Gift Card Psychology

One the most basic psychological benefits behind gift cards is that people see the value on the card as "free money" or "found money". The psychological effect is similar to that of a credit card, only much, much stronger.

As a result, people spend more. Someone with a $50 restaurant card will usually indulge in a dinner for two, spending $120. Another shopper in a retail clothing store with $15 left on his or her card will splurge on an item that is $15 more than they would otherwise be willing to spend.

A person who has a $5 Starbucks gift card is more likely to visit Starbucks instead of another coffee store. What's more, they will probably use the gift card to buy an extra coffee for a friend or colleague.

Other psychological benefits include:

• The cards create a "walking billboard" every time the carrier opens his or her wallet.

• Cards create a bond between the customer and the store.

• Cards makes payments easy, with no searching for change for coffee, etc.

• Cards enhance a business's image, giving the company an image of "modernity".

Strategies to make your gift & loyalty programs successful Gift and loyalty card strategies can get quite sophisticated. However, you don't want to rely on a display at the cash to promote your program, an approach that might work for a larger company that has huge marketing budgets to drive people to their locations.

Smaller businesses need to employ more creativity.

The trick to having great gift and loyalty card programs is never let the card run out. This is called "cycling" in the industry. A savvy merchant will work aggressively to continuously cycle their gift cards, because as long as there is an amount on the card then customers feel the need to come back.

If you allow the card to reach a zero balance then the customer has no benefit to return to your business. You do this cycling enough times you create an unconscious habit in your customers over time. The habit is to shop at your location.

Click here to see successful gift card marketing campaigns that you could duplicate in your business model.