Traditionally, January is gift card redemption month – and that is not just for retail businesses. These days, almost every consumer product or service-oriented business can sell gift cards for subsequent redemption. In fact, one of our office space tenants received a gift card for getting new marketing materials printed.
If you’re like many small-business owners, you may spend considerable effort on selling gift cards, but not a lot of time thinking about redemption. You may have had a great December in terms of sales and gift-card sales, but the important thing you have to take into consideration is being prepared for the cost of redemption in January. It could mean high fulfillment costs during a month of much slower sales and revenues. It could also have some impact on your books, so your accountant must be prepared for this. This is because sales of gift cards don’t get officially reported until they’re redeemed.
The bright side of gift-card redemption is that they can drive new customers to your business. Having a plan for gift-card redemption is a good business practice. Think about this — the giver of the card has made a personal endorsement of your business or your services by purchasing the card. When they give it to the recipient, it really is more than a gift – it is an invitation. What could be better than this type of referral and new business all bundled into a single transaction?
Another benefit of having the gift card redeemed in a slower month like January is that it gives you a chance to upsell or sell other products that may compliment it. According to a consumer insight study by First Data, 72% of customers actually end up spending more than the value of the gift card.
One thing that has gotten this writer thinking, is that even a serviced office and virtual office provider like Telsec could be selling gift cards for its services. Telsec tenants, for example, could give their clients gift cards for day office rentals or other fellow tenants gift cards for the many additional services that Telsec offers – such as secretarial services and printing services.