Gift Certificate Issuance and Redemption Basics

The Gift – Savvy Merchant

A Must for Independent Retailers, Restaurateurs and Service Establishments

By John S. Harris

This is a guest post from John Harris. (this is part one of a 4 part series)

It’s the holiday season and holiday decorations, seasonal recipes, holiday sales and special promotions start to scream at all of us. The charge is underway, and a big chunk of the action every holiday season is that special currency known as gift certificates, or gift cards. How does the independent merchant compete with the chains to make the most of the opportunity?

The answer for the independent is the same as it’s always been. Focus on your customer base. This is a strong suit for independents, many of whom tend to personally know or at least recognize their best customers. These are your most loyal, most frequent, most spending, or some combination therein. These folks also represent your referral marketing network. The holiday season is the perfect time to engage and reward them. Though it helps greatly to utilize an online gift certificate service, it’s not essential. What is essential is to re-think your gift certificate or gift card strategy to do two things: reward your fan base; and reward the potential new fans they bring into your orbit.

Gift Certificates and Gift Cards have obvious and well known advantages, foremost amongst them being cash in the bank well before the sale that ultimately credits against it. But their less hyped advantages lie in their inherent viral marketing properties. Gifts are all about giving, of course, and there’s always a Buyer, and a Recipient involved – two consumers, not one.

Turning one consumer into two consumers is the very definition of viral marketing. Therefore, every single sale of a gift certificate is an outstanding shot at a viral marketing win.

So here are some suggestions for making the most of your gift certificate or gift card opportunities.

Issuance and Redemption Basics: Get the nuts and bolts in place for the rush. You cannot afford to make it difficult or time-consuming for consumers to either buy, or redeem, gift currencies from your business. If you’ve already got a system in place, then good for you. If not, I’ve put together a table (inset, below) that lays out the basics of the commercial gift world – the tools accessible to you to work the gift business.

• Treat Gift Buyers and Redeemers THE BEST. Sure, you and your staff treat everyone well, but the folks buying and redeeming are the best existing, and potentially best new, customers. Viral!
• Make Them Available Online. It’s a must that customers can buy them 24X7 and frankly, it’s a pretty basic courtesy. Widespread, cheap and easy; see the table of online gift certificate services (below), if you’re not already there.
• Stock Up. A one-dollar gift card can be sold for easily one hundred times that amount, or more. Not a time to get caught short on either your paper or mag-stripe gift stock.
• Train The Troops. You and your staff must be fluent in the sale, and redemption cycle, particularly the POS part of it. It costs nothing to set up some practice sessions.
• Review Your Denominations. Maybe you’ve been selling $10 certificates or cards for years, but your average check is $16. Does that make sense?
• Know the Law. Every state is different, but there’s been a flurry of both state and federal legislation in the past two years. Go to www.consumersunion.org, for a great summary..

About The Author – John S. Harris has been a small business consultant for over twenty years. A former owner and operator himself, John is a principal in Lynch + Harris, a consulting firm specializing in operations management and marketing communications that helps independent restaurants and retailers expand their business and improve their operations. John can be reached at ircharris@gmail.com

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