Gift Card Secrets: Why Plastic Turns Into Profit

How would you feel if I told you that your business could transform a $50 sale into a $60 sale without even trying? How much would that be worth to you?

Or, what if I told you that there’s a good possibility that $50 could turn into $100 or more in profit? You’d probably laugh at me and my voodoo money magic! Well, because there’s nothing voodoo about it. In fact, it couldn’t be simpler. The secret is in front of you for every holiday and gift-giving occasion…


I don’t know who came up with the idea of the gift card and gift certificate, but it is pure business ingenuity. Sure, it’s a convenient gift, but it also urges consumers to commit money to your establishment and it makes money on itself. Consider gift cards another aspect of your store merchandise strategy!

How do gift cards make you, the seller or retailer, some extra money? Let’s think about it. The last time you received a gift card, did you use it for the EXACT amount of its value? Most likely not. Whether shoppers stay under the value of the card or go over, the business wins. If shoppers stay under, then the business essentially gets free money without having to give up any goods. That deal is unbeatable! However, if customers go over (which is the more likely option), then the business just made more of a profit. And that is the whole point anyway, right?

As a recipient of a gift card, it’s just so easy to spend more than the card’s worth. No one likes to waste money (especially if it’s a gift), so a shopper would probably be inclined to spend as much of the card’s balance as possible. These chances increase if the recipient is fond of the store the card is good for! Wouldn’t you use $50 toward a bigger purchase at your favorite store?

Think about how many gift cards a place like Target sells in a year. Even if they only make a few extra dollars on each one, that’s a ton of extra money a year with very little effort or cost to Target itself. And of course we can’t forget about all the interest they make off the money from gift card purchases before goods are even bought with them. See what I mean now? Genius!

So, if you own your own business, remember that there’s virtually no downside to offering gift cards. Just don’t go down the expiration date path. In theory, my money should be worth more a year from now, not less. Stooping to balance-zapping techniques is a quick way to discourage people from shopping with you anymore. Do it right, though, and your customers will love you for it because you’re adding convenience to their lives! Even if you sell a low number of gift certificates or gift cards, you’ll still make easy money on them. Give it a shot and see how it goes!