Navigating the Downsides of Gift Cards: A Guide for Businesses

While gift cards offer numerous benefits, businesses must know their potential downsides. In this expert article, we explore the challenges associated with gift cards and provide valuable insights on how businesses can effectively promote and sell gift cards, considering these disadvantages.

Gift Card Limitations: Managing Unredeemed Balances

  1. Unredeemed Balances: Gift cards may result in unspent balances, impacting revenue. Mitigate this by offering small denomination cards or implementing strategies to encourage full redemption, such as expiration dates or bonus incentives.
  2. Breakage: Address the issue of breakage, where some gift cards go unused or partially redeemed, by actively tracking and reporting breakage as part of financial planning and implementing transparency measures.

Customer Perceptions and Restrictions

  1. Impersonal Nature: Combat the perception of impersonality by offering customisable gift card designs or providing complementary personalisation options, such as adding recipient names or messages.
  2. Limited Use: Address customer concerns regarding limited redemption options by offering a diverse range of gift card brands, ensuring a wide selection to appeal to various customer preferences.

Regulatory Compliance and Legal Considerations

  1. Expired Gift Cards: Stay compliant with regional regulations by clearly communicating expiration dates and adhering to local laws. Consider offering options for extensions or refunds on expired gift cards.
  2. Consumer Protections: Familiarise yourself with consumer protection laws, including refund policies, disclosure requirements, and privacy considerations, to build trust and maintain customer transparency.

Promoting and Selling Gift Cards Strategically

  1. Targeted Marketing Campaigns: Create targeted marketing campaigns that highlight the benefits and unique selling points of gift cards, emphasising the convenience, versatility, and joy of gifting.
  2. Gift Card Bundles and Incentives: Encourage sales by offering gift card bundles, where customers receive additional value or exclusive offers when purchasing multiple cards or a combination of products and gift cards.
  3. Enhanced Customer Experience: Integrate gift cards seamlessly into the customer experience by offering digital and mobile options for convenient purchasing and redemption.
  4. Employee Training: Ensure employees are knowledgeable about gift card features and policies, empowering them to provide accurate information and offer personalised recommendations to customers.

By understanding the downsides of gift cards and implementing strategic measures, businesses can effectively promote and sell gift cards while mitigating potential challenges. Through targeted marketing, addressing limitations, and prioritising the customer experience, businesses can leverage gift cards as a valuable revenue stream and a powerful tool for customer engagement and loyalty.