Improve your cash flow with Gift Vouchers

Gift vouchers are everywhere these days. Stand in any checkout line and you see the ‘loadable’ plastic cards. Gift vouchers aren’t just for big companies, they are for anyone who supplies goods or services and they are powerful tool to gain new customers and retain the old.  Their two main features are that you get paid up front and they often get given to a third party thereby sharing the love and the loyalty! Here are a few basics about Gift Vouchers and why you should consider them in your business.

What are Gift Vouchers?

In the purest form, a gift voucher is a pre-paid credit note from your business that can be used by a customer to pay for your services or goods at a later point in time. This is different from such things a discount vouchers (get x % off a service/item) or a promotional device (get x when you do y ). Gift vouchers are not usually tied to a product, they are simply a form of ‘money’ that customer can only use with you. When someone buys the gift voucher, you have already got the money but you haven’t supplied the service or goods yet. How the voucher is formatted, how long they are valid for, how to track their uses, and more technical matters are covered in my blog article How to design a Gift Voucher.

Why use Gift Vouchers

Gift vouchers go beyond being simply a way to get money. Essentially they are the best kind of advertising a business can have because it is a recommendation from one person to another about how good your business is. Personal recommendations are the most powerful form of advertising there is. If you record the details of the person who buys the voucher and the person who spends it, that gives you two people who are clients you want to keep because they value what you do.

Other benefits of Gift Vouchers

Gift vouchers can be a great way of tracking your business. Just make a note of when vouchers are bought and redeemed to see if you have peak business periods. Seeing which products the vouchers are being used on is another way of tracking which is the most popular. Want to see how successful your involvement in an event or promotional body?  Then offer the event a lower value voucher at your cost to track the customer response to it. With gift vouchers having a dollar value instead of a product value, it allows you to hook customers who are unsure if what you offer is the right gift because the gift receiver can pick what they want instead of the gift giver having to guess. Another way of using gift vouchers is as a form of credit note, because if someone has overpaid or you want to give the customer a bonus, why not do it in a form where money has to be spent with you anyway.

The terms and conditions

This is the big one, the rules of how the voucher can be used. These limitations are there to prevent abuse of the gift voucher and also that the customer has a fair deal too. You can add any terms and conditions you like but there few ones I recommend.

• Excluding exchange for cash or credit. You want people to spend money with you so you need this clause, otherwise, you end up losing money by the time you factor in the cost of having the vouchers made and the ‘bank’ cost of receiving then refunding the money.
• Reserving the right not giving out change above a dollar value. One way to get around the ‘exchange for cash or credit’ rule is to spend the voucher on the cheapest item available then get the rest back in change. By limiting the amount of change given it prevents this and ensures that you get the best return from the customer’s investment.
• An expiry time. You should limit how long a voucher should be good for, as it motivates the customer to use it before runs out and ensures that you can keep the bringing in new customers all the time. The time limit is up to you but 3, 6 and 12 months seem to be the most common.
• The right to exclude the voucher from being used for some services or products. It’s a personal choice but it’s handy clause to have if there is some situation where you don’t want to have a voucher redeemed for it.
• The right to exclude the voucher from other promotions. While a gift voucher is money you already received, sometimes it is useful to have the right to exclude a voucher if having it used will result in some of the money going to someone else.
• Limiting where the voucher can be used. Do you use a multi-location business? If so, you can use it as a way to manage where the money goes. Keeping the redemption to the store where the money was paid.

There are more T&C’s that can be added depending on the nature of your business and where you want the money to be spent.

How to use Gift Vouchers in your business

There is no limit to the businesses that can use gift vouchers. The most popular is for sale over the counter so that it can be given away as a gift.  But there are many other ways, especially if you think of a coupon/incentive approach.  Here are some ideas:

• include it as a coupon with a purchase – really good if it is only valid during your slow season and must be used as part of a larger order!
• sell “two-for-one” vouchers – great for health & beauty businesses
• send them as a “reactivation campaign” to customers that haven’t shopped with you for a while

That’s the basics of Gift Vouchers and why you should use them. I’ve only scratched the surface here so why not give us at Copy Express a phone call or email to find out more and what they can do for you.