Tuesday, 17 March 2009

What's the difference between gift cards and gift certificates?

Robert McKinley, chief executive officer of CardWeb.com stated, "Retailers like them because it gives them a pipeline into the teen market and the estimated 20 to 23 million 'un-banked' consumers who don't hold accounts at financial institutions but want the buying ease of plastic".
It's more than just plastic vs. paper. While both products are sold in pre-set denominations, you'll get cash back if your gift certificate is worth more than your purchase.
Profitability - gift cards out perform paper certificates, eliminating the need to refund cash back. Pre-paid Sale - generates immediate cash flow.
Multiple Uses - merchandise return cards, employee incentives, marketing tactics, etc.
Better Reporting - extremely difficult and time consuming to track paper certificates.
Accurate, Online Tracking - track activity by store, venue, issuer, account or by individual card.
Eliminates Fraud - extremely difficult to duplicate.
Pick up a pair of $45 pants with your $50 jean store gift certificate and you can go down the street and buy lunch at the doughnut shop with your change. Not so with a gift card. Buy something for $45 with the $50 gift card and you have $5 left to spend at the same store next time you're there.



Gift Cards

Inspire Commerce offers best of class gift card / loyalty card programs, allowing for solutions ranging from simple company name printing to complex custom card design. How can gift cards benefit your company? Read the article below, then call us to get started on having us implement the perfect gift card / loyalty card program for your business today: 800-261-3173. Gift Card Industry Information Gift card sales totaled $97 billion in 2007, up from $83 billion in 2006, according to data from The Tower Group cited in The New York Times. Though gift cards were expected to be a common holiday gift, they were even more popular than projected. According to a Comdata, consumers spent an average of $203.00 on gift cards during the 2007 holiday season, up from the $186 they expected to spend. Synergistics Research reports that 64 percent of surveyed households find a multi-purpose gift card to be valuable. According to a January 2007 National Retail Federation survey, 79.7% of consumers said that they plan on buying at least one gift card next holiday season. In November, 2006, only an estimated of 5.6% of consumers have completed more than two thirds of their holiday shopping, and 68.5% have only completed 10% of their total holiday shopping. Most consumers use gift cards as a last minute gift. The biggest change in 2007 gift card usage compared with 2006 is the large increase in consumer preference for cash cards. 39% of total gift card recipients prefer to receive cash cards. A 2007 increasing gift card trend is that gift card recipients are holding on to the gift cards that they receive for a longer period of time. They are less likely to use them immediately after receipt or to use the full value within one month. And, more importantly for retailers, consumers are now making an average of two visits to use the entire value of their card. An estimated 10 to 15 percent of gift card recipients never cash in cards. Gift card recipients also bring new customers into stores that they might not have otherwise visited. More than one half of a Comdata led gift card study expressed interest in multiple cards in a packet that can be activated as needed by phone or web. While shoppers can easily purchase gift cards at a variety of locations, most consumers (76.7%) chose to buy gift cards from stores where the card could be used. One in six adults had “re-gifted” a gift card they received. Consumers reported receiving an average of 3.8 gift cards in the 2007 holiday season. Among gift card purchasers:
93 percent said they are likely to purchase additional gift cards in the next year;
56 percent prefer having the ability to reload or add value to a card once used;
69 percent prefer a card for which they choose the card value vs. a preset value;
78 percent decided to buy gift cards prior to entering a store, reflecting strong gift card awareness and satisfaction;
Birthdays and the Christmas holiday remained the primary occasions for gift card giving;
Consumers are 10 times more likely to buy a card over a paper certificate.
Advantages for the retailer?
Studies show that people spend more on gift cards than on gift certificates. The average gift card denomination in 2004 was $50 – twice the amount people would spend on the average gift certificate at the time.
According to the January 2007 BigResearch survey, 50.9% of gift card holders have spent much more than the value of the card when redeeming it.
The 2006 annual Gift Card FACTS Report stated that 58% of merchants said that gift cards are more effective compared to merchandise.
In the same report it was shown that on a scale from 1 to 5 , 5 being the highest, merchants rated gift cards effectiveness as follows: 0% rated 1, 4% rated 2, 22% rated 3, 50% rated 4, and 24% rated 5.
Research also shows that people who buy with gift cards are less likely to be fussy about the price they're paying. The J.C. Williams Group's study found that 40% of shoppers using a retailer's card bought items at full price. Only 16 per cent of shoppers using other payment methods bought at full price.
Retailers are also partial to gift cards because they tend to decrease the amount of merchandise that is returned. You won't have to fake it when you say, "No, I really do like it" when you open what Grandma got you this time.
Another reason retailers have taken to gift cards is that they appear to smooth out the drastic sales drop in the weeks after the busy Christmas season. Gift cards are purchased in large numbers in November and December and given as gifts at Christmas. But many are not redeemed until January or later.
In a research conducted by Incentive magazine, 69% of companies stated that gift cards and gift certificates are more effective than cash in motivating and rewarding employees.


Marketing with Gift Cards and Certificates

From the MASSAGE Magazine article, "Marketing Magic: Use Printed Material to Create a Great First Impression," by various authors, in the March 2009 issue. Article summary: Your marketing materials need to reflect who you are and what you offer—so professional presentation is key. Today, both print and online options are available for gift certificates, greeting cards, posters and signs.

Why offer gift cards? Because they are relatively inexpensive and highly targeted. They can be found in a wide range of cost and choices. Many companies offer nice quality stock designs at low prices. These usually allow for the insertion of your business card, so the receiver can keep your contact information long after the gift card has been redeemed.

Don’t be shy to ask suppliers for samples of their certificates; most suppliers will be glad to help you with your choices. You may be able to find existing designs that complement your office décor. Another option is to have your certificates custom printed. Matching gift cards, thank-you notes and appointment-reminder cards gives the added feature of helping to brand your business.

Who might purchase gift cards? Every client who receives your services is a potential gift card customer. You know you give the very best to your customers, so have confidence in the value of your services and offer your clients the opportunity to share the benefits and enjoyment they receive. When you give top-quality sessions, then the customer will want to share her experience. Bank on the relationship you have developed with each client. A gift card is the most effective client referral. It tells the receiver that the treatment you give your clients is so great they can’t keep it to themselves.

What is the best way to promote gift certificates? Develop this according to your own ideas and customer type. You may display certificates on your counter, or place posters on your window or in your session room. You may offer discounts, or instead choose to add a service on a card. A great way to promote new services is by bringing attention to certificates and recommending the service as a gift.

Anne Marie, manager of Scarlett’s Retreat Day Spa in McDonough, Georgia, says her salon does not have to spend money on advertising to promote gift certificates. “If you have a good reputation, people will just come in off the street and ask

for them,” she says.

In addition, she says it is a great time to reach out to the buyer of the certificate if they are not an existing client. You may give a tour of your facility, explain sessions and get the person comfortable with you and your offerings.

Eketrina St. Onge, owner of Mosaic Day Spa in Avenel, New Jersey, has two locations and more than 70 professionals on her staff. She holds training meetings to help her employees become comfortable offering all the amenities on the menu.

“You have to remember you are servicing two clients with a gift-certificate purchase,” she says. The giver must feel absolutely certain the receiver will get the same superior treatment she enjoyed. Within her first two months of opening one of her salons near a holiday season, she sold more than 3,000 certificates. She attributes much of her success to professional presentation and quality services. “You do not have to spend money on advertising gift certificates when your customers know you give superior treatments," she says.

She also uses certificates as a way to reschedule missed or late appointments. You may charge the client as usual for the missed service time, but build loyalty into your client by giving a certificate she may redeem later. “There are legitimate reasons to miss an appointment or be late, and I do not want to penalize them for something that may have been out of their control,” she says. By placing the charge on a gift certificate, she assures the client will return to her instead of seeking her next session somewhere else.

Massage therapist Mac McDonald of Casablanca Salon in Fort Worth, Texas, uses certificates to sell packages of treatments. He will offer combinations of treatments or series of treatments with a discount for the package. “They not only buy for others, but many of my customers will buy a certificate for themselves to take advantage of the special,” he says.

While no extra advertising is usually necessary to make your gift-certificate program a success, you may find that including the suggestion on your business cards, printed promotional material and appointment-reminder cards result in increased inquiries. Why not jump into spring with a new growth in your marketing plan?


Buy or Sell Unwanted Gift Cards Online For Amazing Deals

You would think that if someone is going to take the easy-out and give you a gift card for a holiday, birthday or wedding, they would at least get you a gift card to a place you actually have some interest in. And yet, now that Christmas is over, you find yourself staring at a pile of giftcards for Bob’s Artificial Organ Transplants & Taco Stand. What to do, what to do? As always, the intarwebs can help.

Here’s the skinny…. Most retailers love when people buy giftcards, because the vast majority are never actually used. Best Buy, for instance, earned $16 million in 2006 in gift-card “breakage,” the industry’s term for card value that was bought but never redeemed.” According to a 2007 article in the New York Times about the economy of the giftcard:

“…let’s just say there is good reason that they are known within the retail industry as a stored-value product: they store their value very well, and often permanently. The financial-services research firm TowerGroup estimates that of the $80 billion spent on gift cards in 2006, roughly $8 billion will never be redeemed…”

There are several giftcard buy/sell/exhange sites out there that enable you to buy, sell or trade your unwanted giftcards. The most well established of these sites is Cardavenue, which even offers a degree of buyer’s assurance. At Cardavenue, gift card swap and auction transactions are protected by Cardcowboy balance verification on most cards valued at over $100. For gift cards valued less than $100 all transactions are secured with a $10 deductible.

Buying Cards
If you’re in the market to buy, you get the best deal of all. You can find amazing deals on gift cards discounted anywhere from a few bucks to 50% of their actual balance.

Trading Cards
The concept here is simple - exchange the card you don’t want for a card of the same value for a store you do want. If you have a card to get rid of, this will often be your best deal, since you can exchange your card with another card of the same value, whereas selling or auctioning your card will generally mean you have to sell it for lower-than-card-value.

Selling Cards
If you want to ditch your crappy giftcard for cold, hard cash, you can simply put it up for auction. As mentioned above, you will generally have to sell it for less than the value of the card, but considering you didn’t pay for it in the first place and would probably have just let it expire, its found money - and in this economy, who doesn’t need some of that? If you’re not up for auctioning, GiftCardExchange and SwapAGift will pay you 65% of your gift card value.


Cash won't buy gift cards at Birmingham's Riverchase Galleria, Century Plaza

Categories: Holidays
Purchasing a gift card in lieu of a gift continues to be a popular and convenient alternative to shoppers short on ideas, but the country's second largest mall operator this year is eliminating some of the convenience, at least for consumers.

General Growth Properties, which counts the Riverchase Galleria in Hoover and Century Plaza in Birmingham among its 225 mall properties nationwide, will stop accepting cash for gift cards beginning Dec. 1.

The Chicago-based company, which early last week acknowledged it is considering bankruptcy to escape a showdown with creditors, gave no explanation beyond a prepared statement: "The GGP Mall Gift Card was created to provide our shoppers a convenience. That's what the gift card is based on. To further our commitment of convenience we've chosen to go the route of only accepting credit cards for the purchase of GGP Gift Cards."

The Summit shopping center in Birmingham, owned by Bayer Properties, still accepts cash, which accounts for about a quarter of its gift card purchases, a mall employee said.

General Growth spokesman David Keating said malls aren't bound to accept cash just because dollars are "legal tender for all debts, public and private."

"A purchase is not a debt," Keating said. "A lot of places we're aware of are doing that (rejecting cash). It's a time-saver for General Growth."

Mickey Gee, a marketing professor in the University of Alabama at Birmingham School of Business, offered two possible explanations. Accepting credit card payments cuts down on theft and employee fraud, such as loading a gift card with more value than the cash purchased, he said.

Also, he said, new accounting rules this year mean income from gift card sales have to be carried on the company books as liabilities until the cards are actually redeemed. In some states, unspent gift card amounts are treated as unclaimed property, which reverts to the state.

Tracking such property is potentially easier if it is matched to a credit card transaction, he said.

Still, "It's odd," said Gee, a career retailer whose family business, the Pants Store, is now owned by his sons. "Cash is king. I've never turned down cash."

Jennifer Morton, marketing manager at the Galleria, said signs went up at the mall a few weeks ago, and she's received no complaints. Only a small number of customers use cash, she said. Many individual stores inside the mall still accept cash for store gift cards.

Related material -- National Public Radio's report this morning -- Gift Card Warning: Check retailer's health



Save Your Money - Give Cash not Gift Cards

Abstract: Best Buy reported a $43 million gain in revenue in 2006 due to unused gift cards. This is just one example of why you should Save Your Money - Give Cash not Gift Cards.
Gift cards have really started to become a normal part of gift giving. Whether it's a bridal shower, wedding present, birthday for him, birthday for her, a graduation present, or an anniversary, there's a gift card for that.

There are now complete gift card kiosks at stores where you can buy gift cards from nearly every large retailer, prepaid calling cards, etc. making gift giving an impulse purchase. Drug stores, grocery stores, gas stations, and even locally owned beauty salons now offer gift cards. Record sales of gift cards continue to top the charts more and more each holiday season. At least if you receive an American Express, Visa, or MasterCard gift card you can use these almost anywhere. But, if you buy a gift card to a Home Depot, Best Buy, or Target, you don't have that flexibility.

As a recipient of these gift cards, we are excited about the prospect of what we will purchase. But, retailers are counting on you forgetting about the gift. These small plastic gifts accumulate in wallets, drawers or are unintentionally thrown away when the party is over.

Retailers are banking the profits. Millions of dollars go unused every year padding the revenue of these retailers.

Some interesting usage trends include:

Grocery store and gasoline gift cards are used the most but cards from retailers are often forgotten.
When a card is used, the buyer typically buys more than the card is worth making up the difference in cash.
It is estimated that 6-10% of gift cards will go unused.
If you don't know what to buy someone for a gift, cash is still a one-size-fits-all welcomed gift. And, best of all, cash doesn't have an expiration date, user fee, and service charges like most gift cards are now doing.

Be creative with the gift of cash, consider going to the bank and asking for $2 bills or the entire gift in singles. A new one hundred dollar bill or fifty dollar bill also make a large impact. If you are having to mail the gift, be sure to send a check instead of cash. If it's misplaced you at least can stop payment on the check.

When you are a recipient of cash, it is a nice gesture to let the person who gave you the gift know what you bought. They want to know that you spent the money for something you wouldn't normally buy.

For example, if you are a newly married couple and receive cash from someone, send a thank you card that says, your $100 gift went to pay for the champagne toast, or the honeymoon dinner. It's nice to make the gift tangible so that the giver knows that they contributed to your happiness.

If you aren't going to use a gift card that you received, regift it. At least let someone use the money instead of allowing the gift card to expire. Many charities can now transfer unused cash from gift cards that you may donate. Whatever you do, don't let these gift cards go unspent.


Should you buy Gift Cards this holiday season?

I love getting gift cards as gifts because they are almost as good as cash. Almost. But, with the economy struggling and people needing to monitor their spending ever more we need to consider the short and long term value of a gift card this holiday season.
What might be a good purchase today, may not be after the holidays. Why? Because there is some doubt on whether or not struggling retailers will honor store gift cards after the holidays.

There is much speculation on this topic. While I don’t have the answers, I can point you to some sources that might help provide greater insight on how specific stores will handle gift card transactions after the holidays:

Good Morning America came out with a story on November 25, 2008 called “Gift Cards: Fact vs. Fiction: Find Out Which Stores' Gift Cards Should Be Avoided This Holiday Season“. (read GMA article)
Online myth-buster, Snopes.com, has a lengthy string of articles regarding stores closing and gift cards. (read Snopes article)
The New York Times published a story on November 22, 2008 called “The gift card comes wrapped in a growing risk”. (read New York Times article)
The Chicago Tribune published a story on November 19, 2008, called “Gift cards tagged with doubt”. (read Chicago Tribune article)