Selling gift cards boosts your profits almost automatically. In this post, we explain why.
We've said it many times on this blog: gift cards are a great way to increase profit. We've already shared a few examples – such as how to boost gift card sales for Mother's Day and the self-activator model for gift card marketing.
Today, though, we're looking at gift cards in everyday business – because even without special campaigns or much effort, gift cards increase profits. And of course: the more you sell, the more you earn.
Gift cards improve cash flow
The great thing about gift cards is that the money comes in right away, while you only provide the service later. That improves your cash flow and balances out spending and income. You might expect this to even out once all the gift cards sold have been redeemed – but it doesn't. Depending on the industry, up to 30 percent of gift cards are never redeemed, which means profit with no service required.
From new customer to regular customer
But should you really be pleased about unredeemed gift cards? Shouldn't you want every gift card to be used? After all, you want to win new customers and impress them. That's the other big way gift cards increase profit: ideally, someone who receives a gift card for your business doesn't just come once to redeem it, but becomes a regular. So you earn not only from the gift card itself, but from every purchase that new customer makes afterwards.
It doesn't stop at the gift card value
Extra sales often happen right when the gift card is redeemed – for example, when the customer buys something worth more than the gift card. Say they were given a €50 gift card but like a product that costs €60. Without the gift card, it would have felt too expensive. With it, they only pay €10 themselves – so they buy it from you.
Many gift cards also aren't used alone. Take a day at a thermal spa: the recipient got a gift card for it, but of course they won't go on their own – they'll bring someone, who pays for their own admission. More profit for the spa.
Gift cards attract new customers
In this way, gift cards work like a magnet: they bring new customers into your business who don't just redeem the gift card but buy more. That's how they increase profit. The extra cash from gift cards not yet redeemed is especially helpful in quieter periods – but unredeemed gift cards should never be the goal.
