Why Should Small Businesses Offer Gift Card Loyalty Programs?
Gift cards attract customers and help businesses reap numerous benefits in terms of sales and branding. From becoming popular among your customer base to eliminating cash backs – there are many small and big advantages of offering gift card loyalty programs. 2021 has brought a huge set of opportunities and as we come closer to the yearend, small businesses should rethink and revamp their customer loyalty strategies.
Before understanding the different benefits of customer loyalty cards and programs, let’s dig deeper into the concept and types of gift cards:
Closed Loop Gift Cards
These are business-specific gift cards that are used only for self-branding and customer loyalty purposes. Customers can use these for purchasing directly from your business and not from any other sources.
Open Loop Gift Cards
These are network-based cards that are used to purchase items wherever the payment network brand is accepted. For example, Visa and Mastercard. This is because the gift card payment processing takes place through the concerned card network.
Now that you know of the basic types of gift cards, let’s see what kinds of benefits await for small businesses across the United States…
Benefits of Gift Card Loyalty Programs for Small Businesses
Small businesses may start small, but shouldn’t stop thinking big! Offering gift card reward programs can ensure great business progress while unlocking tremendous potential. Of course, you’d need either a software development provider or an all-around gift card processing company to make it happen!
Join a Rapidly Growing Industry
As per the recent statistics report, the end of 2021 sees the US market cross a valuation of $170.78 billion! The same is speculated to go beyond $238 billion by 2025, taking the US Market share over 50%. With the US all set to become a global leader in the Gift Cards industry, it’s pivotal for small businesses to leverage the same and elevate their business potential. Between 2021 and 2025, the annual growth rate is projected to be 8.8%, resulting in a consistent rise in the coming 4 years.
Hence, small businesses offering gift card solutions will instantly become a part of this rapidly growing industry. This means two things will happen:
- Signing up for a guaranteed positive outcome in terms of customer loyalty and retention.
- Opening doors that lead to better business prospects for the future.
Attract More Buyers to Your Business
In one of the most imperative surveys, it was reported that gift card sales across the United States experienced significant yearly gains since 2018. In the case of open-loop gift cards, the sales had undergone a 31.5% increase during the pandemic. The initial half of 2020 saw US consumers buying on an average 7.1 open-loop loyalty cards a quarter. This was 4.4 in 2018 and 5.4 in 2019. Even closed-loop gift cards saw a good rise in their sales at an average of 4.7 per quarter. As compared to 2018 and 2019, this is a flat 20.5% and 80.8% of increase respectively.
All of these statistics and market trends affirm that gift cards can help small businesses attract more buyers and ultimately, retain them for future sales. 37% of closed-loop gift card buyers indulge in expenditures exceeding their card’s original worth. That’s clearly a win-win situation for small business owners who look to accomplish better profit goals.
Witness a Steep Rise in Sales
Almost 50% of the world’s leading (top 1000) retail e-business owners are accepting gift cards. Because of the COVID-19 epidemic, online sales have skyrocketed like never before. Digital loyalty card trends have shown how more than 55% of customers who use Gift Cards as a mode of payment spend more while making purchases.
As a small business owner, online or onsite, you’d be glad to know that programs for retailers are like multi-bagger stocks. These can comprehensively multiply your sales and help your business tackle financial challenges with ease.
Expand Your Customer Base
Along with sales and revenue, it’s vital to emphasize your customer base. As your business grows older, expansion strategies must be redefined to keep your business up and running. Gift cards and loyalty program solutions are one of the few strategies that can make a big difference. Research shows that on average, US consumers use $4 more when it comes to gift cards. Most of the time, gift card purchases are made for personal use. Also, 53% of e-shoppers purchase gift cards for gifting purposes as well.
From the Gen-Z and Millennials to the aged consumer segment – everyone loves gift cards. Small businesses must prioritize gift card loyalty programs for enticing a wider range of consumers.
Think Digital, Think Profitable
According to a report by Businesswire, businesses of all scales are opting for digital gift cards. It’s estimated that by 2025, such adoption will undergo an increase of about 23%. Consumer sentiments are evolving and moving towards online shopping. Hence, now is the best time for small businesses to start providing gift card solutions to their customers. Not so surprisingly, digital gift card sales are rising at double speed in comparison to the net sales from 2021 and 2025.
Going digital with your customer loyalty card programs is an effective way to cut down on your costs while generating greater cash flow and profits for your business.
What Do You Need for Gift Card Processing?
To start offering gift cards and accept them for sales, you need the following:
- A merchant loyalty program account.
- A point-of-sale system and payment terminals.
- Virtual terminals and payment gateways for e-commerce websites.
- Loyalty customer card software for closed-loop gift cards.
How to Process Customer Loyalty and Gift Cards?
While offering closed-loop gift cards, you’d need a loyalty program software integrated with your POS system or e-commerce portal. This makes it possible for you to keep a track of gift card purchases and customer credits. Gift card processing companies can help you set up the entire system with sheer ease.
Once your gift card processing system is all set, you simply have to swipe the gift card on your card terminal or POS hardware. This will perform total card activation and add the relevant value. Customers can redeem their gift cards using this process or by entering their card numbers online. For open-loop gift cards, a process similar to credit card processing is followed.
As such, there are many reasons to have credit card processing systems set up at your store.
At Patel Processing, we provide customized gift cards and loyalty solutions for big and small businesses. Get in touch with us to know more about the attractive packages!