Tips & Tricks: Leveraging Gift Certificates

Automatic new customers
Electronic Gift Certificates (paper ones too, for that matter) can be a great way to acquire new customers.

When an existing customer buys one for a friend, the friend is an automatic (and FREE) customer acquisition (unless they were already shopping with you).

When a new customer buys a gift certificate for a friend, you acquire two customers in one shot.

Motivate them to buy Gift Certificates!
Given that the customer acquisition cost is ZERO for the new customer and that there is normally a real cost associated with acquiring a new customer for your business (very roughly: total monthly marketing expenses / total new customers per month), you can afford to build incentives into your offering.

For example, you could launch this promotion:

- If you buy a Gift Certificate
- ... and it is redeemed by a new customer
- ... we will give you another Gift Certificate for FREE

... where the redemption value for the second Gift Certificate should be lower than your average customer acquisition cost. E.g. they buy a $50 Gift Certificate, the person redeeming the Gift Certificate is a new customer -> you give the first customer a $10 Gift Certificate free of charge.

If you think about it, it's not unlike giving an affiliate a bounty for referring a new customer. The "affiliate" here is the existing customer that buys a Gift Certificate for a friend. The "bounty" is the free Gift Certificate that you give him once you have ensured that the referred friend was indeed a new customer.

Try it and see how it goes!

Why Not?
Even if Gift Certificates are not common in your industry, offering them is a typical "why not" paradigm: they don't hurt anyone, why not making them available? What do you have to lose? Nothing, other than taking a few minutes to set them up and make them visible in your store navigation.

If the name "Gift Certificate" sounds funny in your industry, just call them "My Store Dollars" or whatever you want :-)

Comparing shopping carts: this is one to look at
So if you are looking for a new shopping cart system or considering upgrading your existing e-commerce Web site, this is definitely a feature to keep in mind.

Not all e-commerce software out there includes the right kind of support for Gift Certificates. In fact, most e-commerce solutions don't.

Here are some of the features to look for:

- ability to easily add/edit Gift Certificate products
- ability to specific electronic vs. paper Gift Certificates (the latter require shipping)
- ability to specify whether the purchased Gift Certificate expires or not, and when
- automatic generation of a unique Gift Certificate code upon purchase
- find/view/edit purchased Gift Certificates
- allow customers to notify the recipient during checkout, with a custom note
- allow the recipient to partially redeem a Gift Certificate

Advanced features that it might be nice to have:

- ability create the GC code through an external script
- ability to import existing Gift Certificates (redemption code and value)
- ability to instantly generate multiple Gift Certificates in your administration area
(so you can print the redemption codes on paper Gift Certificates if you want to)

Get ready now
Gift Certificates become key around the holiday season. Don't wait until the fall to get your store ready for them. Get ready now. Start learning how to best take advantage of the Gift Certificate features in your e-commerce system.