If you’re like most small business owners, you are always looking for new ways to increase revenue. One great way to do this is by implementing a gift card program. Gift cards can be used by customers to purchase products and services from your business, and they are a great way to attract new customers.
In this blog post, we will discuss the benefits of gift card programs and how to create them for your business. We will also explore some of the different types of gift card systems that are available, and explain the benefits and drawbacks of each.
So if you’re thinking about implementing a gift card program for your business, keep reading!
The Benefits of Gift Card Programs
Gift card programs provide a multitude of benefits for your large or small business. Let’s take a look at what you can expect when you offer gift cards to customers.
Increased Revenue
Gift cards are a great way to draw new customers into your business. When someone receives a gift card, they may shop for more than the pre-loaded amount, ultimately increasing your revenue more than just that from gift card purchases. In addition, people often forget about the money on their cards and end up spending it later, giving your business an additional boost in sales.
Customer Loyalty
Offering gift cards to customers is a great way to create customer loyalty. By providing them with an incentive, customers are more likely to come back and shop at your business again. Plus, if you offer discounts or other rewards for gift card buyers, you can encourage even more loyalty among your customers.
Customer Retention
A gift card program can help you retain customers who may not have otherwise returned. For example, if a customer leaves your store without purchasing anything, they may come back later when enticed by a new gift card marketing campaign advertising a free gift card with a new purchase. This can be especially beneficial for online stores that offer digital gift cards.
Attract New Customers
Gift cards can be used to attract new customers. When you offer gift cards to existing customers, they may share the card with friends or family, who have never visited your business before. With a friend’s recommendation and a gift card, these gift card recipients can be easily converted to repeat customers for your business.
Types of Gift Card Systems
Now that we have discussed some of the benefits of a gift card program, let’s take a look at the different types of gift card systems available.
Closed-Loop System
Gift cards can be used to attract new customers. When you offer gift cards to existing customers, they may share the card with friends or family, who have never visited your business before. With a friend’s recommendation and a gift card, these gift card recipients can be easily converted to repeat customers for your business.
Open-Loop System
Open-loop systems are networks that are not limited by a single business or store, and allow customers to use the card at any outlet that accepts credit cards. These types of systems usually require customers to purchase gift cards from a third-party gift card vendor, such as a bank or financial institution and they often have an activation or payment processing fee.
Restricted Open-Loop System
A restricted open loop system is similar to an open loop system, but the card can only be used in a certain geographic area or for specific merchants within that area. This type of gift card system is great for businesses with multiple locations, as customers can use the card at any of the locations in that geographic area. Gift card buyers can often purchase this option from third-party gift card vendors, as well.
Unrestricted Open-Loop System
An unrestricted open-loop system is a gift card option similar to an open-loop system, but it allows customers to use the card anywhere a major credit card is accepted. This type of gift card program is ideal for businesses that want to offer their customers maximum flexibility when using the card.
Paper Gift Certificates
Paper gift certificates are physical documents that customers can purchase to give as gifts or use for themselves. These types of physical gift certificates are the most basic gift certificate system with low overhead costs since they don’t need to be printed or produced in large quantities.
Electronic Stripe or Barcode-based Plastic Gift Cards
These types of gift cards are similar to traditional plastic gift cards, except that they have a barcode or magnetic stripe on the back, which can be scanned at the point of sale. This type of gift card is great for businesses with multiple locations that want to track their gift card activity.
Digital Gift Card System
Digital gift cards are digital versions of traditional plastic gift cards and can be used to purchase goods or services online. These types of electronic or online gift cards don’t require the customer to purchase a physical card; instead they can purchase the digital gift card online or in an app and be redeemed at the cash register or entered onto the businesses web site.
Digital or online gift cards have increased in popularity due to their convenience for gift card buyers and the low cost of production for businesses, but many companies still don’t have the cash flow to create a digital gift card app for customers to store their online gift certificates and pay with them on the go.
DigitalGift powered by apocket offers a digital gift card solution for businesses of every size. Our digital gift card solution can also be tied into your business’s loyalty rewards program to convert new customers into loyal gift card buyers. We make gift card functionality easy for users as they store their digital cards safely in our digital wallet on their smart devices.
Contact us to learn how your small business can start offering electronic gift cards with DigitalGift today.
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