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The Savvy Manager’s Guide to Implementing a Gift Card Program Part 1: Getting Started

This holiday season, 8 in 10 shoppers will include a gift card to their shopping basket. This is according to a 2013 survey conducted by Prosper Insights & Analytics for the National Retail Federation (NRF).  Aggregate spending on gift cards will reach $29.8 billion this year with holiday shoppers spending an average of $163.16 on gift cards. That’s a 4% increase from last year’s average of $156.86.

Gift Card

In terms of holiday wish lists, a separate study commissioned by the NRF found that 6 in 10 (59.4%) shoppers still prefer gift cards as holiday presents over clothing and clothing accessories (51.2%), electronics (36.1%), jewelry(23.3%), and home-related furnishings (20.8%).

So, how do you cash in on this trend? Start a gift card program!


Gift card programs can impact your business both in the short and long term.

Business owners and managers have seen increased revenues, higher margins, and improved customer retention rates as a direct result of gift card programs.

Here are some of the ways in which your business can benefit from a gift card program:

  • Enhance Cash Flow – When your gift cards are purchased, you receive immediate payment for your unredeemed service or merchandise. Whether it’s redeemed the following day or the next month or not at all, you’re already assured of a sale. Plus, you can re-invest these dollars back into your business or make the money grow by letting it earn interest in the bank
  • Increase Revenue – Studies have shown that consumers’ spending habits change drastically when gift cards are added to the mix. They tend to reach for higher priced merchandise or services that they normally wouldn’t consider without a gift card. They are also inclined to spend more. Since it’s difficult to fully consume the preset value of a gift card up to the last centavo, shoppers resort to spending well above and beyond the dollar value of prepaid gift card. This phenomenon is referred to in the gift card industry as “uplift.” The uplift rate is pegged at around 30%.There’s also “breakage,” which refers to gift cards that are never fully redeemed. Most data put “breakage” rate at about 20% of the listed value on the gift card.
  • Promote Customer Loyalty – Most store-branded gift cards are redeemable only at the store or chain that sold them. This means that the customer will have to go to your store to spend the dollar value. A good way to incentivize the customer into coming back is to “cycle” their gift cards. This means never letting card to reach a zero balance. You can do this by offering to reload the customer’s card if they reach a purchase threshold.
  • Eliminate Product Returns – With gift cards, the recipient is able to choose an item or a service that he/she wants. Because they buy a desired item with the gift card, merchants are freed from the expense and hassle of handling returns of unwanted gifts.
  • Gain New Customers – Research shows that 11% of gift cards are from stores that the receiver rarely or has never visited. This demonstrates that gift cards can be a cost-effective way of getting new customers, which business owners and managers can turn into repeat buyers.
  • Promote Brand Awareness – Gift cards can enhance your business' image, giving the company a touch of "modernity." They also serve as an “in-wallet” reminder for the customer to visit your store.


Gift card programs have 4 main costs. These costs can be one-time or ongoing.

Sample Costs

Initial Setup

Fixed, typically one-time cost

$100 - $400 (estimate)


Ongoing cost, can be month-to-month

$35 - $45 / month (estimate)


Ongoing cost, typically per transaction

$0.0020 - $0.0030 (estimate)

Gift Cards

Ongoing cost, price depends on feature set and artwork requirements

$1.00 - $1.50 / card (estimate)

The table above shows estimated costs for starting a gift card program. The information listed are estimated costs from packaged solutions offered by merchant services companies.  

PROTIP: Costs are generally lower if you develop the gift card program yourself and acquire the equipment and stock cards directly from suppliers like

Sample Case Study
A flower shop that sells bouquets in the range of $25 to $50 starts a gift card program and orders 150 cards. 
Of the 150 gift cards, 100 are $25 gift cards while the remaining 50 are assigned a value of $50 each. All the gift cards combined amount to $5,000.
Assuming the acquisition cost for each bouquet is 45% of the retail price, the shop will stand to earn $2,700 if they sell all $5,000 worth of their gift cards with $2,300 covering the actual cost of the bouquets.
Deducting the gift card program costs of roughly $700, the flower shop still nets a healthy profit margin of $2,000.



To ensure that your gift card program become successful, you must consider the following factors:

  • Thorough planning and execution
  • Knowledge of the program
  • Commitment to the program

Planning and Execution

When planning your gift card program, involve all departments and not just your marketing department because most often than not, the guys from store operations will be the ones actually dealing with customers redeeming their gift cards. They will surely have some insights on customer behavior. Furthermore, the folks from accounting probably have useful insights on sales trends as well.

Fostering close coordination between and among departments will ensure that your gift card program will have all your bases covered.


You must be proactive in building upon your gift card knowledge. Study the gift card programs of other merchants to find ideas that you can implement in your own program. Visit your own locations regularly, as well, to get a sense of how your gift card program is actually implemented in-store.

Custom Printed Gift Cards

Gather feedback from customers and employees on how you can improve your gift card program. Their insights must carry weight in the decision making process involving the program because they are the ones actively dealing with the program.


When everyone shares a sense of program ownership as a result of the collaborative planning, they will all be committed to the program’s success and this shared commitment will drive the success of your gift card program.


When your gift card program is up and running, the next step is to get people to buy them. Here are ways on how you can drive sales:

  • Promote Online and On-Site
  • Offer Gift Card Customization
  • Offer Incentives
  • Use Customer Analytics

Promote Online and On-Site

Gift cards are so popular, they will virtually sell themselves, but only if your customers know about them.

Promote your gift cards every chance you get. Review available marketing spaces for promotion opportunities. These can be buttons on your personnel's shirts, banners on your website, inserts in your restaurant menu, or signs near the most trafficked areas of your store. If you maintain a newsletter, use that to announce your gift cards.

Offer Gift Card Customization

If there’s a downside to gift cards, it’s the perception that they are impersonal gifts. Fortunately, some gift cards, like e-gift cards, can now be personalized with custom designs, personal photos, and special messages. Use this to your advantage.

Another approach to customization is themed or seasonal gift cards. Consider printing different sets of gift card for popular occasions like birthdays, graduations, and Christmas. Expanding your gifting options will help a lot in growing your client base and increasing sales.

Offer Incentives

In a 2009 survey of gift card buyers, 8 out of 10 shoppers said they would be inclined to purchase an online gift card if there was an incentive, like a free $5 gift card with every purchase of a $50 card.

The advantage of offering incentives is it drives both the gift card buyer and the recipient to your place of business, doubling your earning potential.

Use Customer Analytics

Most gift card systems have reporting capability and can generate deep customer data, enabling you to create tailor-made promotions for each customer.

Another business benefit of gift card programs is the ability to track the spending behavior for both the gift card giver and the recipient. This customer analytic allows you to make targeted marketing initiatives that will help foster customer loyalty.


Spas, beauty salons, department stores, restaurants, coffee shops, home improvement companies, and businesses in many other industries have used gift cards to increase sales and attract new customers successfully. It’s no longer a marketing tool that is available only to big businesses, but a strategy that you can put to work to grow your business.


If you’re keen on developing your in-house gift card program, ID Superstore can help you get started. We can print your custom designed gift cards for you or you can buy the card printer and print the gift cards yourself.  We carry top of the line card printers and high quality cards stocks with data encoding options from all the major manufacturers including Evolis, Datacard, Fargo, Javelin, Nisca, Magicard, and Zebra.

Id Card Printing machine

Need help in getting your gift card program started? Call our friendly card professionals at 1-800-667-1772 to discuss your needs.

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