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Gift Cards - You've Got To Spend Money To Make Money!

   By: Steven Schneidman

The old adage you've got to spend money to make money is no where more true than with gift cards. Look around all I've seen advertised on television and in the newspapers this holiday season has been for the purchase of gift cards. It's as if Walmart, BestBuy and Target don't have any merchandise to sell.

Advertising today is very expensive. People in marketing know that to advertise for 1 specific product nationally or locally can cost thousands if not millions of dollars. Is it worth it to sell 1 product. For those interested in that product they might venture into the store and while there, they may purchase other items, but what about those not interested in that product? All that money spent and no direct result seems like a waste. What the marketing departments in these companies have decided to do is push gift cards. In todays fast paced life style, window shopping or browsing is a luxury that most people don't have or don't want to do, with their limited free time. Gift cards are the drive-throughs for these retailers. Quickly pick up a card, plunk down some cash and be on your way. Gift cards have become trendy and very convenient for the consumers.

This sounds good for the consumer but why is the retailer pushing the cards. Do they genuinely want their customers to be happy? Perhaps, but being a synic I can suggest other reasons. Firstly, gift cards are great for cash flow. The cash sits in the retailers account and waits for the purchase at a later time. Secondly some gift cards never get utilised, they might be lost or forgotten. Thirdly, the average consumer when making a purchase using their gift cards, spend more than the gift card amount. Fourthly with gift cards you cut down on returns to the stores. The cashiers spend less time, merchandise isn't destroyed or abused and inventory amounts reflect real sales which helps in planning replenishments. Fifthly, these cards can be refilled or exact amounts can be depleted. With gift certificates any unused portion was generally give back as cash to the consumer, thus a sale might not really be a full sale.

Having a company, Solutions Ink, in the promotional products industry I've personally seen the dramatic change to gift cards. The next big shift will come in loyalty cards, as these same retailers discover the benefits of consumer buying patterns. The old adage you have to spend money to make money is true but with todays competitive markets you must spend that money wisely. You don't mind spending the money if there is a worthwhile return. We see with Gift Cards that the returns are great, more than offsetting the cents you spend per card. With Loyalty Cards the knowledge gained on consumers buying habits will lead to personalized marketing campaigns to each and every consumer with phenomenal response rates. If you know what your customer is looking for and offer them that product, chances are they will buy it from you, and appreciate your help in saving them time. Being first to market in your business category will give you a decided advantage for years to come.

Steven Schneidman runs a successful printing and promotional product company servicing customers in both Canada and the United States. He has an MBA, has taught finance at a leading Canadian University and has worked at the head office of a leading Canadian Bank.

Look for companies like Solutions Ink that also specialize in variable data. Today with the use of digital presses and customer data we have seen an explosion of successful marketing campaigns that generate more sales with reduced marketing budgets.

Remember spend your dollars wisely.

Steven Schneidman

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