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Loyalty through Gift Cards

What tactics has your business used to broaden your customer base? Many businesses currently work to attract customers by offering deep discounts for first time buyers. This is a good way to increase sales, but it does not lead to customer retention. In order for a business to see these initial sales translate into year-end profits, you must build customer loyalty. By increasing customer loyalty and retaining a large base of loyal customers, your business can gain a distinct edge over your competition and increase your business profits.

One powerful tool that can be used to increase customer loyalty is a gift card program. Many businesses have embraced the idea of using punch cards to build loyalty. With punch cards, customers earn rewards over time and, typically, the card can only be used for a particular item.  Unlike punch cards, gift cards offer the customer instant gratification and can be used for any product or service offered.

One company that has had great success with the use of gift cards to increase customer loyalty is Durango Joe’s Coffee shop in Colorado.  In 2008, the company began offering its customers “cash cards”  which were store-specific gift cards.  For every $25 that a customer loaded onto their Durango Joe’s gift card, the customer received a free drink of any kind and any size as soon as they bought the card. The customer did not have to wait to hit a specific number of purchases and the free item was available immediately.

The gift cards at Durango Joe’s can be used to purchase anything in the store, from coffee to merchandise.  The program is so popular, that 40 percent of Durango Joe’s customers now use the card for their purchases.

There are several reasons that businesses should consider a gift card program to increase customer loyalty.

  • Customers prepay for future purchases giving them incentive to return.
  • Gift cards allow customers to maintain a balance. When the balance is low, rather than lose the amount they have on the card, they are likely to load more onto the card.
  • Gift cards allow you to track what your customers are buying thereby giving you information that allows you to make your marketing customer specific.
  • Business specific gift cards mean that the customer must use the card in that business.
  • Studies have shown that over 60% of people who use gift cards spend more than the value of the gift card when they shop. Customers feel that the gift card gives them added value.
  • Gift cards offer an immediate benefit to the customer who will not have to fulfill a specific purchase requirement as is the case with punch cards.
  • Gift cards with a company logo are considered more valuable and more likely to be retained by the customer.

Building customer loyalty through the use of a gift card program is one of many benefits for businesses, other advantages include:

  • Capturing information about the customer.
  • Inhibiting counterfeiting and theft.
  • Nearly unlimited marketing potential.

Customer retention and loyalty is the goal of any business.  Loyal customers frequently help to build your brand and your business by sharing their positive experience with others. In addition, loyal customers can provide you with honest and important feedback about your business. By implementing a successful gift card program you will begin to build customer loyalty. The end result will be a noticeable increase to your bottom line.

Are you ready to garner visitors to your business who become lifelong customers? Learn about all the benefits of gift cards and gift card programs in a convenient one-sheeter.