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.
This article only touches on each topic; for more in-depth discussion, contact us!
Why are gift cards important?
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).
So why are they important?
- Their receipt from the gift-giver markets your business to potential new clients
- Sales of gift cards bring clients into the facility during slower times, post-holiday when business is not as robust
- Sales of cards can assist with cash flow on the short term
- When redeemed, guests normally spend over and above the price of the gift card. This can range from as low as five cents on every dollar to as much as fifty cents on every dollar. This means your $100 gift card sale likely represents $105 to $150 in sales
- A staff busy with appointments generated from gift card revenues are happier and less likely complain
- They are a low-cost sales item. Requirements differ by facility; however, normally the sale of a gift card is a nominal expenditure
- Assists in the branding process of your facility
- Gift cards are a silent marketing tool, understood by all, and are ageless and timeless gifts
How can you compete effectively?
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:
- Offer incentives for purchases over $50, $100. Do not discount and sell for a lower price, such as “A $100 gift card for $80.” Instead, offer a separate $10 or $20 certificate, with appropriate disclaimers, in addition to the gift card. You can limit their expiration and should have an expiration date. We will explain below.
- Pre-print certificates/coupons valued at $10 and $20. (See above) These are not gift cards and do not have monetary value like a gift card. Make sure you place disclaimers on them as follows: These coupons do not have monetary value and not redeemable for cash. This can be used towards services or products valued at $20 or $40 respectively. This coupon expires on______. __________reserves the right to cancel or suspend this program at any time.
Check with your accountant and/or legal counsel for appropriate wording of these items.
- Dedicate one-half of your advertising budget to the sales of gift cards.
- Plan your social media attack! Plan your gift card sales by day and plan your social media marketing by day too. Determine when you will post, when you will email and when you will tweet, by day! Make sure your database is up to date. Every communication sent to customers should include a reminder for gift cards. Remember, every day of the year it is someone’s anniversary, birthday or some other gift-worthy special event.
- Use Social Media to educate your clients about your gift cards. Place a promotional box on your home page.
- Sell online. Make sure you are set up to sell gift certificates or gift cards on-line. If not, at least have a place where a guest can send an email to place an order. Most salon and spa software systems provide the ability to sell and print gift cards online. If they do not, they normally interface with a service that does offer the functionality. It will not be a huge part of your gift certificate business; however, an area that is growing each year.
- Denominations sell best. Suggest $50, $75, $100, $150, $250, $500 and $750 card values. Also, packages that fall within strong price points also work well. If your facility is more budget driven, a $100 package including two services may be an idea.
- Understand that you need to make it easy! Let clients call their orders in and pick them up later. Allow them to order on-line or e-mail. Have a beautiful presentation available or, offer giftwrap for them. Be ready to ship them if needed.
- Step up a separate pickup area and register if feasible. During strong selling periods like Thanksgiving, Christmas and Mother’s Day, you may choose to have a dedicated area for these transactions along with forms developed for easy order taking and so on. Make it easy for the staff to take orders and sell. Set up beautiful gift bag presentations and perhaps gift baskets in which a certificate could be placed.
- Be clever in your marketing in-house! For example, “Would my wife rather have a family dinner with an Olive Garden gift card or, a massage at ______________?” Easy answer! Make sure every focal area within your facility reminds them about this program.
- If creating packages, offer the best-selling services in your packages. If you developed your menu properly, you have a basic service in each category, with a lower cost of goods, driving the predominance of sales in that category. Do not create new services just for gift certificates. Create packages using these services. An example: Signature Deep Cleansing Facial-$85, Swedish massage $85, Spa Manicure $25, Spa Pedicure $55. Total Regular price for these services purchased individually is $250. It is perfectly acceptable to offer this package at no discount. If you feel that incentive is needed, perhaps offer a light snack and a $20 certificate to be used towards products or additional services (the one mentioned above), bringing the value of the package to $295, for only $250.
- Create three packages: use a good, better, best philosophy. Fit them into price points, acceptable for your demographic.
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.
How to plan for a strong holiday selling period
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:
- Set your sales goals. To start, your goals should equal five percent of your total service and retail sales last year. This means, if your salon’s revenue was $250,000 last year, your goal should be $12,500 in gift card sales. Most successful operators sell in the range of ten to fifteen percent of total sales.
- Replenish your stock. Order cards immediately. It is okay to have one basic card and one seasonal card. They are not expensive. Better to have too many. They should work with your electronic POS system. If you do not have a supplier, call your software provider and they will recommend one. We have listed a few below.
- Replenish bags, tissue paper, and boxes. Everyone has a different presentation for gift cards. Some simply place them in an envelope, while others place them in a beautiful box, with a card insert describing the services, then into a bag with tissue. Whatever you do, make sure it is special.
- Make the process time efficient. If you have the ability to sell electronic cards, do it. Paper gift certificates are labor intensive to make out for each guest, easily lost and more expensive. Dedicate an area just for the sale of gift cards.
- Create a contest to incent employees. Friendly competition within a salon is good for morale and business. A contest could reward a single winner or, incent each staff member once they have hit their goal. Again, if you do not set goals, how can they be achieved?
- Target men! Make sure you have focused at least 75% of your marketing on men closer to the holiday and 75% of your marketing on women over three weeks out. Why, men tend to buy closer to the holiday. Ease of shopping is very important to them. Be ready to suggest based on their budget and offer complimentary gift wrapping services or packaging for their card purchases.
- Gift Cards should be part of the Culture. Make recommending gift cards part of the culture during the holidays.
- Make it easy. Have collateral materials created to make it easy for your receptionist to sell cards over the telephone or to guests. Don’t make them wait around.
- Create a gift card displays throughout your facility. It needs to look like you are in the business to sell gift cards! This means that every area in your salon frequented by guests should suggest a gift card. The cash wrap, the styling area, every treatment room, the shampoo area, the relaxation room, the waiting room and even the restroom.
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.
Attitude is everything!
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.
Focus 365-Not just the 90 days between Thanksgiving and Valentines Day!
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.
Gift Certificate Redemption
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.
Gift Card Merchandising
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.
Track and plan for next year
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:
- What worked?
- What did not?
- Was the process easy?
- How could it be better?
- Could I have sold more?
- Did my staff understand the importance of gift card sales?
- What are some other promotions that could compliment this effort?
Unclaimed property laws
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.