Business > Sales > Use Magnetic Gift Cards To Skyrocket Restaurant Sales and Profits
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Article rating : 0.00, 0 votes. Author : Jerry Wilson
The History of Gift Cards
Whoever created the idea of gift certificates was a marketing genius. The idea of taking someones money (which is valid anywhere) and giving them a certificate redeemable only at your restaurant was a pure stroke of brilliance. It made gift giving easy and guaranteed the restaurant profits either through redeemed or lost certificates.
The problem with paper gift certificates was that they took time to issue, track and redeem. Usually, the certificates were kept in a secure place and access was restricted to only a very few. If a certificate were sold, it took time to issue and interrupted the manager/owner to issue the certificate.
Tracking the certificates, which were usually sequentially numbered was critical as gift certificates could be stolen, forged and then redeemed thus creating a loss rather than additional profits. It was because of these problems that many restaurants stayed away from gift certificates and thus missed out on some huge marketing opportunities.
In recent years magnetic cards have taken the place of paper certificates. Balances were kept in a database, which were linked to the card via a number in the magnetic stripe. Some credit card companies have jumped onto this bandwagon offering gift card programs that act similar to a credit card. The balances are kept off site at the credit card processor. The processor then charges a transaction fee to add to/redeem the gift card. This fee can run between $.15 - $35 per swipe of the card. On small card transactions such as coffee houses these fees gouge deep into the profits of the sale.
A newer trend is to house the gift card balances at the store level. There is no transaction fee and virtually no time lost processing the transaction outside of the store. Any amount may be added to the balance of the card, thereby making the card reusable and not disposable. Your logo is on the card, making it a constant reminder of your restaurant every time the customer looks in their wallet.
The Need for Gift Cards
Restaurants need the ability to securely sell, track and redeem gift card transactions without transaction fees. Balances should be kept in-house. The customer should be able to add to their balance at any time, making the gift card like your own private debit card system.
The cards should be reusable and they should have your logo on them for a constant reminder of your restaurant.
The Solution To Manage Gift Cards
Many point of sale products now have optional gift card modules that tracks numbered paper certificates as well as issue, tracks, redeem and reports on magnetic gift cards. With the optional magnetic card reader and magnetic cards properly formatted for the software, you are able to take full advantage of this powerful marketing tool.
The gift cards should have your logo on them for advertising purposes. They also may be packaged for a nicer gift presentation. Some companies have even worked out reciprocal programs with other non-competitive companies to display gift cards at each others business.
The cards have no value until sold, thereby eliminating the problem of theft, forgery and redemption of stolen certificates.
The cards are reusable once fully redeemed. The customer may also add to the balance, thus creating your very own debit card system with frequent diners being able to continue to use/reuse their card on future visits. This have become huge in coffee shops where customers use their cards on a daily basis to make purchases.
Some point of sale products keeps the balances at the store level for single store operators. There is no need to process the gift card outside the store as balances are adjusted up or down at the end of the transaction. There are no transaction fees with this type of data storage.
For multiple store operators a few point of sale products have the ability to house gift card balances at a central location with every store accessing and updating gift card balances through high-speed internet connections. Even though the balances are being kept off-site there are still no transaction fees with our system.
The Benefit of Gift Cards To You
The potential for huge profits, additional sales and repeat customers are the overwhelming reasons to sell gift cards. Being able to private label the cards, add to balances and create your own debit card system make using magnetic cards for gift cards essential to a profitable restaurant operation.
Abandoned cards are also a huge area of realized profits. When balances get below $1.00 the system still recognizes them as active. However, customers tend to abandon their cards if the balances get below a certain amount. For some larger companies these abandoned balances along with lost cards equal millions of dollars per year in profits.
DirecTouch Point of Sale also allows you to set expiration dates on the cards issued. This helps create a sense of urgency for your customers to come back to redeem the cards.
Some restaurateurs will use gift cards as enticements to get people to try their restaurant. Instead of writing on the back of their business card the owner will put small balances ($5 or so) on cards and then distribute them to certain people to get them to try their restaurant. This is a great way to get people to come to your restaurant and much more secure than writing on the back of a business card.
Jerry D. Wilson is Director of Internet Sales for DirecTouch Restaurant Point of Sale. With over 25 years of hospitality point of sale experience, he has written several articles explaining the benefits of touch screen and retail point of sale software. Please visit DirecTouch Do It Yourself Restaurant Point of Sale or DirectRetail Do It Yourself Retail Point of Sale for more information.
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