How to Improve Your Business with Gift Cards
Daniel Flynn
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Due to an ever-growing list of things to do and the churn of day-to-day operations, entrepreneurs, like yourself, often overlook the three areas that can instantly improve your business:
- Cash Flow
- Profit
- Marketing
Not only are these areas the lifelines of any business, but also their proper management (or lack thereof) will turn your business into a big winner or an even bigger loser. Poor cash flow management alone accounts for 82% of small business failures.
Therefore, you should always ask yourself how to increase cash flow, maximize profit, and improve your marketing actions. Luckily for you, gift cards improve all three areas and here’s how.
1. Increase Cash Flow
A small business owner who sells a gift card today will get the cash in hand for that sale today. However, he or she will not distribute the products or services until a future date.
Therefore, gift cards increase cash flow because the business owner receives cash upfront. The business owner wins because he or she can fund operations, inventory, payroll, utilities, and pay himself or herself a little easier without providing any products or services.
2. Increase Profit Potential
When a business sells a gift card, a customer provides value in the form of cash, a check, or credit card, which the business owner then loads onto a gift card. That gift card is then issued to the purchaser and can be used at an agreed-upon time, the next visit to the business, or immediately after the transaction is completed.
If the consumer redeems the full value of the balance for purchases in the future, then the sale was a 1 to 1 transaction. Other then the value of cash flow to the business, there is no other immediate monetary value of the transaction to the business.
But what if they don’t?
The value in gift cards is the profitability of the un-redeemed balance that was purchased on the gift card.
For example, you go to a retailer and buy a gift card as a gift for a friend. The value of the gift card is $25. You give the card to your friend and they lose the card, don’t use the card, or redeem the card at the retailer for less than the $25.
In all three examples, the business made more profit than if they had sold a product at the store for $25.
In fact, 65% of gift card recipients spend roughly 38% more than the value on the card.
Starting to understand the undeniable profit opportunity in gift cards?
3. Increase Organic Marketing
Gift cards are one of the most efficient and effective forms of organic marketing, even in today’s digital age. The recipient of the gift card also becomes another ambassador of your brand who might tell people about your business, which increases word of mouth marketing, the golden egg in marketing and advertising.
If the recipient knew about your business already, then having a gift card to your business will only make him or her a better customer.
Do You Want to Improve Your Business?
Gift cards offer an effective supplement to your marketing that is sure to last. Due to the low cost to issue them (no cost with TAP Local Payments), there is no reason that you should not be offering them.
If you are, then you know how gift cards create a win-win situation for your business. If you don’t, then that is why we, at TAP Local, are here: to help you TAP into your full earning potential, setting you up for long-term growth.
For more information, visit our webpage. For more articles on digital marketing and payment processing, visit our blog.
Next Step?
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