Cost Effective Advertising!

[imported_smrtan]

Help me out here! What is the difference between gift cards and gift certificates? Why are gift cards better?

[imported_HEARTLAND]

Originally Posted by smrtan

Help me out here! What is the difference between gift cards and gift certificates? Why are gift cards better?

The big difference is that there is less fraud with a "PLASTIC CARD" then a piece of paper.

Also, Plastic holds up to wear better then paper.

While the plastic will cost you more, they are more impressive and the can be reloaded with a dollar value.

Thus, increasing sales an/or returning traffic.

This is the goal for all owners.

[imported_movieking]

Check out these links.

http://msnbc.msn.com/id/8205880/

http://www.cdnprintplastic.com/gift_cards.htm

http://www.patronworks.com/giftcardprogram.html

[imported_HEARTLAND]

Promotional Card Idea:

Run a "Mystery Card" swipe-and-win campaign to drive more customers in the door for a sale or event. Simply pre-load a quantity of card with $$ of value, two card with a higher $$ value, and one card with a higher $$ (set the amounts to fit your type of business).

Then mail or distribute the cards with a promotional piece that invites customers to come into the location to discover how much their card is worth.

Plastic cards loaded with value have been proven in the marketplace to generate significantly more response then paper discount coupons.

Gift cards mean a better sales experience for both you and your customer. But most importantly, they provide a real return on investment. A 2002 survey by the National Retail Federation found that gift cards were among the most popular of gifts, not far behind clothing and books/CDs. Customers are familiar with plastic, like using it, and purchase more with a gift card than with a paper certificate. In addition, over 60% of customers purchase more than the value on a card.

A popular twist on the gift card concept is prepaid or stored value cards. With stored value cards, your customers pre-pay for multiple products or services in exchange for a discount.

Got a marketing idea? Use cards to improve your results.

Interesting facts:Here are some additional ways that gift / stored value cards improve your bottom line.

1. Gift cards are becoming a first-choice gift ides. –American City Business Journals
2. 64% of consumers say they would like to receive a gift cared as a gift. –Deloitte-Touche
3. Gift Cards outsold paper gift certificates by $55 billion Vs $5 billion in 2004. – National Retail Federation.
4. Prepayment advantage. A $100 gift certificate sale means $100 cash for your business today.
5. Products or services are delivered by you - well after payment is received.
6. Reduced labor and administrative costs.
7. Paper gift certificates are difficult to handle, process, and reconcile.
8. Gift cards are easily stored, issued, and tracked.
9. Transaction times are faster than any other exchange medium…just swipe the card to complete the purchase.
10. Reduced loss from theft and fraud.
11. Paper certificates are easily copied or altered. They are susceptible to theft, and must be kept secured, like cash.
12. Gift cards have no value until they are activated, have a unique ID number, and are not susceptible to duplication.
13. Breakage revenue. Studies show that the average customer leaves 15% of a gift card’s value unredeemed, and gift card programs are typically set up to leave this value on the card.
14. Reduced loss from returns. When customer returns merchandise, you have the option of offering a refund in the form of a gift card, ensuring that the value of the return stays with your business.
15. Free advertising. Your company’s logo and marketing message is printed on every gift card sold. This is a form of advertising that your customers carry in their wallet or purse every day. Plastic cards and associated in-store merchandising also provide advertising at your business.

Merchant Benefits of Plastic Gift Cards:

Increased Income:

1. Gift Cards are often the most profitable square foot of selling space in the store
2. Merchants report sales increases of 25% TO 500% OVER paper gift certificates
3. Customers spend more with gift cards: 61% spend more then the value on the card.

Marketing Impact:

1. Cards improve brand awareness and function as small "billboards" in customers’ wallets
2. Cards consistently boost the effectiveness of marketing campaigns to attract new customers
3. A variety of Loyalty & Rewards programs give customers a reason to keep coming back

Management Tools:

1. Cards may be used to issue store credit for all merchandise returns-keep cash in store.
2. Detailed reporting reduces fraud & eliminates burdensome manual accounting tasks.

Retailers reap huge profits from gift cards: Home Depot reports $43 million in income from unused balances

By Lisa R. Schoolcraft, Atlanta Business Chronicle

Updated: 2:33 p.m. ET June 13, 2005

The huge profitability of gift cards to American retailers became clearer than ever June 2, when The Home Depot Inc. said it has taken in $43 million in income from gift cards that are unlikely to be redeemed. The nation's No. 2 retailer recognized the gain from gift card "breakage" for the first time ever, in a quarterly filing with the Securities and Exchange Commission. Breakage is the balance remaining on gift cards that a retailer can claim when the cards expire, are lost or are unused for a lengthy period. An estimated $55 billion worth of gift cards were sold in 2004, according to John Gould, director of bank cards at TowerGroup, a financial services consulting group outside of Boston. About 10 percent of the value of gift cards sold in the United States goes unused, as consumers "put them in their back pockets and forget about them," Gould said.

Paper’s Out! Plastic’s In! The switch to Plastic Loyalty/Gift Cards is on!

Did you know?

• Plastic Gift Cards outsell paper gift certificates by 200-400%.
• A year ago only 15% of North Americans had heard of Gift Cards. Now, more than 80% of North Americans know about them. Clothing stores, hardware stores, bookstores, and even Starbucks, sell Gift Cards.
• How can plastic cards be used?

• Gift Cards can be sold to your customers to give as gifts for friends and family to use only in your store(s).
• Loyalty Cards can be used to keep track of your customers' purchases and award them points to use for "free " or other rewards.

How do plastic cards increase your revenues and profits?

• Increased store traffic

• – Attracts new customers and generates repeat traffic with loyalty incentives. 55% of cardholders make more than one trip to your store to use up the card's value. This number should be even higher in stores, with low average transaction size compared to other retailers.
• Generates higher ticket sales - 58% of gift card receivers spend more than original value of the card "Customers see the gift card as a discount and on average spend 40 percent more than the gift card says."
• Increase profit margin – Gift card users tend to pay full price more often and make larger purchases than customers who use other payment methods. Forty percent of customers using a gift card purchase items at full price, compared to 16% of shoppers using other payment methods.
• Improve cash flow – When a card is sold or recharged, you keep the cash until the card is used to purchase goods and services. By issuing refunds to an electronic gift card rather than issuing cash or credit card refunds, you can ensure that the customer will spend it in your store. Also, since any unspent balance remains on the card, there is no need to issue change for unspent amounts.
• "Breakage" - Many customers will not use every cent on their electronic card. "Breakage" is the unused balance on each card, which traditionally ranges from 10 to 20%. In other words, for every $15 Gift Card that you sell, $2.25 will never redeemed and (in most provinces) falls directly to your bottom line!
• Inventory Shrink – Electronic gift cards only have a cash value after they are "initialized" at the time of purchase. Therefore, stolen gift cards (not yet initialized) have no value and cannot be used! (Stolen "paper" gift certificates represent lost revenues!)

Save Money & Eliminate Losses

• Eliminate Fraud

• – Eliminate the possibility of counterfeiting which exists with paper gift certificates.
• Stop Theft – Eliminate employee or customer pilferage, since electronic cards hold no value until activated, and all transactions are electronically tracked.
• Reduce administrative costs – Paper gift certificate administrative costs run as high as 8% of total gift certificate sales.5 Gift cards reduce this cost by as much as 90%. Since transactions can be tracked electronically, gift card transactions are more accurate than paper-based gift programs.

Convenient for Merchants

• Easy to issue & redeem electronic cards

• – All transactions handled by credit card processing terminal, quickly and easily.
• Easy to track – All transactions are electronically tracked, with detailed monthly statements.
• More flexible than paper certificates – One card can contain cash value AND loyalty points, with redemption program custom designed to fit your business.

Convenient for Customers

• Easy to carry and redeem –Fits perfectly in a wallet
• Easy solution - Great gift for the hard-to-shop-for friend or relative

Enhanced Advertising

• Differentiation

• – Improves your company Image. Sets you apart from your competition by offering your own gift and loyalty program, instead of the old gift certificates and punch cards
• Branding opportunity – Keeps your business on your customers’ mind with custom printed gift/loyalty Cards, which act a "your billboard in their billfold."
• Capture Customer Profile and Track Purchase Behavior – the data capture capabilities of electronic cards can refine marketing efforts.

[Grip Marketing]

Paper or Plastic?

Please allow a marketing pro to offer a dissenting vote....I differ on some of the statements above....and reject some of the contentions made. The same benefits listed for plastic gift cards apply to paper gift certificates…such as...

“4. Prepayment advantage. A $100 gift certificate sale means $100 cash for your business today.” Same for paper or plastic.
”5. Products or services are delivered by you - well after payment is received.” Same for paper or plastic.
”6. Reduced labor and administrative costs.” Same for paper or plastic.
”7. Paper gift certificates are more difficult to handle, process, and reconcile than plastic gift cards.” No, they are not. Gift cards cost more money. Period. Are they worth it? Yes, they certainly can be.
”8. Gift cards are easily stored, issued, and tracked.” Same for paper or plastic.
”9. Transaction times are faster than any other exchange medium; just swipe the card to complete the purchase.” Not exactly. You have to check to make sure payment has been made whether it is a gift card or gift certificate. Or you’ll have to pay an outside processor more money than you can do it yourself; either way, it costs you and speed isn't any different.
”10. Reduced loss from theft and fraud.” Same for paper or plastic.
“11. Paper certificates are easily copied or altered.” I differ on this issue vehemently. We’ve never heard of a single case of a paper certificate, out of millions, printed by Grip, that was copied. “They are susceptible to theft, and must be kept secured, like cash.” They aren’t susceptible to theft because paper gift certificates have no value, just like gift cards, until they are ‘activated’ through a purchase on your computer software or file card system. They are tracked with a serial number just the same.
”12. Gift cards have no value until they are activated, have a unique ID number, and are not susceptible to duplication.” The same is true of gift certificates!

At Grip, we print both paper gift certs and plastic gift cards and have no axe to grind either way.

You don't need to pay an external processing company for tracking as you can track gift certs or gift cards with your own computer software or you can just keep a handwritten log.

You can get customized full color plastic gift cards for $.14-$.49 each and paper gift certs for $.06 each. Paper or plastic? The added marketing that gift cards provide is definitely worth the added investment for many salon owners as gift sales increase dramatically. Breakage is the same for certs or cards.

Mostly what we have observed, but don't have any stats on, is the salons that bought cards that didn't boost sales with them...we feel was directly attributable to being unable to take advantage of the more powerful display aspect that cards provide - which is WHY they increase sales. You must have a stellar, eye-popping POP (Point of Purchase) display for them. Or don't do them.

If you did have an eye-popping display and it still didn't do the job...then as Homer Simpson once said, "Son, you tried your best... and you failed miserably. The moral is: never, never try again."

Make sure your POP display is professionally designed and attractive.

[imported_HEARTLAND]

I agree with Gary, if you do not market your "Gift Cards", then you are not going to sell them, nor make a profit on them.

Gary is corret is saying:

"Make sure your POP display is professionally designed and attractive."

As far as the stats on the "Gift Cards", I can share what my Merchants have experenced.

Example: Joe (location owner of 3, but trying Gift Cards in 1 location) bought the Plastic Gift Cards, put them under the counter, and complained about the monies he had spent.

I took a couple of his cards, attached them to pins for the employees to wear. Went on line and printed "Mother's Day" flyer and hung them around the store.

All of this was done 4 weeks before Mother's Day. He had bought the started package with 200 cards, had only sold about 25 cards. But, by Mother's Day he was reordering new cards, and complaining that they would not be there until the Monday after Mother's Day.

You can figure out what happen to his sales, he had the ease of pulling reports off line for tracking purpose, and OF COURSE HE IS A BIG SUPPORTER OF GIFT CARDS, NOW!

It is in the marketing and your POP.

Alyce

[Grip Marketing]

I agree. IMHO, the major difference that has made gift cards more successful, albeit a lot more costly, than gift certificates is their "display" opportunities.

Slatwall displays, pegboard displays, or a Free Standing Literature Holder makes a big difference and in my view, accounts for the overwhelmingly vast majority of the increase in sales of gift purchases in the paper vs plastic process.

A minor role is that plastic also feels more substantial in the hand, and has greater perceived value.

[missmojorising]

It's like Vegas Psychology but reversed-- Pretty, Colorful Chips vs. Paper $. Can ya'll see where I'm going with this or am I just crazzzzy?

[Grip Marketing]

Excellent MissMojo. Great way to look at it. And plastic gift cards come with a Vegas price tag, too. They are an investment.

[Damon]

Everyone,
Plastic Gift cards are now available as mailers! Not at Vegas prices!!! ACH now has a mailer that combines the power of direct mail with the power and perceived value of a plastic Gift Card. At the ITA show we introduced the plastic gift card mailer.

Does anyone have any thoughts about this type of mailer?? No one in the tanning industry has anything comparable!!

[Grip Marketing]

"No one in the tanning industry has anything comparable" Not intending to burst your bubbleworld...Grip has had highest quality plastic gift card mailers for years as self-mailers with tap-ins and as lettermail and extremely competitively priced.

[neon beach]

Effective advertising....... hmmmm?

Depends on where you are, what you are offering as a service, and the type of people in your market.

In this biz, in my market at least, I don't think there is such a thing. I don't think anyone here has an FM radio, they can't read apparently, so print media in all forms are out, and we have no local sports channels to advertise on. Maybe ads on beer cans and vinyl banners on moose would work though.

[HBT6872]

I would like to see a true gift card mailer that was affordable. What do you consider affordable?

[neon beach]

That would involve reading and permanent addresses. Won't work.

[Damon]

HBT6872,
There is a Plastic Gift Card mailer that we feel is very affordable. We introduced them in Nashville. These are bi-fold card carriers with 30ml plastic cards glued inside. We produce the card, carrier and do the entire mailing (TURNKEY) postage included for .60 for just 5k. These mailers are getting any where from 2 - 4 times the response rate as a typical mailer. When you mail plastic, you put your salon in a different class than your competition. People attach value to plastic therefore they keep it and use it. If you want any info, let me know.

[Grip Marketing]

Here is that competitive pricing mentioned above....bifold card mailers with 30mil plastic cards glued inside - turnkey delivered including postage for $.50 for 5k. Lower pricing for larger qtys.

[SUNNYDAYS]

So will Damon match Grip's price. I know that Damon says he always has a better price than Grip.

[Damon]

SUNNYDAYS,
I can mail this card for .50 for 5k if I mail it saturated. Grip mails saturated carrier routes. I mail lifestyle clusters. The data and the postage are both more expensive. Anyone mailing plastic cards saturated would be wasting money! If you saturate carrier routes you hit your likely targets as well as non likely targets. These pieces cost too much to waste mail. Therefore, you save .10 to waste .50 on every bad prospect. This is true on paper cards as well as plastic mailers. Grip and I have a different philosophy, he saturates and I target by lifestyle. Again, to answer your question, I CAN MAIL SATURATED FOR .50. I would not recommend it!

[SUNNYDAYS]

Damon

That makes sense!!

[Damon]

SUNNYDAYS,
It's all about the ROI!