How Coffee Shops Benefit From Offering Gift Cards
Gift cards were first introduced by large department stores in the 1930s in the form of gift certificates. The paper certificate was valid for the amount written on it, and able to be purchased as a gift. Restaurants didn't offer gift certificates until the 1970s when MacDonalds introduced them. Other restaurants soon followed.
But why did they? Why are gift cards so attractive for restaurants and coffee shops? There are a few reasons: cash flow, loyalty and referrals.
Table of Contents
Gift Cards Are Good for Your Cash Flow
Imagine if you could get a loan from your customers to improve your business. For many large chains, that’s how they view their gift card program. They don’t see it as a “nice to have” for their customers, but as a financing strategy in and of itself.
Starbucks is well known for doing this. In 2019, they had $1.6 billion in Starbucks Card liabilities. This money essentially worked as an interest-free loan for the company. It gets used for operations and expansion. Plus, not all those gift cards are redeemed. Starbucks says they make $155 million a year in unredeemed card balances.
While your gift card program may not raise $1.6 billion, it can still raise a substantial amount. Your program can bring in revenue during busy months like December that can then be used to keep your cash flow positive during slower months.
Gift Cards Buy Loyalty
Once a customer purchases a gift card from you, that money can only be spent with your business. That’s a guarantee that that customer, or the person they bought the card for, will be back.
If it’s a reloadable card or money added to their account on your mobile app, then it's even more likely that they’ll spend money at your business.
Gift Cards Are a Referral Strategy
Someone buying a gift card from your coffee shop should be seen as the ultimate compliment. They like your cafe so much that they want to gift your products to someone they care about.
Or, maybe they know someone who loves your coffee, and this is their first time ordering from you. They want to get a gift card for that friend and try your coffee themselves.
Either way, your brand is being introduced to someone new.
How Do You Set Up a Gift Card Program That Works for Your Coffee Shop?
How you set up your gift card program has an impact on how successful it will be. Below are a few things to keep in mind when setting up your program.
Use a Provider That Works With All Your Systems
In most cases, your credit card processor or point of sale system provider is your best bet for gift cards. In both instances, you can be sure that your gift cards will work across all your systems, from your online ordering site to your in-store POS system. All your systems will be able to accept gift cards as a form of payment.
Make Your Gift Cards Easy to Buy
Buying a gift card from your business needs to be easy. If it’s complicated, only your most dedicated customers will do it.
Ensure your customers can buy gift cards anywhere they can order from you. That means in person, on your online ordering site, and your mobile app.
Make Your Gift Cards Easy to Redeem
If your customers can’t redeem their gift cards, they will get frustrated.
And let them redeem partial balances on their gift cards. For example, say your customer has a $50 gift card to your coffee shop. Their regular order is a $6 coffee. Let them use their card to pay for each $6 transaction until their balance is zero. If you don't, they'll become frustrated, and you might lose them as a customer.
A well-designed gift card program can generate revenue, increase loyalty, and be an unofficial referral program for your business. Use a gift card program to grow your business, and attract new customers.
Written by Elizabeth Goodwin Kelly