October 7, 2014
4 Things to Consider When Implementing a Gift Card Program
Gift card sales are growing. Increasingly tech-savvy and choice-driven customers want to let gift recipients take a hop into the driver’s seat by selecting their own presents through the use of gift cards for birthdays, holidays, and other special occasions. On the merchant side of things, offering gift cards is a proven method for driving sales, promoting customer loyalty, and enhancing marketing efforts.
If you’ve decided to implement a gift card program, there are a few steps that you should follow in order to ensure it’s a success. Here are four things to consider before implementing your gift card program:
1: Find Which Rules & Regulations Apply to Your Business
Your company’s legal department or an outside counsel or specialist will be your first point of contact regarding the different requirements that apply to your gift card program, depending on your industry and the state in which you live.
For industry requirements, you can reach out to one of the following associations for information about gift cards:
- Hospitality: Hospitality Financial and Technology Professionals (HFTP), American Hotel & Lodging Association (AH&LA)
- Retail: National Retail Federation (NRF), Retail Industry Leaders Association (RILA)
- Food & Beverage: National Restaurant Association (NRA)
State and federal regulations relating to gift card programs may also be found at the following sites and/or by using the following search terms:
- Credit Card Accountability Responsibility and Disclosure Act of 2009 (111-24)
- National Association of Unclaimed Property Administrators (NAUPA)
- National Association of Attorneys General (NAAG)
- Federal Trade Commission (FTC)
- State websites and law libraries – look for “escheatment” or “unclaimed property” laws
- Gift card business practices – rules on “dormancy fees,” “expiration,” and “registration”
- State liability and jurisdiction laws – if you have properties that cross state borders
You will want to research and stay up to date on the rules and regulations that apply to your business by periodically checking for updates and changes.
2: Learn the Financial Considerations of Running Your Gift Card Program
In order to prepare for the launch of your gift card program, there are a few gift card-related reports that your finance department will want to be familiar with, including how to report income from card redemptions, deferred income or liability reports for outstanding card balances, and how to handle inactive cards with dormancy fees and expiration capabilities. You will also want to plan how you will track gift card sales, retain gift card monies, merge card balances, eliminate cash buy-outs, and void gift cards that have been purchased fraudulently.
If you have multiple properties, you will want an enterprise-wide solution for tracking and settling cross-property sales and redemptions.
3: Implement Gift Card Technology
Shift4 recommends a gift card program that fully integrates with your point-of-sale (POS) or property management system (PMS) because this will enable one-step activation, redemption, and balance inquiries, as well as the ability to swipe the gift card like a credit card.
Also, using a hosted, web-based system to manage your gift card program can limit your software and hardware investment, minimize upgrade costs, and allow your gift cards to be delivered instantly via online sale and/or sold where there is not a POS (e.g., through a concierge).
You should also consider adding security measures, such as a non-sequential numbering system and security code/PIN number requirements. These types of security considerations can be crucial in preventing the creation of fraudulent cards and securing access for your customers to check their balance and register gift cards on the Web.
4: Market Your Gift Card Program
Creating a look and feel for your gift card program will be essential to maintaining your brand, promoting sales, and building customer loyalty. If this is your first time implementing gift cards, you may choose to run a limited-time promotion or to mail prepaid cards as part of the promotion.
Further, you will want to consider how you will market your cards, including selling gift cards in specific dollar amounts or flexible values, and whether you will sell gift cards or e-certificates through your website. You can also consider tracking gift cards as they relate to seasonal promotions and allowing customers to register gift cards so that you can tailor promotions and evaluate spending trends with activity reports.
Of course, if you want to make things really easy for yourself, then you can take advantage of Shift4’s full-featured gift card solution, IT’S YOUR CARD® (IYC). A seamless integration with DOLLARS ON THE NET® allows IYC to leverage Shift4’s unrivaled speed and security while giving you ultimate control over how you deploy and utilize your gift card program with both physical and electronic gift cards.
If you have any questions about implementing a gift card program in your business, please email [email protected] or call 702.597.2480 (option 4).