Blog Article

What's Better for Your Business: Promo Cards or Gift Cards?

Author: Adèle Richardson 2-minute read

To offer promo cards or gift cards? That is the question.

Understanding the difference between the two can be a bit tricky. However, they are both effective at incentivizing repeat visit, improving customer engagement, strengthening loyalty and encouraging customers to spend more money with your business. 

Let’s go over the differences between promo cards and gift cards and dive into how they can be used to best achieve your business goals.

 

Expiry Dates

One of the main differences between gift cards and promo cards is the expiry date or lack thereof. Gift cards do not expire. A promo card, on the other hand, is only valid during a specific window of time, and beyond that timeframe, it has no value. This gives you complete control over a promo card’s expiration date and value. For example, you can generate a promo card offering customers 20% off a purchase of $75 or more between March 1-14.

 

Cash Flow

The big difference here is gift cards are prepaid and promo cards are not. When a gift card is purchased your business gets paid on the spot. Gift cards are a great moneymaker because they increase cash flow, and you generate revenue in advance of providing any products or services. Promo cards are typically given to customers at the time of purchase. They hold no value until the customer returns to your business and claims the offer.

 

Breakage

Since promo cards are not prepaid, breakage only applies to unused gift card balances. If you’re new to the world of gift cards, you’re probably wondering what “breakage” means. Breakage refers to the balance left on a gift card that a customer forgets to spend. Remember that gift card you never bothered to redeem because there was only $3.12 left on it? This is a very common practice. But guess what? All that unspent money goes right to your bottom line.

 

Urgency

Promo cards have a timestamp so they will generate a sense of urgency among customers to return to your business. Utilizing promo cards to compensate for low foot traffic or seasonal slowdowns are a very effective marketing strategy. Many businesses hand out promo cards during the busy holiday season to encourage customers to return in the new year. Although gift cards don't create the same sense of urgency, they will help during slow periods.  How?  Well, 72% of customers spend more than twice the value of their gift cards.

 

So, Gift Card or Promo Card?

This brings us back to our original question: gift card or promo card. Which is the right choice for your business?  The right answer depends on your business goals and what you hope to achieve. 

  • If repeat business is a priority, incentivize your customers using promo cards. They are a great motivator and work for any size business.
  • Need to focus on boosting revenue? Gift card sales and breakage are an excellent way to increase cash flow.
  • Looking for a strategy to address poor reviews or unhappy customers? Repair the relationship with a sincere apology and a promo card. 
  • Maybe your goal is to grow your customer base and brand reach. Selling gift cards is one of the best ways to introduce your business to new clientele. In fact, 41% of people visit a new business as a result of receiving a gift card. 
  • What about increasing customer engagement? Sending a happy birthday message along with a promo card is an easy to interact with loyal customers and deepen their engagement with your brand.

Because promo cards and gift cards offer specific yet equally important benefits, the best strategy is to offer both!   

Still unsure if your business strategy should include promo cards or gift cards? Watch this video:

 

PromoCardsVsGiftCards-EN

 

Learn more about the advantages of offering your customers gift cards.

If you think your business is ready to start selling gift cards, learn more about our gift card program.

 

Adèle Richardson
ABOUT THE AUTHOR

Adèle Richardson

Adèle is a marketing content creator at Paystone. She likes cats, really good food, and hiking.