Here's How to Make the Best Use of a Stored Value Card Program

Basic Gift Card
This is best when the merchant wants to replace a paper gift certificate program with a sturdier, more manageable, and better looking system.

Example: Sally L. has owned an antique shop just outside of a medium sized Midwestern community for the last 12 years. Quite set in her ways, she stubbornly sold only paper gift certificates until a year ago when she began noticing that after people purchased less than the face value of the paper gift certificate, she was making up the difference in cash at the time of the purchase. She reluctantly switched over to our plastic gift cards where the balance of the card's value remained electronically on the card if the initial purchase amount was less than the original face value. In other words, no cash back. The unused value on the card brought some people back for a second time while others went unused. Either way, she profited. The unused amounts were pure bottom line profit, and for those who returned a second time, more often than not, they spent more than what was remaining on their cards. After doing things the same way for many years, Sally realized the positive, profitable results a simple change can make.

Loyalty Card
The gift card becomes a loyalty card when it is used to generate repeat business. It's like a Subway Shop punch card in plastic form with no punches necessary.

Example: Don F. owns a computer game store in Atlanta. He turned his gift card program into what he called his "Lucky 7 Plan". Purchase 6 computer games at their regular price and the seventh game is free. Don knew that - contrary to a Subway-style punched paper card that can be copied easily - the plastic card maintained the promotion's integrity. The results amazed Don because this simple promotion separated him from the many other computer game stores in the area. Instead of shopping around, many of his customers who he saw once every three months became monthly repeat customers, exclusively shopping with him simply because they wanted their free seventh game. And when he added an extra free game to every 100th Lucky Seven customer, he was busier than ever and knew who the truly lucky one was after a visit to his accountant.

VIP or Club Card
Just about everyone likes to feel special and part of an elite group. Using the gift card program as a "Club" card or VIP card with an upfront membership fee not only generates cash flow but literally insures repeat visits from those who want to take advantage of the special offers their prepaid membership gives them.

Example: Tony and Gina G. own a delightful Italian restaurant on Miami Beach. They used their gift card program to create and manage "Club Cacciatore." Club memberships were sold for $150. Membership benefits were programmed into the card and included reservation privileges (members were assured to get the table and reservation time they wanted), 10% off every meal, a yearly club party for members only that featured special dishes, desserts, and entertainment (members were charged $150 for the party unless they wanted it added to their original club card purchase, which Tony and Gina then charged $250 for the membership card), Tuesday night is member night where members get 20% off their bill and after 10 Tuesdays they get their 11th Tuesday meal for free, and a Club Cacciatore quarterly newsletter that was sent via e-mail to all members, which contained a variety of other promotional ideas. The club became so popular Tony and Gina sold T-shirts with the club name on them. In the second year, more $250 memberships were sold than $150 memberships which resulted in a huge influx of cash reserves. Year-round residents felt they were being treated special because the club was originally open to residents only and not snow-birds. But after two years, the snow birds clamored to join and a whole new market opened up for Tony and Gina. Needless to say, their business increased by 50% during the club's first year and the business doubled from that after year two. Because of the cash generated from the sale, Tony and Gina were able to buy out the store next door to them and expanded their business adding tables and a new dance floor.

Return Program
Most retailers would rather issue credit for returned goods than give cash back. The gift card can be programmed to accommodate credit for returned merchandise, which then requires the customer to return to the originating store as compared to cash which can be spent anywhere else.

Example: The cosmetics counter of a large local department store in Colorado Springs had an open return policy and a considerable amount of cosmetics were being returned by women who didn't like the color or were allergic or just didn't like the cosmetics they had previously purchased. Instead of store credit, customers were given cash back, which they didn't necessarily put back into the store. The department manager brought in a gift card program and immediately, all credit that was issued for returned goods was placed onto the card. Not only were customers required to activate credit at the issuing store but could only activate credit for cosmetics at the cosmetics counter. The result was that customers tended to not only redeem the credit amount but purchased additional amounts of cosmetics at an average equal to the credited amount. Sales and profits for the cosmetics counter reached new heights after only 6 months in effect, and the department manager was promoted to floor manager for turning around the entire department from struggling to profitable.

Stored Value Card
Because a stored value card can be programmed at the point of sale for whatever amount (or point value) is needed, the use of the card offers tremendous flexibility for the merchant.

Example: Jeff's Car Wash in Spokane used to sell gift certificates that featured 10 washes for $99. Regular customers liked the package idea but not all wanted to spend $99 upfront for 10 washes. They preferred 5 washes for $49 or some other variable. Gift certificate sales declined. Jeff brought in a gift card program, which allowed him to program in the number of washes the customer wished to pre-buy. Some wanted 20; others wanted only 3. Jeff was able to accommodate everyone and his "Wash Card" sales skyrocketed. It also improved Jeff's cash flow, which he used to add another wash bay. All in all, Jeff cleaned up.