Starting Your Gift Card Program

Present cards continue to grow leaps plus bounds allowing retailers that have implemented a program for their stores to reap vast benefits. In fact , total spending on gift cards in 2012 nearly reached $30 billion with around two-thirds of all American consumers having purchased at least one gift card.

It is popular and it’s not for the holidays any more. While nearly 2/3rds of all customers have purchased gift cards to get someone around the holidays, over 80 percent of all consumers have purchased a present card as a birthday gift. No longer should retailers simply rely on the holiday season for their sales – though product sales at this time are concentrated – the sales are available throughout the year.

Gift credit cards are convenient, secure, and act as a branded “billboard in a wallet”. In multi-unit retail outlets, they keep the money within the store network with gift cards, retailers will obtain more name recognition and direct exposure in the marketplace, further widening its current customer base. To further the case, not necessarily just for the brand awareness, this adds to the top line as the typical gift card user ends up spending an extra 20% beyond the value of the card.

Why Gift Cards? Some suppliers may still use punch credit cards or paper certificates and while these types of programs may have advanced their loyalty program to date, plastic gift cards outsells paper certificates from 2 to 10 times as much. The particular electronic concept has become the medium of preference for retailers and merchants across the nation. Among the significant reasons are:

No Cash Back – the value remaining right after partial redemption stays on the credit card ensuring additional opportunities to solidify the particular guest relationship.
Real Time Processing – virtually eliminates both the losses associated with paper gift certificates and costly tracking and accounting.
Offering a gift card is very similar to offering a new product item – without having to learn complicated handling procedures, training methods, and tie up valuable storage space. It can help gain new customers – friends or even associates of your existing customers — and the card program should be viewed as a revenue generator.

Logistics: A processing terminal is needed to run the gift card program. Usually your credit card company can help you pick out the terminal that will meet your needs and budget. Most gift cards use a host-based computer system to store the value of the cards as they are sold and redeemed. Simply load and redeem the particular cards via a credit card terminal that will accesses the host computer. This host-based system enables the present card to be sold and redeemed at all participating locations (if applicable for multi-unit operations). Here is usually how it works:

Consumer purchases the gift card for any quantity using cash or credit card — the clerk executes the selling via normal payment procedures for the register
Amount of the “gift value” is loaded and stored within the host database by swiping a magnetic strip card through a credit card terminal
Customer receipt shows balance on card – updated instantly
The card can be reloaded and may be used multiple times

Swiped through charge card terminal for host authorization
Simply no cash back – customer receipt shows real-time card balance
Pooling: To get multi-unit operations, as your cards are redeemed within other participating shops and other stores’ cards are redeemed within your store, the redemption amount is transferred at a specified time electronically. This is called pooling. All of transactions are accounted for electronically in the database and activity reports. All of pooling activity is documented, itemized by card with an overall summary and redemption amounts are moved between locations via the Automated Cleaning House (ACH) network from every location. The ACH network is the same system banks use to shift money as regulated by the Federal Reserve. All activity is recorded electronically on the terminal and host computer with time and date stamp for audit purposes. A fatal gift card batch report itemizes transactions for reconciliation.
Marketing and Merchandising: With suggestive selling plus merchandising, the gift card will certainly create additional revenue. The demand is strong year-round, especially in the different holiday times throughout the year. Birthdays are the most popular reason to buy a gift card – every day is someone’s birthday! Much like activation, the cardholder can purchase additional value or “reload” the card for any amount at any taking part location. This is great for regular guests. The gift card can also be used in house for credits. For instance, in lieu of cash return on a purchase return or a client complaint, you can issue a card for the value of the credit. This particular keeps the purchase money in the retailers network.

Loyalty Programs: The loyalty card program uses the same host-based computer system to store the value of the loyalty cards as the gift card. You can load and receive the cards via a credit card airport terminal just like the gift card with the only difference being that you can only add/redeem points to a loyalty card, not dollars. Much like the gift card, the loyalty card earns points and is redeemable at all participating locations. A normal loyalty program works something like this particular:

Enrollment – Consumer enrolls by completing a loyalty application.
Staff reviews for eligibility and ensures the loyalty card number will be recorded on the application.
Consumers will earn X point per dollar spent when they initially enroll plus ongoing.

Activation – Consumer makes X point per $ spent as soon as they enroll.
Amount of the particular “loyalty points” is loaded and stored on the host database by swiping a magnetic strip card through a credit card terminal
Enter the quantity of the purchase when prompted.
Client receipt shows points balance on card – updated in real time.

Adding Points – Consumer earns X point per $ spent with each purchase.
Same procedure as activation transaction, but done since “add value” transaction.
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Customer receipt shows points earned and cumulative balance on card – updated in real time.

Redemption – Redeemable in any way participating locations (if applicable).
Swiped through credit card terminal for web host authorization.
Enter amount of points to become redeemed when prompted.
Customer invoice shows real-time points balance.
The well-run gift and/or loyalty program can be a terrific revenue generator for the retailer. Not only does it help generate pre-paid revenues, it also creates pregressive sales upon redemption since the consumer generally spends 20% more than the significance of the gift card. This pregressive business combined with the loyalty aspect of the card being redeemed at your store is really a winning combination.