From the blog The Complete Guide to Gift Cards for Small Businesses

Running a small business can be tough. It doesn’t matter what industry you’re in, there will always be challenges. Along with amazing products and services, you also need to wow your customers. While there are many ways to do that, gift cards can play an important role.

Gift cards are more than another “transaction currency.” They give you creative ways to promote your business, build customer loyalty, and create conversation around your brand.

And businesses see the value of promoting gift cards. Global gift card sales are expected to reach almost $700 billion in 2024.

Whether you sell flowers, books or car parts, gift cards are an important part of the expanding payment industry. Let’s take a look at your gift card options.

Types of gift cards

If you want to offer your customers gift cards, you have a couple of options. We encourage you to think about the size and security of your business, as well as your customers’ preferences.

In broad terms, you can offer two kinds of gift cards.

Printed gift cards

Simple gift certificates—think physically printed pieces of paper—can be a good option for some small businesses. They’re cheap to produce, and you can literally design and print them today.

If you’re in a crunch (gearing up for the holiday shopping season, for example), it doesn’t get any easier than this.

But while physical gift cards are cheap and easy, they’re not terribly secure. Even if you include bar codes (which we recommend), they’re fairly easy to duplicate. You’ll want to include very basic security measures, like signing each in a unique color of ink or including a watermark that’s hard to replicate in copies.

Even with these precautions, printed gift cards aren’t ever going to be super secure. Quaint? Yes. Quick? Definitely? Ideal? Not at all.

Secure gift cards

If you’re ready to get a little more serious about gift cards, we suggest using physical cards with magnetic strips. Here’s why.

The customer experience is basically the same. Maybe even easier. And the security level is much higher. Each strip links with an individual account. Money is deducted from the account when the card is swiped.

It’s much harder to duplicate a magnetic strip, making this a preferred method.

But you won’t be able to create these gift cards on your own. Instead, you’ll want to partner with a payment processor that supports gift cards. The downside is you’ll have to pay for the cards—but you’ll benefit from the improved security.

Plus, magnetic strip gift cards look more professional and polished. Especially if you brand them for your business.

The benefits of gift cards

Okay, so that’s the how of gift cards. What about the why?

We never recommend businesses of any size implement a change just to implement it. Especially when it comes to payment options, you should always think strategically. So, the natural question is, what’s the strategic advantage of gift cards?

There are a few.

Branding

Gift cards are ideal for branding purposes. Getting your name and logo out there can have a huge positive impact on your business, and gift cards give you a positive, proactive way to do that.

Think of it this way. Gift cards are basically a form of free advertising. In fact, customers are literally paying you to advertise for you when they buy gift cards to give as gifts. 

Not only that, but gift cards also create an opportunity for you to collaborate with other businesses. For example, you might consider partnering with other businesses in your area to offer gift card packages. That extends your marketing dollar and gives you more exposure.

You can also use gift cards to connect with your community through fundraisers and giveaways. The next time someone asks you to donate something for a fundraising event, consider gift cards instead of products or services.

All of that contributes to your image within the minds of your target audience. It gets your name out there, promotes your business, and gives folks a tangible reminder of what you do.

Said another way, gift cards are a surprisingly powerful way to build your brand.

Customer loyalty

Gift cards are also a great way to create customer loyalty.

Repeat business is a key element for long-term success. After all, it’s 5 times more expensive to get a new customer than it is to keep an existing customer. 

Gift cards give you an organic, non-pushy way to acquire customer information (like email addresses and phone numbers). You can then use that information for all kinds of inexpensive marketing tactics—everything from email campaigns to follow-up phone calls with your most loyal repeat customers.

Not only that, but you might also consider offering small gift cards as a part of your customer loyalty program. Even something as small as $5 or $10 can make a big difference in making customers feel appreciated.

Bigger transactions

Customers shopping with gift cards are more likely to spend more. For example, in retail, customers who use gift cards spend an average of $59 more than the face value of the gift card.

That means a $50 gift card can turn into a $110 transaction.

Customer spending patterns with gift cards make sense. The person using the gift card sees it as “free money.” So spending more than the face value doesn’t feel like a stretch to them.

As a merchant, this is one of the easiest ways to boost sales.

Hassle-free promotion

To a customer, gift cards are a convenient option. For you, the business owner, gift cards are a strategic marketing tool. The combined effect is a perfect storm for promoting your business… without seeming like you’re promoting it.

Like word-of-mouth marketing (which gift cards can also help create), this is marketing that doesn’t feel like marketing.

Even if you push for gift card sales around the holidays, folks won’t feel like you’re aggressively demanding more business. Done right, gift card promotions come across like a customer-centered matter of convenience.

And in reality, they are. They just happen to also be a good marketing tactic.

Get onboard

If you’re not already offering gift cards, we strongly recommend them.

Think about what your customers would most want from a gift card program. That should always come before your marketing considerations. (If you meet customer needs, the marketing will take care of itself.)

Then consider the following practical steps to get moving with gift cards right away:

• Do some quickfire competitor research. What do competing local businesses offer?
• Brainstorm with other staff members about options and gift card promotions—especially folks who have the most face-to-face contact with customers.

Contact your payment processor to see what kind of gift card options are available.