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Use Magnetic Gift Cards To Skyrocket Restaurant Sales and Profits
Gift Card and Gift Certificate Management Software
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
Associated Websites
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.
Some restaurant point of sale products also allow 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.
About the author:
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 www.directouchpos.com or
www.directretailpos.com
for more information.
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