January 2007 Edition
The Gift That Gives Back

Gift Cards can Help Build Business

 

By Patricia Nicholson

The old adage that it is better to give a gift than to receive one may be true when it comes to making gift cards available for your restaurant. Gift cards are flexible and customizable, which makes them appropriate for almost any operation, from coffee shops to fine dining restaurants.

Gift cards are becoming one of the top gift choices in Canada, says Brenda Zurba, team leader at NEBS Business Products. In 2004, Canadians spent over $4 billion on such cards, and the market has grown substantially since then, outselling traditional gift certificates by a wide margin. The cards’ resemblance to credit cards may give them a higher perceived value in the eyes of the consumer, Zurba says.

Statistics on gift card use are very encouraging: Zurba reports that 75% of customers redeeming a card will spend more than twice the card’s value. Restaurants are a good example of this, because a customer with a $50 gift card is more likely to use it toward a nice dinner for two costing $120 than to use it to choose menu items totaling $49.95. Customers tend to view them

as “free money,” rather than as a spending limit, Zurba says.

Restaurateurs have several options for buying and administering gift cards for their business. Think about convenience, cost, data collection, transaction fees and security and tracking when deciding on a supplier.

Many POS system providers offer gift card services. This option may offer the convenience of using your existing POS supplier and integrating gift cards directly into your existing POS system.

It may be worthwhile for some restaurants to use a separate supplier for gift card services. Zurba says programs offered by companies such as NEBS can be advantageous for smaller businesses that would prefer to avoid transaction fees, or for those who would prefer to have ownership of their data records. These systems use a separate magnetic swiper and software provided by the supplier.

 

Whichever system you choose, don’t limit your gift card business to just selling the cards to customers. They can also be a powerful business and promotional tool. Zurba offers the following tips and ideas for gift card use:

1. Customer appreciation: A $10 gift card shows your best customers that you value their business. It’s also a great way to reward a customer who books a special occasion or a private event, and it encourages him or

her to return for another visit.

2. Encourage new customers to come in and sit down: Turn neighbours into clients with a local mail out of $5 gift cards inviting people to come in and try your restaurant.

3. Community involvement: By donating a gift card to a local charity or community group’s raffle or silent auction, or as a door prize for a local event, you’re gaining recognition as a part of your community, and gaining the opportunity to make the auction/raffle/prizewinner a regular customer. Remember that there’s a strong possibility that the winner will spend more than the value of the card. If the winner never comes to redeem the prize, there is no loss to you.

4. Smooth over rough spots: When there are hiccups in service, or when a customer makes a complaint, offering a gift card not only acknowledges that you care about the customer’s concerns, but it also invites them back to give you another chance to make a better impression.

5. Target business: Boost traffic during slow periods, or increase your draw for special occasions such as Valentine’s Day by distributing gift cards redeemable

only during certain months, or on specific occasions. You can also make them redeemable only above a certain threshold, such as $10 gift certificates good only on bills totaling $50 or more.

6. Avoid problems: Gift cards can bring big benefits to a business, but misuse of cards is the equivalent of money walking out the door. A good gift card system should be able to track transactions to help avoid theft and misuse. To avoid any customer misunderstandings, it’s also a good idea to make sure your gift cards state that they are not redeemable for cash.

Choosing the right uses for gift cards for your restaurant will depend on the size and nature of your operation, but they can provide big payoffs in marketing, traffic and customer satisfaction.