Gift Card Program: Retail System FAQ & How to Sell

Revel Blog | Sydney Kida | June 4, 2020 |


There’s a reason many major retailers around the world have a gift card program in place: when done right, it works on a number of levels. It’s a fantastic way to market your brand and adds revenue to your bottom line at the same time. Customers love these programs, too, since they’re the perfect gift in a pinch.

Still unsure if selling retail gift cards is right for your business? In this article, we’ll discuss the benefits of having a gift card system for retailers, plus a few tips to help you make the most out of your program.

What is a Retail Gift Card Program?

A retail gift card program allows retailers to sell gift cards directly to customers. Customers can buy them in your store or they can buy them online. People have the option of redeeming it either online or in your physical store or both.

Gift cards can either be open or closed loop. Open loop cards can be used in a wide variety of stores, while closed loop cards are specific to your brand. The latter is the best choice for small businesses.

Benefits of Implementing a Gift Card Program

There are plenty of reasons setting up a gift card program for your business is an excellent idea. Here are just a few ideas.

They increase your sales

Gift cards are a proven way to boost your revenue because people spend more with them. It has something to do with a psychological effect: customers are more likely to spend using a gift card versus their own money.

The numbers don't lie. More than 70% of customers who use a gift card end up spending more than the card's amount. Close to 25% of them also end up buying something they didn’t plan to, while 8% opted for a more expensive version of an item they originally planned to buy.

Gift cards also outperform retail gift certificates by a wide margin: they lead to 51% more sales than the paper version.

They are cost-effective

It doesn't take a lot of upfront costs to become a gift card distributor. You often only need to pay for the cards themselves—which is typically a nominal cost for your overall operations—plus an initial fee for customizing them. There’s also no pressure on you to sell a certain number of cards.

They help bring in new customers

Gift cards are fantastic because they hit two birds with one stone in terms of customers. You're effectively gaining both the shopper who bought the card and the person he or she gave it to, as customers to your store.

Even if the card recipient hasn’t visited your store yet, getting a gift card is a good incentive for them to do so. Assuming they like your product or service, you've gained a new customer with little effort on your part.

They also lead to more repeat customers 

If your gift card is reloadable, it has the fantastic side effect of encouraging customers to return to your store. Customers will often have some balance left over in the card, which entices them to reload and buy something from you again. Over time, this becomes a virtuous cycle of profit for your brand.

They are fantastic marketing tools

A properly designed gift card can do wonders in building brand awareness for your retail business. In many ways, it's like a functional calling card. It can include your contact information and even social media profiles if people want to follow you online.

Gift cards are also a constant reminder to your customers whenever they open their wallets. That’s why it pays to hire a professional to design a catchy, memorable gift card for your brand.

Customers love them

Gift cards are popular because of how convenient they are. Many people love buying gift cards because they’re an easy decision to make, especially if they're unsure of what to give. By giving them the option of buying a gift card, you do them a favor. This will help you build a stronger relationship with that potential customer.

They take up very little retail space

Gift cards are probably one of the smallest things you can sell in your store, no matter your line of business. They require very little space to store or display, so it’s easy to integrate them into your operations.

Abide by Gift Card Regulations

Gift cards are another form of money customers can use to buy something at your store. For this reason, the federal and state government have the Credit Card Accountability Responsibility and Disclosure Act that also governs gift card use. The key regulations gift card vendors should keep in mind include the following:

  • Transaction fees are allowed in gift cards, but the user must be fully informed before purchase. Make sure to put all applicable fees in writing (either in the card itself or the packaging), and make the customer confirm they accept all of these fees at the point of purchase.
  • No dormancy fees can be charged to the gift card if it has not been used for less than 12 months. After 12 months, keep in mind that only one fee can be charged per month.
  • The expiration date on the gift card should at least be five years and disclosed to the customer. The easiest way to do this is to just put the expiry on the card itself, just like how credit cards do.
  • In case of a conflict between federal and state law, the one that favors the consumers will take effect. For example, if state laws give a longer expiration date limit compared to federal laws, the state laws take precedence.
  • Regulations are only applicable to plastic gift cards. It doesn’t cover gift certificates or promotional cards.

Before printing your gift cards, we recommend getting advice from a lawyer or legal professional to ensure you comply with all local regulations.

Tips to Maximize Your Gift Card Program

Make sure you take steps to maximize your gift card program. Don’t just position the cards near your retail POS system and call it a day. There are plenty of strategies you can employ to maximize profit and savings from your gift cards.

Use it to reward loyal customers.

Gift cards are a great way to show appreciation to your best customers. They will appreciate the gesture, and it will subconsciously encourage them to return to your store. 

You can start by sending a gift card when customers spend a certain amount of money at your store. Mail a gift card to someone on their birthday or during the holidays. You can even send a gift card to a loyal customer you haven't seen in awhile, just to jumpstart their spending again.

Use it in place of a discount

Giving out discounts is something that makes any customer happy, but it does have a negative side. If it's overdone, you train your customers to only buy from you when you're offering a sale. Not to mention,discounts can cut into your profits.

A better option is to offer a gift card instead. Rather than lowering the value of your brand by cheapening it, you actually add value with a card. It also encourages customers to return to your store to spend the gift card, an action that is less certain when you offer a discount.

Reward the giver

One way to drive your gift card sales is by coming up with a promotion that rewards the giver of the card as well. For example, you can give a $20 gift card to the buyer whenever they buy a $500 gift card for someone else.

It’s a subtle way of enticing people to buy a gift card from you, and getting two customers to walk through your doors for a consecutive visit.

Use a gift card to build your marketing list

Gift cards are a good vehicle for collecting contact information from your customers. For example, you can get people's email addresses whenever they redeem a gift card.

Adding these names to your marketing list gives you the power to inform them about your brand in the future. For example, you can encourage people to spend by giving additional discounts when they redeem their gift cards over the weekend.

Promote your gift cards

You should treat your gift cards like any other product or service your brand offers. That means you’ll want to market it properly in order to get return on your investment. When well executed, gift card promotion will hopefully entice your customers to buy.

You can create a marketing campaign, social media content, explainer video, or email blast to inform people of your gift card program.

Make it gift-ready

The majority of people who buy gift cards give them to someone else, so use that fact to your advantage. You can go the extra mile by making your cards gift-worthy. Consider pretty envelopes, bowties, or fantastic packaging to make the gift as impressive as possible.

Upgrade Your Retail With Revel

Do you need an easy way to integrate a gift card program in your store? Revel’s iPad POS system makes it extremely easy to sell and manage gift cards for your brand. Contact us today to see how our innovative POS platform can help you succeed in retail.