Practical Ecommerce

Gift Certificates Create Automatic New Customers

Electronic gift certificates can be a great way to acquire new customers. When an existing customer buys one for a friend, the friend becomes a free and automatic customer acquisition, unless they were already shopping with you. When a new customer buys a gift certificate for a friend, you acquire two customers at once. Given that the customer acquisition cost is zero for the new customer and that there is normally a real cost associated with acquiring a new customer for your business (very roughly, total monthly marketing expenses divided by total new customers per month), you can afford to build incentives into your offering.

Gift certificate example

For example, you could launch this promotion: “If you buy a gift certificate, and it is redeemed by a new customer, we will give you another gift certificate for free.” The redemption value for the second gift certificate should be lower than your average customer acquisition cost, so if the customer buys a $50 gift certificate, and the person redeeming the gift certificate is a new customer, you give the first customer a $10 gift certificate free of charge. If you think about it, it’s not unlike giving an affiliate a bounty for referring a new customer. The affiliate here is the existing customer that buys a gift certificate for a friend. The bounty is the free gift certificate that you give him or her once you have ensured that the referred friend is indeed a new customer. Try it, and see how it goes.

Even if gift certificates are not common in your industry, why not offer them? They don’t hurt anyone, why not make them available? What do you have to lose? Nothing, other than taking a few minutes to set them up and make them visible in your store navigation. If the name “gift certificate” sounds funny in your industry, just call them “my store dollars” or whatever you want.

Gift certificate integration with shopping carts

If you are looking for a new shopping cart system or considering upgrading your existing ecommerce website, this is definitely a feature to keep in mind. Not all ecommerce software out there includes the right kind of support for gift certificates. In fact, most ecommerce solutions don’t. Here are some of the features to look for:

  • The ability to easily add/edit gift certificate products.
  • The ability to specify electronic versus paper gift certificates (the latter require shipping).
  • The ability to specify whether the purchased gift certificate expires or not, and when.
  • Automatic generation of a unique gift certificate code upon purchase.
  • The capability to find/view/edit purchased gift certificates.
  • Allows customers to notify the recipient during checkout, with a custom note.
  • Allows the recipient to partially redeem a gift certificate with advanced features it might be nice to have.
  • The ability to create the gift certificate code using an external script.
  • The ability to import existing gift certificates with redemption code and value.
  • The ability to instantly generate multiple gift certificates in your administration area so you can print the redemption codes on paper gift certificates if you want to.

Get ready now. Gift certificates become essential around the holiday season. Don’t wait until the fall to get your store ready for them. Start learning how to best take advantage of the gift certificate features in your ecommerce system.

Massimo Arrigoni

Massimo Arrigoni

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  1. Legacy User May 15, 2008 Reply

    What are some recommended companies to work with that can quickly set up a gift certificant program at an economical cost?

    — *MB*

  2. Legacy User May 21, 2008 Reply

    I don't know what shopping cart system you use above, but I use the Network Solutions Ecommerce Package and out of everything I looked though it was the best for a small business. Gift Certificates are also there and really the whole shopping process is very well done.

    As for the article itself, I found it very useful and will be implementing more GC's as the holiday season will approach.

    Travis
    http://www.ledholidaylighting.com

    — *Travis Fremming*

  3. Legacy User June 10, 2008 Reply

    Network Solutions does look like a good ecommerce package, but what digital gift certificate companies are available for the website that is already up and running?

    — *Tamara*