven to act fast, not all who buy will actually redeem, and virtually all who do will still generate a profit for your business.

Customer re-engagement

Nothing says ‘we want you back’ like cold, hard…gift cards. Combining card giveaways with smart email marketing is a proven way to get customers back shopping online or in your store. 

Birthdays & special occasions

Admit it: you feel special when someone remembers your birthday, even when that someone is a store or brand. Even more when it comes with a gift card! Honouring your customers’ special occasions is sure to give your business increased traffic and revenue to celebrate as well. 

Source: Blackhawk Network

Via social media

There are 4.74 billion people on social media worldwide, who spend an average of 2.5 hours per day on various social platforms. When you combine those numbers with endless engagement plus targeted ad possibilities, you see the potential social media holds for gift card promotion.

Page profiles

Did you know that you could promote gift cards right in your business profile? 

On Instagram, you can add a gift card button to your business bio. Facebook allows pages to customise their CTA button in the upper right corner of their profile. Switch yours out to ‘buy gift card’ to automatically allow users to purchase. Note you will need to register with one of Facebook’s certified partners in order to process payments for gift card sales.

Stories

Add a sticker to Instagram stories promoting your gift cards. Once your followers click the link, they’ll instantly be taken to your payment partner’s form to enter their payment details. Stories are a fantastic way to offer limited-time gift card offers or flash sales.

Posts

Unlike ads, only your followers will see your posts show up in their feeds. Keep this in mind as you incorporate gift card promotion into your content marketing strategy. Obviously, don’t just rely on ‘hey, we sell gift cards’ type of posts. Increase gift card awareness and user engagement with:

• Contests (best photo/video promoting a product or theme relevant to your business)
• Raffles/drawings (comment, like, share, tag a friend for a chance to win)

Hashtags

Who knew that adding the pound key to a search query could be a total game-changer? #Giftcards currently pulls up over 1M results on Instagram and yes, finding online deals this way is a thing. Adding a hashtag to your gift card posts will certainly give your engagement a boost. 

Ads

Social media ads offer serious advantages over free content marketing methods such as posts and stories. 

For one thing, they can’t be avoided. Emails need to be opened, posts need to be read, stories need to be clicked on and viewed. Ads get in front of our eyes whether we like them or not.

Also, they can be varied, targeted, and measured better. You can create an ad on the same gift card offer in several different ways in order to target various customer profiles. 

For example, a gift card ad for an athletic store could picture grandparents cheering on their grandchild playing a sport. It could also feature a young couple working out together. With ads, you can target various buyers as a result of featuring different potential recipients.

Diversify Your Retail Gift Card Program

So far we’ve talked about the advantages of selling or giving away gift cards in order to bring in more customer traffic and revenue. But gift cards can help your business reach other goals, too.

With exchanges/returns

It can actually cost stores more money to receive, restock and resell returned merchandise than to offer a refund and allow customers to keep it. And that’s exactly what many retailers are now doing.

By offering a gift card instead of a cash return or even in place of a return item, you keep money in your business and are still likely to make a profit. 

With staff incentives

You can motivate staff and bring in more revenue to your store with gift cards. Use them to recognise and reward performance and work ethic such as:

• Employee of the month
• Sales leader
• Attending skill-building seminars

With loyalty programs/customer referrals

Reward customer loyalty and brand promotion while encouraging higher transaction values by offering gift cards once shoppers hit certain milestones, sales amounts or referrals.

Loyalty programs

Did you know that you’re up to 14x more likely to sell to a current customer than a new one? And gift cards can help you do it significantly better. Consider:

• Offering a gift card for signing up 
• Rewarding increased transaction amounts with higher-value gift cards
• Providing exclusive members-only gift card rewards for holidays/special occasions 

Referral program

What’s the most persuasive form of marketing that 92% of consumers trust? Not clever ads. Not influencer claims. It’s actually word-of-mouth marketing from people we know. Encourage your current customers to refer a friend with a gift card for both. 

Source: Blackhawk Network

Grow Your Retail Gift Card Program

Winning in business means staying ahead of industry trends, and that applies to gift cards as well. Check out the clever ways companies are thinking outside the box in order to optimise gift card use.

Customisation & personalisation

Companies began offering personalisation due to the impersonal nature of giving with a gift card. Many also customise their gift cards to appeal to specific buyers or promote specific product categories. (This works wonderfully when placed with corresponding merchandise in store or online). Likewise, your business can implement customisation via:

• Digital design software that allows you to design your own digital and physical cards.
• Providing customers ways to personalise their own gift cards through your website.
• Adding customisable gift card ‘accessories’ such as sleeves, cards, and wallets.

Brand partnerships

Promoting another brand’s gift card in your store or on your website may sound idiotic but (when done right) it can do wonders for widening your market and boosting brand awareness. Remember these key points to partner like a pro:

Pick complementary businesses

If a second-hand shop and a luxury spa launched a gift card partnership, neither business (or their customers) would benefit much. Many cross-selling partnerships fail due to a mismatched audience. When deciding which brands would do the best at promoting your cards (and vice-versa) consider things like price range, shared values, and buyer personas.

Target the right products

Wine and cheese. Leggings and yoga mats. Diapers and coffee (if you’re a parent, you know)! Get into the mind of your customer and imagine what would be practical and attractive to someone buying a particular item in your store. Consequently, brainstorming for an ideal product duo is also an awesome way to find the perfect business to partner up with. 

Philanthropy

Issues that matter can motivate buying (or boycotting) now more than ever. In fact, 65% of Gen Z is willing to pay 48% more on products by purpose-driven brands. By donating a portion of gift card sales towards a cause or individual(s) your market cares about, you promote your business and the greater good. Here are some things to consider:

Your locale

Your location undoubtedly plays a huge role in deciding which causes will garner the most customer support. The political views, socioeconomic status and cultural background of your community need to be taken into account before choosing which cause to donate proceeds to.

The scale of your business

The effectiveness of a gift card donation campaign will vary according to the market size of your business. For example, raising cancer research funds during breast cancer awareness month is likely to get far more attention at a franchise rather than a small family-owned shop.

Think You’re Ready To Start A Retail Gift Card Program?

To sum up, businesses of all sizes and industries have nothing but benefits to gain from gift cards. With mindful planning and creative marketing, you can utilise gift cards to take your brand awareness and revenue to the next level.