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Monday, November 23, 2009

Guest post by John S. Harris

It’s Thanksgiving Week and holiday decorations, seasonal recipes, holiday sales and special promotions start to scream at all of us. The charge is underway, and a big chunk of the action every holiday season is that special currency known as gift certificates, or gift cards. How does the independent merchant compete with the chains to make the most of the opportunity?

The answer for the independent is the same as it’s always been. Focus on your customer base. This is a strong suit for independents, many of whom tend to personally know or at least recognize their best customers. These are your most loyal, most frequent, most spending, or some combination therein. These folks also represent your referral marketing network. The holiday season is the perfect time to engage and reward them. Though it helps greatly to utilize an online gift certificate service, it’s not essential.

What is essential is to re-think your gift certificate or gift card strategy to do two things: reward your fan base; and reward the potential new fans they bring into your orbit.
Gift Certificates and Gift Cards have obvious and well known advantages, foremost amongst them being cash in the bank well before the sale that ultimately credits against it. But their less hyped advantages lie in their inherent viral marketing properties. Gifts are all about giving, of course, and there’s always a Buyer, and a Recipient involved – two consumers, not one.

Turning one consumer into two consumers is the very definition of viral marketing. Therefore, every single sale of a gift certificate is an outstanding shot at a viral marketing win.

So here are some suggestions for making the most of your gift certificate or gift card opportunities.

Issuance and Redemption Basics: Get the nuts and bolts in place for the rush. You cannot afford to make it difficult or time-consuming for consumers to either buy, or redeem, gift currencies from your business. If you’ve already got a system in place, then good for you. If not, I’ve put together a table (inset, below) that lays out the basics of the commercial gift world – the tools accessible to you to work the gift business.

• Treat Gift Buyers and Redeemers THE BEST. Sure, you and your staff treat everyone well, but the folks buying and redeeming are the best existing, and potentially best new, customers. Viral!
• Make Them Available Online. It’s a must that customers can buy them 24X7 and frankly, it’s a pretty basic courtesy. Widespread, cheap and easy; see the table of online gift certificate services (below), if you’re not already there.
• Stock Up. A one-dollar gift card can be sold for easily one hundred times that amount, or more. Not a time to get caught short on either your paper or mag-stripe gift stock.
• Train The Troops. You and your staff must be fluent in the sale, and redemption cycle, particularly the POS part of it. It costs nothing to set up some practice sessions.
• Review Your Denominations. Maybe you’ve been selling $10 certificates or cards for years, but your average check is $16. Does that make sense?
• Know the Law. Every state is different, but there’s been a flurry of both state and federal legislation in the past two years. Go to, for a great summary.

Marketing Basics: It is crucial to let your customers and employees know about your gift offerings. Some inexpensive (or free), direct marketing programs that you can make happen in a couple of days:

• Eye-catching Signs or Posters:
• “Gift Certificates Available – On-Line or In-Store at…”
• Table or Counter Displays. Same message
• Staff Buttons. Fast and cheap, a million places online can create them for you overnight
• Flyers:
       -Start putting a simple flyer into every bag or box; in every check-presenter, etc.
• Add to Voice Mail message:
      -“Our gift certificates are available 24X7 online…”; or “We’re open special hours this year to provide gift certificates…”
• Add simple text at the bottom of your receipts or invoices
• Staff Training. It’s easy to simply mention that you offer gift certificates or gift cards

Promotion Plan: Work the gift business both online (see table of online gift certificate services, below) and offline. Some proven strategies include:

• Give Free Gift Certificates to your best customers. Send them via mail or email, an actual Gift Certificate / Card with a personal message, e.g.,”Thanks for you business over the years.” Make sure you do it in a way that makes it very easy for the recipient to re-gift it if they want. Most recipients will spend more on the back-end, both in purchases and in referral business. If you’re too busy, some companies will do a special run of Gift Certificates complete with personalized messaging and complete fulfillment for a very small fee.

• Buy a Gift Certificate / Get a Gift Certificate. This promotion rewards the purchaser with an additional, or separate, gift of their own. This is particularly effective with office administrators, because when the purchaser buys a $50 gift card/certificate, they would typically receive a $10 one for themselves. The big chains do very well with this strategy – Smith & Wollensky’s is one of many examples of what a proven technique it is. Online gift certificate systems (see table below) are particularly adept at automating this and capturing all the buyer and recipient info.

• Presuming you already have some form of customer list or database, this is the season to think more professionally about how it needs to be happening all year long. You do not want to win new customers without capturing some basic contact info about them! Get your website up to speed on this. Ask whoever handles your website to add a simple online form for customers to join your mailing list – it’s trivial and very inexpensive.

• Send a follow-up “Thank You” via email or personal note to recipient and giver after redemption. If the recipient is a first time customer, thank them for coming to your store and reinforce your goal of personal service and product selection. Also, send a ‘Thank You” to the buyer for introducing a new customer to you and sending a best customer back to you. This simple courtesy is worth its’ weight in gold.

Gift Systems. It’s a brave new world out there as far as online gift certificate services are concerned. Your most successful competitors are already there. If you’re not, it’s never too late. Most of the systems today can be up and running in literally one or two days. I put this table together to try and simplify a pretty complicated industry. There are billion-dollar vendors and tiny start-ups in this space, and hundreds of companies. So this is merely my attempt to clarify what’s out there.

Check out the "Landscape of Online Gift Certificate Services Available to Small Businesses"

About The Author - John S. Harris has been a small business consultant for over twenty years. A former owner and operator himself, John is a principal in Lynch + Harris, a consulting firm specializing in operations management and marketing communications that helps independent restaurants and retailers expand their business and improve their operations. John can be reached at


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