Gift cards are more than just a convenient present—they’re a powerful business sales tool. When a customer buys a gift card from you, they pay upfront for goods or services they may not redeem right away. That gift card purchase means your business receives cash before providing anything in return, creating a financial advantage known as pre-banking sales.

In today’s retail world, gift cards offer you guaranteed revenue, boost customer spending, increase brand awareness, and improve cash flow. Let’s explore why selling gift cards is smart for any business like yours.

1. Guaranteed Revenue

One of the most significant benefits of selling gift cards is immediate cash flow. Unlike traditional sales, where customers receive a product or service immediately, gift cards provide funds upfront without an upfront cost to the business. [1]

A side effect is breakage income, when customers forget about or never use their gift cards. This unused balance might be converted into pure profit, making gift cards a straightforward way to boost earnings. In some instances, gift card breakage may be considered unclaimed property subject to escheatment. We encourage you to review unclaimed property laws and regulations in your area. [2]

2. Increased Spending Behavior

Gift card users don’t just spend the card’s value—they usually spend more.

• 61%-65% of people spend 38%-60% more than the card’s value. [3]
• On average, customers spend 1.4 times the gift card amount when redeeming it. [4]

Why does this happen? Many customers see gift cards as “free money,” which makes them more likely to splurge or buy higher-priced items.

3. Enhanced Brand Awareness and Marketing

A branded gift card is like a mini billboard in someone’s wallet. Every time the card is seen, it reminds customers of your business and keeps your brand top of mind.

Gift cards also attract new customers:

• 11% of gift card recipients visit a business for the first time because of a gift card.

Unlike traditional ads, gift cards directly lead to sales and customer engagement, making them a cost-effective marketing tool with measurable results.

4. Improved Cash Flow and Financial Flexibility

Selling gift cards means businesses hold onto customer funds until the gift cards are redeemed. This creates financial stability and flexibility, especially during slow sales periods. In some cases, especially for larger retailers, funds from unredeemed gift cards may be held in interest-bearing accounts. [5]

Gift cards were beneficial during the COVID-19 pandemic, allowing companies to secure income when regular sales declined.

5. Customer Engagement and Loyalty

Gift cards provide two chances to connect with customers:

1. When they buy the card – Businesses interact with the buyer, who may also shop during the purchase. [4]
2. When they redeem the card – This brings customers back, increasing repeat visits and long-term loyalty. [4]

The more times a customer visits your business, the more likely they are to return in the future.

6. The Power of Gift Card Sales

Still not convinced? Check out these powerful statistics: [6]

• Over 70% of adults buy at least one holiday gift card.
• 25% of customers buy unplanned items when redeeming a gift card.
• Gift cards are the #1 most requested holiday gift.

With so many people buying and using gift cards, businesses that don’t offer them are missing out on a major revenue stream.

Conclusion

Gift cards are a win-win for businesses. They generate guaranteed revenue, increase spending, boost brand awareness, and improve cash flow. Plus, they strengthen customer relationships and drive loyalty.

Now is the time to start if you’re not selling gift cards. If you already offer them, consider ways to promote and optimize your program for even greater success.

Ready to boost your business? Start selling gift cards today!

Sources

1. Breakage or Escheatment? Making Sense of Unused Gift Card Data
2. Breakage and Escheat – Navigating Gift Card Regulation
3. Gift cards prove to be a game changer for retailers
4. Gift Cards Lead to Even More Consumer Spending
5. Gift Card Breakage Accounting Treatment: A 2024 Guide
6. NRF Survey Shows Top Picks for Toys and Gifts for the Winter Holidays