The case for a year round gift card program.

If you are already a specialty coffee retailer you have probably implemented a gift card program. If not…what are you waiting for? You are missing out on one of the most profitable and revenue generating aspects of your business. If you are just starting your business, don’t wait for the next holiday season to roll around to implement your gift card program.

Why Gift Cards all year?  Let’s set the stage. 

Coffee Shop Gift CardMost of you reading this are either independent specialty coffee retailers or seeking to enter into the business. You may not be big fans of Starbucks as a competitor but it is undeniable that they have an impressive and growing annual gift card program. In Starbucks’ last facial year ending in September 2015, over 5 billion dollars was loaded on to Starbucks cards. The cards are so popular year round that more than a third of all their transactions in the U.S. and Canada were paid via gift card.  I tell you this because it shows that a year round gift card program works. Starbucks states that 1.1 billion of its gift cards sales were generated during the 2014 holiday season alone. That leaves nearly 75% of their sales for the remainder of the year.

The list below shows the percentage of gift card purchasers who gave at least one gift card for the corresponding occasion:

Christmas 50%
Birthday 48%
Thank You Gift 18%
No Special Occasion 12%
Mother’s Day 8%
Father’s Day 5%
Anniversary 4%
Congratulations 4%

Here are some other fun facts:

  • GIFT CARDS HAVE THE ABILITY TO GET CUSTOMERS IN THE DOOR as 72% of shoppers also do some shopping for themselves when going to a store or website to purchase a gift card.
  • NEARLY ONE-QUARTER of consumers used a gift card to buy something they wouldn’t have bought on their own.
  • ALMOST 2/3 OF CUSTOMERS will spend MORE than the value of their card and on average the recipient will SPEND 20% MORE than their gift card value.
  • Customers are 2.5 TIMES more likely to buy something for full price if they pay with a gift card.
  • Retailers who switch from paper gift certificates to plastic gift cards typically see a 50-100% increase in sales.
  • 40% of gift card recipients do not use the total value of the card. 

Now that you have sold the initial gift card you have the opportunity to turn the gift card recipient into a long term customer. Unlike paper gift certificates, using a POS system such as Coffee Shop Manager you have the opportunity to easily convert the gift card customer to a pre-paid customer simply by offering to re charge the original gift card with an ongoing pre-paid amount. You can offer incentives for the new gift card customer to become a pre-paid customer enabling them to take advantage of your ongoing loyalty programs.

Don’t just look at your gift card program as just another inventory item.  The time and effort you put into planning, implementing and monitoring your effort will pay off for you year round!