9 biggest problems with paper gift card programs
You see the need for a local gift card program for your town or city and you want to get it going as quickly as possible, so you set up a ‘quick and easy’ paper gift voucher. Pretty soon though, your paper gift voucher scheme turns into a nightmare for you, your customers and your businesses. Our experience of working with towns and cities has revealed many problems with paper gift voucher schemes, but here are the 9 biggest:
1) Paper gift card schemes are labour intensive. The day to day running of a business improvement district or council is busy enough without adding on extra tasks. And administering a paper gift card program is particularly labour intensive, from allocating serial numbers, to scanning in redeemed gift certificates and even visiting businesses to reimburse them. That all adds up to heaps of extra time in an already busy week.
Places spotlight: Downtown Peterborough found their paper gift voucher scheme Downtown Money onerous to run, spending hours each week on administration. After estimating that they’d need a full time staff member to achieve around £60,000 in sales with Downtown Money, they made the switch to a high tech alterative.
2) They’re open to fraud. The reality is that paper gift vouchers can easily be replicated by others, leaving your scheme open to potential fraud. To prevent this, you’ll need a whole raft of procedures to verify each and every gift certificate before it goes out to market and when it comes back in.
Places spotlight: Past experience with a paper based gift voucher scheme that required staff to hand stamp and emboss the paper vouchers, plus stringent security measures, meant that Drogheda BID opted for a prepaid gift card for the hugely successful Love Drogheda Gift Card.
3) Merchants hate paper gift vouchers. We set up gift card programs to support businesses, as a way to provide them with a new revenue stream, new customers, and a typical 40% spent on top of gift card values. Paper gift voucher schemes though are the bane of traders’ lives. They have to batch up the paper vouchers, take them to the BID or council office, waiting 2-3 weeks for money that could be with them instantly.
Places spotlight: With every paper gift certificate needing to be redeemed by hand, and a cheque written out to the business, it wasn’t long before Downtown Mesa switched from a paper program to a high tech gift card.
4) They’re an unknown liability. With paper gift voucher schemes, downtowns often don’t know what the unredeemed total amount of vouchers is, and that makes it difficult to plan. What if a business drops by with £3000 worth of vouchers they’ve been storing up, 3 years after purchase?
5) Customers get short changed. Paper based gift vouchers tend to be purchased in denominations like £20 or £50, and businesses are often reluctant to give change back to customers for any amount spent under that gift voucher value. The result is that customers have a less than optimal experience, and will be reluctant to buy again or recommend to others. Added to that, it’s down to you to sort out the complaints that will likely arise.
6) Some businesses miss out completely with paper schemes. Gift card programs work best when they benefit a wide range of businesses. But as we saw above, most paper based vouchers are offered only in certain denominations. With customers wanting to get the full value for their paper voucher, they’ll only spend in higher transaction value venues, meaning some businesses don’t benefit from the program at all.
Places spotlight: With paper Downtown Money available to buy in higher denominations, the cafés and sandwich stores in Downtown Peterborough missed out entirely. With their new program, every type of business benefits.
7) Success is not a good thing. Every place wants their gift card to be successful don’t they? Not if they have a paper scheme. Each sale with a paper program means a mass of additional work, potential complaints from customers and dissatisfied traders; little wonder that places become reluctant to market their paper gift voucher schemes.
8) They don’t work for corporates. One of the surest routes to success with a gift card program is corporate sales because of the larger order values, with most orders in the thousands of pounds. But, imagine having to count all those up in paper money! Added to that, huge volumes of paper gift certificates are difficult for employers to manage. A single gift card per employee, loaded to a specific amount, is far easier to safely store and distribute to employees.
Places spotlight: Ballinrobe in Northern Ireland took over £150,000 in corporate sales in the first two months of operation of The Lakes Gift Card and found the process of taking corporate orders easy.
9) Getting businesses on board is tough. The traders you work with are incredibly busy running their own business. Signing them up to be a part of a paper gift card scheme potentially fraught with problems will be difficult. Even if you do get them signed up, attrition is likely with paper schemes, meaning you’ll be in a never ending battle to have enough participating businesses to make your scheme attractive to customers.
Places spotlight: Kirkwall in the Orkney Islands has made its gift card integral to the community, with 80% of its retail type businesses signed up. Businesses can even book a town mascot for gift card promotions. Businesses in this Scottish island town have hailed the program as a huge success.