Custom Gift Cards

The popularity of plastic gift cards continues to grow as more companies offer them and as consumers become more comfortable using them. A company's cards basically come in two types. One type is the loyalty or membership card that is shown at the time of purchase at any of that company's locations. Membership provides one of two benefits: 1) depending on the dollar amount of the purchase, the consumer receives points to redeem for a variety of offered amenities; and 2) the consumer receives discounts on the purchase. For example, grocery stores often give reduced pricing on certain items for cardholders. The bar code on the card can be scanned at a cash register. These are often small rectangles that have a hole punched in one end that can be inserted on a keychain, making it easier for customers to keep track of them.

The other type of custom gift cards is used by the consumer as a gift certificate to make purchases. Consumers appreciate ones that are the same shape and size as credit and debit cards because they fit easily in one's wallet and are more durable than a paper certificate. Instead of a bar code, the card has a magnetized stripe on the back where information, such as the monetary value, is embedded. Both businesses and consumers benefit from using both types of the plastic gift cards.

As stated earlier, consumers benefit from membership and loyalty programs by receiving points that can be exchanged for prizes or by receiving discounts on purchases without bothering to cut out coupons. The business's sales clerk scans the barcode which is linked to that customer's purchases. This information is stored in a database that tracks the purchases. Because consumers provide demographic information when applying for the membership program, analysts can use specialized computer programs to correlate demographics and purchases. This important information helps businesses to know what products are popular with various consumer demographics and can help in the making of both marketing and stocking decisions. In essence, the customer gives up privacy regarding her purchasing decisions in exchange for the discounts or points.

Businesses also benefit from offering custom gift cards to customers because of the revenue that is generated. Consumers are more likely to shop at stores where they have signed up for membership or loyalty programs. Given a choice between two similar stores, the consumer will go to the one where he will receive either points toward a coveted prize or discounts on his purchases. Companies also like the plastic gift cards that are used like gift certificates for several reasons. People who receive them come into the store and often spend more than the value of the card, generating additional revenue for the business. Even better, the full value often goes unredeemed, either because the card gets lost, forgotten, or has an expiration date. The difference between the value and the amount redeemed is pure profit for the business. Additionally, the plastic gift cards are incredibly cheap to create, yet serve as pocket-sized marketing tools. Companies can choose the designs so they obviously include their logos on what amount to small billboards. Jesus once told a parable that included these words: "For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?" (Luke 14:28). Though Jesus' spiritual lesson was that a person should count the cost of discipleship, the verse also has significant business application. A business must consider its costs to ensure that a profit is made. Even though the business pays a small fee to vendors both to create the card and again when it is activated, their return on the investment is worth the cost.

At one time, custom gift cards could only be purchased at the store offering them. As they've gained in popularity, their points of sale have also increased. Many discount and drugstore chains offer a variety of restaurant, video rental, and specialty store cards that consumers can purchase. According to statistics obtained by a national retail association, buyers spent over $26 billion on gift cards during the 2007 holiday season, up from almost $25 billion in 2006. On average, men spent more than women, perhaps finding it easier to let their ladies pick out the presents they wanted rather than running the risk of having to stand in line at the return counter. More cards are bought and redeemed during the holiday season than any other time of the year.

Where there are benefits, there are usually drawbacks, and the business of plastic gift cards is no exception. Some consumer activists speak out against the membership and loyalty programs because of the personal information that members are required to provide in exchange for a program's benefits. Their position is that the benefits are not worth selling one's privacy. They also warn consumers to pay attention to the policies regarding custom gift cards. Sometimes a surcharge will be added to the balance left on a card after a specified time period, often after six months, or there may be an expiration date. In addition, if a company goes out of business, the consumer is probably left with a worthless miniature billboard. Buyers should also find out a company's policies in case the card is lost or the magnetic stripe becomes demagnetized. Some states are addressing concerns about surcharges and expiration dates by passing legislation to protect consumers.

Businesses appreciate the demographic information obtained through membership and loyalty programs and the increased revenue received, at a relatively low expense, from offering these miniature billboards. Despite their drawbacks, enough consumers appreciate the benefits of custom gift cards that they are almost certainly here to stay.

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