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MME Gifts
Merchant Made Easy’s Gift Card replaces the paper gift card with magnetic stripe technology which eliminates most administrative and accounting costs associated with paper gift certificate programs. The design resembles that of a pre-paid phone card, in that the value for the gift card is automatically debited with each use. Receipts are provided to gift card customers with up-to-date balance information that can be printed instantly at the point-of-sale. This technology allows capture of customer transaction and offers an activation/registration feature that can be used to protect the gift card from loss or theft. Reduced costs, automated record keeping and time saved during issuance and redemption are just a few of the benefits of this program.
Increase in average Ticket/Increased sales
A gift card program can drive consumer sales higher and increase their average ticket size. As the customer brings a gift card into the merchant location to redeem the stored value amount they are most likely evaluating merchandise based on amount of-out-of pocket cash they can justify on their purchase. This usually results in the customer to spending more money than they would if they didn't have a gift card.
The merchant also has the ability to leave any un-redeemed value on the card as opposed to giving the customer a cash credit. This will prompt the customer to return to the store and redeem the remaining balance. In most cases, when there is nominal value left on the card the customer will supplement their final purchase with another form of payment.
Creating Brand Identity
The Customized card serves as a function of the Marketing department as much as it does a financial one. The card is basically a "Billboard in a Wallet". Every time a cardholder opens their wallet or purse, they will see the customized card and be reminded that they have value on the card. The merchant's name will be placed in the mind of their customer every time they see the card…the card is a walking advertisement. Also, as those cardholders talk about the card to other people, the card is doubling its effectiveness.
One of our sales phrases is "Let the card do the promoting". Although the card program can be a critical part of any advertising campaign, it has the ability to sell and/or promote itself. For example, restaurants may have their servers wear a sample card around their neck or as a button on their shirt with a catch statement about the program. Many stores have contests based on who can sell the most cards. The possibilities are endless and the sales representative in the organization is a critical influence in the decision. This is one of the most important aspects of the program.
Breakage Income
Potential Income from Breakage: The term "Breakage" is used in our industry to define the amount of value that has been prepaid and never gets redeemed. There are laws that govern this environment that many merchants are not aware of or are just not keeping track of. The legal term is Escheatment. The law states that if cash is accepted and delivery of goods purchased doesn't happen in a specified period of time, the money must be paid back to the state where the transaction occurred. The Innovative system produces reports that specifically assist the merchant in tracking all of the information that is necessary for reporting back to the government.
The other side of this coin is that there are ways that merchants can eliminate the need to forfeit these funds in their entirety. Our network has the ability after a certain period of time to automatically deduct on a monthly basis a specified amount of value from the card balance. The merchant can determine this period. For example: If the card is inactive for twelve months, our system can subtract $3.00 monthly from the value of the card until the value of the card is depleted. With this Escheatment process, the deducted amount moves from the liability portion of the financials to the revenue portion.
Another one of the key benefits for understanding "breakage income" comes into play when cost justifying the investment required in implementing a Gift Card Program. For example, let's say that you have a chain of five locations and each one sells 2,500 gift certificates per year. Let's assume that the average ticket of these paper certificates is $50. This gives a total value of $625,000 in certificate sales in one year from all the store locations.
The industry average for un-redeemed or partially redeemed transactions is between 5-15%. Using 10% as an average for this five-store chain, there would be $62,500 in unredeemed sales per year. This more than pays for all your card production fees, transaction fees and any other costs associated with implementing the Innovative gift card program.
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