The Definitive Guide to Gift Card Marketing – Part 3

Gift Card Marketing Strategies

Smaller businesses need to employ more creativity when marketing their gift card programs.

The trick to having great gift and loyalty card programs is to never let the card run out. This is called “cycling” in the industry. A savvy merchant will work aggressively to continuously cycle their gift cards, because as long as there is an amount on the card then customers feel the need to come back.

If you allow the card to reach a zero balance then there is no advantage for the customer in returning to your business. Repeated cycling creates an unconscious habit in your customers over time: habit of returning to shop at your location!

You should have two goals when planning your gift & loyalty campaigns:

  1. Increase your customer base.
  2. Maintain your existing and new customer base.

Let’s look at some real life strategies used in successful gift & loyalty Campaigns.

Lunch restaurant uses gift card strategy for opening day launch:

The owners of a lunch time restaurant, located near a university, were ready to open. They wanted to create a real buzz from the moment the store opened to ramp up their business.

We came up with a plan to make 100 gift cards with a value of $4.00 each. The owners knew their average ticket price was around $8, with a “cost of goods and services” of about $2.50. They could afford to give the cards away and still make a profit.

Two days before the opening we hired someone to hand out cards to students, explaining that they would only be good on opening day. When the restaurant opened its doors there was a line-up out the door. A lot of students brought their friends with them and many ended up spending $12 as an average ticket price.

And since the food and service were good, to this day the lunch time restaurant has one of the busiest lunches in that area.

Sidenote: An interesting read: Restaurant Gift Card Survey

Florist increases deliveries with gift card strategy:

A florist I worked with knew that most of the flowers they were delivering were to people who were receiving flowers from someone. The company wanted to try to increase their customer base to include the people receiving the flowers.

After working out their “cost of goods and services” they determined they could maintain profitability and still include a free $10 gift card with each delivery. They tastefully added a free card when they delivered flowers, and soon saw a dramatic increase in orders due to their gift card campaign.

Clothing retailer challenges larger chain stores with savvy strategy:

Clothing retailer challenges larger chain stores with savvy strategy.

A clothing retailer who was finding it challenging to compete against larger chain stores used a gift card strategy to turn things around.

The owner trained his staff to ask new patrons if they had shopped at the store before. If the answer was no, the sales person would offer a gift card in the amount of roughly $5. The free card was a big motivator. The store owner observed that patrons would begin to shop and would buy something because they’d been given a gift. (This is a sales technique called the “reciprocal agreement“).

But the store owner didn’t just want one-time customers, so he trained his staff to reload the person’s gift-card during the check-out. Customers, already in a positive frame of mind from the initial gift, received a cheery comment like “Thank you for your business, we added $X to your gift card for your next visit.” That simple strategy turned many casual shoppers into loyal, repeat customers.

Restaurant owner uses gift card strategy to create a lunch time rush:

The owner of this restaurant, located near a few office buildings, made it known to the buildings’ employees that a gift card with a $50 dollar value was hidden underneath one of the tables at lunch everyday. Eventually the word spread through the offices. As the card would, in most cases, be found by the first people to enter the restaurant at lunch, it created a line-up at the door before the restaurant opened. Because the restaurant was in an area where there was a lot of pedestrian traffic, people walking by thought, “Wow, the food must be great at that place. We will have to try it sometime.” So not only did this promote a faithful lunch crowd, it also created a ‘buzz‘ that brought in new customers for the evening meal, when the restaurant charges more for the same dishes. The Psychology of Line-ups

A Handbag Maker increases her sales and beats her competition at flea market with gift card strategy:

This entrepreneur made handbags out of recyclable material and would sell them at a flea market every weekend. Another lady was doing something similar a few booths down, and she wanted an edge on her competition. With every handbag sold she would thank customers for their business and put a $5 dollar gift card in the bag to be used for their next purchase-or to be passed along to a friend to purchase their own unique handbag. She reported her sales and referrals increase by 25%. It was a simple strategy but it worked!

Nail Salon uses gift card to boost sales with this Birthday gift card strategy:

The owner trained all her staff to say at check-out: “We appreciate your business and we are sending a $10 gift card to you and your best friend on your birthdays because everybody deserves to be pampered on their birthday.” Staff would then explain that all they had to do to receive this offer was provide a mailing address for themselves and their best friend so they could mail this gift card to them. Not only did this create an additional potential customer (i.e. the best friend), it also gave teh store a mailing address to which they could send personalized promotions to ensure repeat business.

A Retail Tire Dealer was looking for a way to create repeat business even though the average customer only bought new tires ever 2-3 years:

He gave out a $25 dollar gift card with every set of tires purchased. Since nothing in his store could be purchased for this amount, it was a strategy to take advantage of “uplift”. Most customers put the card away to be used for their next investment in new car tires, which is what the owner was hoping to accomplish.

An Automotive Repair Shop wins the sale today or tomorrow with this gift card strategy:

As mechanics serviced the problem the car was brought in for, they would also look for other potential near future break-downs. When the customer returned to pick up their vehicle the mechanics would say: “By the way, we noticed that “xyz” has been leaking, if the “xyz” runs dry, it will burn up and then it will cost you a new “abc”. As it stands now, we only need to replace “xyz”. Parts and labour will run you about $75. Would you like us to go ahead and schedule your car for that repair?

If the customer looked like they were going to put off, the mechanic would say: “Look, I’d hate to see you come back in here to have “abc” replaced because you didn’t get “xyz” done today, which will then cost you $400. You know what we’ll do? We’ll give you a $10 gift card that you can use towards the replacement “xyz” or the “abc” if you wait too long. Just get it done soon, okay?

The vast majority of the time the customer has the repair done on the spot-and if they don’t the customer usually comes back to have the repair done due to the generosity of the free gift card. This marketing campaign has increased this Mechanic’s sales by 45%.

A Wedding Invitation Business partners with a Formal Wear Shop with this gift card strategy:

The owners of a Wedding Invitation Business and the owners of a Formal Wear Shop shared each other’s mailing addresses. When a new wedding was announced, each other notified each other and they would each send a $20 gift card with a letter saying: “Congratulations on your engagement! We’ve got you covered.

It brings them both business they might never receive. And with each of their “costs of goods and services” the gift cards really only cost them 1/4 of what the value is.

This gift card exchange strategy could be used for many different business types: an accountant could partner with a computer store; a specialty cigar store could partner with a specialty wine store; dance instructions studio could partner with a dance clothing retailer. You get the idea.

A Jewelry Store increases sales during the holiday season by giving a free $50 gift card to the “right” people:

Every year during the holiday season, this jewelry store gives the Human Resource department in a very large ad agency about a dozen free $50 gift cards to be handed out to the Head CEOs as a gift from the HR. It is a win-win for everybody. The HR Department gets to look very generous and CEO’s usually come in to purchase their significant others an expensive piece of jewelry for the holiday season.

Other strategies at play:

Gift and loyalty cards can be used in many unique ways. A few other creative strategies I have seen include:

  • Small business owners using cards as rebates on products instead of holding a sale. A sale gets people in the store, but it doesn’t encourage them to return. Rebate gift cards do both.
  • Gift cards can also be used as refunds and ensure sales stay in your store.

Gift and loyalty cards have been used successfully by: mechanics, massage therapists, beauty salons, restaurants, coffee houses, home improvement companies, accountants and companies in many other industries. This is no longer a business marketing method that is limited to larger companies, but a strategy that you can put to work in your business immediately.

Click on the following link to learn the ROI on Gift Card Marketing.

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Matthew Hunt has been helping small businesses get set-up with Canadian Merchant Account Services since 2007 and helped 1000's do so. Join Matthew on Google+.

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