Gift Cards

TechExec Week 17 - Monday Edition

Author

Gaurav Singh
July 31, 2023

(Total read time: 3 minutes)

Hey there,

Welcome to the Week 17 of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!

As always, we are sharing a new set of BLTs this week

  • 💼 B - a Business concept / theory / story

  • 💝 L - a lifestyle advice

  • 🤖 T - a Tech explainer

Here is the schedule:

Monday —>💼 B - a Business concept / theory / story

Wednesday —> 💝 L - a lifestyle advice

Friday —> 🤖 T - a Tech explainer

This week we will cover the topic of the Feynman Technique on Wednesday and introduce you to Gamification on Friday.

Today’s Business Concept is Gift Cards!

💼 B - Gift Cards

I have been told I give very thoughtful gifts. If you and I haven’t been friends, here is a reason why you should make more efforts😂. Unlike yours truly, a significant majority of the population is less-than-stellar at picking out the perfect presents. So who is their ultimate holiday savior? Gift cards!

Gift cards are like the Superman of the gifting world, swooping in to save us from our gift-giving ineptitude. But did you know there is a crafty business strategy behind these plastic heroes? Let's unravel it.

Firstly, let's acknowledge that gift cards are a win for businesses. They get the cash upfront, whether or not the card is ever redeemed. That’s right, companies can rake in the dough without ever having to provide a product. Add the fact that these plastic cards are rectangular recommendations - every time someone buys a gift card, they are telling someone else to buy from you. Moreover, gift cards often lead to additional sales. Recipients usually end up spending more than the value of the card. So, not only is the business getting your money upfront, but they’re also convincing you to spend more of it. Crafty, right?

However, it’s not all peaches and cream in the land of gift cards. There are some pitfalls businesses need to avoid to make their scheme...I mean strategy...successful.

One common mistake is making the redemption process complicated. If it requires a degree in rocket science to figure out how to use your gift card, chances are it will end up in the infamous ‘miscellaneous’ drawer, never to be seen again. Simple is best. Remember, folks, we’re gifting ease and convenience here, not a brain teaser. Another blunder to avoid is forgetting about expiry dates. Nothing sours a customer's mood faster than discovering their gift card has expired. So, keep those expiry dates long and clear. Finally, hidden fees are a big no-no. If a customer finds out they have to pay an extra fee to use their gift card, they're going to feel cheated. It’s like winning a free vacation and then being told you have to pay for your own umbrella drinks—it just leaves a bad taste.

Takeaway: Gift cards offer a strategic advantage for businesses by ensuring cash flow regardless of redemption. Moreover, gift cards essentially act as rectangular recommendations, encouraging recipients to make purchases from the respective businesses. Additional sales are often generated, as recipients frequently spend beyond the card's value. However, businesses must be cautious to avoid pitfalls such as complex redemption processes, short expiry dates, and hidden fees, which can deter customers and tarnish the gifting experience.

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