How to Encourage Shoppers to Redeem Gift Cards

gift card redemption

Gift cards were the most popular holiday request in 2021. Gift cards are convenient both for gift-givers and recipients because they’ve easy to ship and they take out the guesswork of holiday shopping. Recipients of gift cards are sure to get something they like when they make the purchase themselves. Plus, in a year impacted by major breakdowns in the global supply chain, gift cards were an attractive option for holiday gift-givers who wanted to ensure they didn’t show up for the holidays empty-handed.

Companies know that selling gift cards is an excellent way to drive more revenue, but how can sellers encourage shoppers to redeem their gift cards?

Unredeemed gift cards are common

Over half of adult consumers have unredeemed gift cards. Millennials and Boomers, in particular, are known for having unused gift cards, sometimes for years. 

Gift cards go unused for several reasons:

  • People forget about or lose their unused gift cards
  • People don’t like the store or restaurant that the gift card came from
  • People can’t use their gift cards because of location or for other logistical reasons
  • People use only a portion of the gift card balance
  • People don’t use their gift cards because they’ve expired or they come with restrictions
  • The business that issued the gift card closed before the recipient could use the gift card
  • The recipient doesn’t know what the gift card balance is

Most shoppers have a firm intention to use their gift cards, but after six months, gift card redemption rates decline, and after one year, they plummet. That means retailers should encourage shoppers to redeem their gift cards quickly.

Why would you want customers to use gift certificates or cards at your store?

Many people believe that unused gift cards represent “free revenue” for businesses –– money comes in, but no goods or services go out. Which means that unused gift cards have a profit rate of nearly 100%. 

However, those forgotten gift cards and vouchers actually represent lost additional revenue potential. In fact, when shoppers redeem gift cards, sellers often make more money than the value of the gift card. Increasing revenue in this way may seem counter-intuitive, but gift card redemption has more benefits than just incremental revenue.

Gift cards can attract new customers and expand your customer base

People often receive gift cards for stores they haven’t visited, or maybe haven’t even heard of. In that case, a gift card serves as brand awareness to attract a customer who hasn’t found your store through other channels. After the customer makes their first purchase, they may become loyal to your brand. Eventually, they might even give gift cards that win you more customers!

Gift card redemption increases AOV

When shoppers redeem gift cards, they often end up spending more than the value of the gift card. For example, a shopper may receive a $25 gift card and apply it to a $60 purchase, resulting in low-cost marginal revenue. When shoppers don’t redeem their gift cards, there’s zero chance that they’ll end up spending extra on your product or service.

Additionally, shoppers are more likely to purchase items at full price when they shop with a gift card. That means that sellers can capture more profit by making sales after the holidays on full-priced items. Instead of raising your prices or pushing deep discounts, consider encouraging gift card sales to existing customers.

How to encourage shoppers to redeem unused gift cards

So, what are the best ways to get customers spending their gift cards?

Remind shoppers of their remaining balance

One reason shoppers don’t spend their gift cards is that they don’t remember their balance, and it’s too much trouble to check the card online. For physical cards, always let customers know what their remaining balance is by either printing it on the receipt, or by sending an email confirmation. Then use email automation to periodically remind them of their remaining balance.

Send reminders via email and social media

Once per season, push a short marketing campaign to your email list and social media followers reminding customers to redeem the gift cards they received on their birthdays, at events, or during the holiday season. 

Offer bonus incentives for shoppers who redeem gift cards

You can also offer bonuses to shoppers who pay with gift cards: add an extra item to their order, give them a small discount, or offer double points in your loyalty program. Unique gift card programs can also help you retain customer interest and increase the rate of redemption.

Publish gift card guides to highlight your top-selling products

Gift card guides are a great way to highlight products and bundles at different price points, especially for new customers who don’t know what to buy. Create separate pages on your website promoting products in common gift card price ranges, like “Top Sellers Under $25”. The natural inclination is to redeem the entire gift card to not have a lingering balance. So, shoppers will spend above the gift card amount. This will increase your revenue generated by each card-redeeming customer.

Payability helps you speed up your cash flow

One of the advantages of gift cards is that they provide revenue before the sale of goods. However, eCommerce sellers still need to fulfill these orders and buy more inventory. Speed up your cash flow with Payability.

Instant Access from Payability provides daily payouts for marketplace sellers and Instant Advance provides immediate access to up to $250k in growth funding for businesses that are ready to scale. Qualification and approval are fast and easy with no credit checks required. Apply online with your marketplace and get funded in as little as one business day. Access your money on your schedule with Instant Transfer, Same-Day ACH, or wire. Payability also helps you earn more money with up to 2% cash back on every purchase you make with the Payability Seller Card.

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