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With Easter, Mother’s Day and Graduations fast approaching, making sure you are ready take advantage of the gift card trend pervasive across the United States. In 2016, the gift card business in the United States surpassed $49 billion dollars! What is even more astonishing is the fact that ten to fifteen percent of that total will go unredeemed.
Why should your salon or spa not be a beneficiary of this massive business opportunity? Every hour you spend in preparation will net long term sales returns a week, a month or a year down the road. No matter where you go, whether your local grocer, pharmacy or even office supply store, gift cards are front and center, available for purchase at any time, from many retailers. You will find their store brand gift cards along with a plethora of cards from fast food establishments to Nordstrom and Bass Pro to Toys R Us.
Why? There are substantial profits made by both the retailer offering the cards for sale and the retailer issuing the card. Those cards are convenient for shoppers, an easy gift for hard-to-buy-for individuals and normally usually appreciated by the recipient. They have become a staple in most retailers and many dedicate high traffic end caps to them. If you have not already, start today to prepare for this upcoming surge.
Yes, spas and salons need to class those retailers as competition. Why? The answer is simple: because they are potentially taking your gift card and gift certificate businesses away when you do not make your statement as pervasive as theirs. Over the next week, make the sale of gift cards or gift certificates a top priority. This takes pre-planning, marketing, strategic marketing, dedicated space within your facility and a sales goal by day.
Traditionally for most salons, spas and retailers, certain times of the year are slower than other times. Those months include the summer months in areas where summers are extremely hot, the month after students return to school, usually August and September, and January, when most people are recovering from holiday spending. The elation and highs brought on by higher-than-normal holiday spending evaporate with a seemingly instantaneous drop in revenues usually beginning right after New Year’s Day. The modest surge in momentum brought by Valentine’s Day sales cannot counter pre-holiday selling. Gift card sales help during those times! Focus on the sale of gift cards before the holidays and the redemption of gift cards after! I have heard two schools of thought on gift card sales over the years. The first: “We don’t care if the gift cards get redeemed. We have their money.” Many problems with this train of thought exist, which we would discuss later. The other, “Let’s get those gift certificate recipients into our facility now! They will likely spend additional money, perhaps purchase product and if we do everything right, we have a new customer!” This is what I feel is the correct attitude toward gift card sales and redemption. Gift cards and gift certificates are a pre-payment of services or products. The sales of these cards or certificates allow your customers the ability to give the gift of beauty to a spouse, relative, teacher, coach, friend, or significant other. Normally salons create a minimum purchase requirement for the gift card (we suggest $25 as a minimum, perhaps $50 in higher end facilities).
Now that you understand you are competing for gift card revenues against every retailer selling them, you can look at your local area competitors to see what they are doing to drive those sales. Grocery stores, a large seller of gift cards, normally offer incentives in the form of bonus points during their key selling times. Retailers such as Sam’s and Costco offer gift cards at reduced prices. Gift card purchasers often expect an incentive to purchase. Here are a few ideas:
Check with your accountant and/or legal counsel for appropriate wording of these items.
Important: The reason I recommend printing certificates or coupons to use in addition to the gift cards is simple: These do not fall under Unclaimed Property laws and if not redeemed, they have no value. If not used by a certain date, they can expire, unlike gift cards in several states that by law have no expiration. You must check your state for specifics. Salon owners looking to sell their salons or spas can expect a potential buyer to ask about outstanding gift cards as in most States, they do not expire and therefore could be a long-term liability.
If you want to have a successful gift certificate selling period, you must plan for it. Your facility must look like you are in the gift card business. You must start today to assure you are ready by Easter, Mother’s Day and Graduation. Here are some ways to accomplish this:
Create a spreadsheet to track and recap goals each day. Understand the sales become stronger and stronger every day with the strongest sales happening a day or two prior to the holiday. You will find a spreadsheet to help you track. Launch in a big way. Make this event a big deal within the facility. Make sure they feel part of the planning and the event. Track sales by staff member. Let them know how they are trending against their goals. Congratulate their successes. Inform your staff daily of your achievements. Make it fun. Recap results at least twice per week. Once on Monday then again on Thursday. This way you know what is expected going into the busy weekend selling period. Make sure they understand WHY the sale of gift cards is such a focus. Being busy after the holiday is something they may not be thinking about now. Look for ways to improve. Your initial plan may need modification. Figure out what is working, what is not and adjust.
Make sure everyone understands the importance of selling gift cards and is on board. Do not let one negative individual ruin your chances for success. Place importance on the recommendation of a gift card. Everyone has a hard-to-buy-for friend, spouse or even a teacher or coach whose hobbies and preferences are unknown. Offering in denominations of $25 or more make them affordable for most. You may choose during the holiday time to decrease the minimum purchase to $15, making it affordable for teacher and coach gifts. Know that the momentum builds everyday as you approach the holiday. Women traditionally purchase earlier, men later.
Focusing your attention now on holiday gift giving is key; however, you should keep this going throughout the year! Birthdays, anniversaries, graduations, baby showers, bridal showers, and thank you gifts can happen throughout the year. Make sure you “plant the seed” throughout your facility, year round. Keep a gift card section as a small part of your retail space. Change the way it looks by using different display bags and signing.
We talked a bit about the right and wrong attitudes to have relating to gift cards. Redeeming gift cards gives you an opportunity to sell those recipients additional services, products for perhaps another gift card for someone else. Here are a few suggestions: “It’s time to redeem those holiday gifts!” is a great way to engage guests via social media. Remind them via a Twitter, Snapchat, Instagram, and Facebook to come in to relax, refresh, and unwind after that busy holiday season! Ask technicians to continue their recommendations throughout the year. When a guest calls in for an appointment, they may mention they are redeeming a gift card. Ask if the recipient has been into your facility before. Ask if they have any questions. Make them feel welcome. According to a source cited below, “60% of gift card recipients spent and additional 38% over and above the value of the card. What does this mean for you? Yes, additional sales! Recommend products! Make sure your facility is well maintained as those redeeming gift cards are ready to buy! See how effective your redemption has been. When a gift card is redeemed, track how much that guest spent overall. You can see for yourself how important this strategy can. Remember, you must check Unclaimed Property laws and laws relating to gift cards by State. Do no assume that money is yours if the recipient chooses not to redeem their cards or certificates.
MAKE A STATEMENT. MAKE IT APPARENT. MAKE IT APPEAL TO MALES AND FEMALES. Identify five locations within your facility. Make a gift card statement in each location, whether a poster, a framed sign or, a display with bags and tissue, make sure it is impactful. Show your gift card presentation to your guests. This presentation is from a company called Nashville Wraps. www.nashvillewraps.com. If you do not have custom bags, tissue and boxes, you may choose to use something like this, utilizing gold or colored tissue to accent and pull your salon or spa colors into the equation. If your focus is natural, organic and renewables, you may choose to purchase reusable bags, such as those pictured above with the gift card inserted along with menu or card with the web address, allowing the guest the ability to peruse the menu online.
If this is your first year really focusing on gift card sales, recap your successes and failures. Pull this out next year to assure you are better prepared. Ask the following:
By now, every business owner must understand the fact that revenues generated from the sales of gift cards are Unclaimed Property in most States. It is imperative for every business owner to understand what this means and what your long-term liabilities may be. Many states do not allow gift cards to expire while others range in duration from two years to five years or more. Once they expire, there is a process by outlined by each state. Check with your Accountant or one of the numerous online services for more information. These laws protect the gift card owner from unfair business practices. Statistically, you could end up with fifteen to twenty percent of your gift card sales going unredeemed. Remember, gift cards are not sales until they are redeemed. Until then, they should not be counted as a sale. It is imperative your software be set up to separate these sales and track sales and redemptions alike. Make sure each is redeemed properly if it was sold through your software to not only minimize the liability but to assure a lost certificate is not redeemed twice.