Outstanding Gift Vouchers
When a new client started working with me recently we first took a look at a review of the business financials and we uncovered a significant amount of outstanding gift vouchers
This business sells a lot of gift vouchers and while some are redeemed almost immediately, many remain valid and not redeemed and are accounted for as outstanding gift vouchers
This is a pretty significant issue for this business – and here is why:
This is an obligation for future service
The business has the money in the bank – in some instances, paid many months ago – and the service remains unfulfilled
We calculated the cost in dollars and the cost in time required to fulfil the obligation of the outstanding gift vouchers
It is more than 3 weeks of sessions for this business.
This means that if every gift card were to be suddenly redeemed, this business would provide service for 3 weeks and not receive any revenue – they already have the revenue
We’ve now allocated an amount of money to their Balance sheet to cover the liability for these sessions
Now to tackle ways to encourage people to redeem those gift cards and visit the studio
Here is a couple of the ways this business is going to encourage people to take up their gift cards:
- set up regular posts on various social media to encourage “Redeem your gift card today” and connect this with. for example, “Get ready for summer” or similar
- contact the people who bought the gift cards and encourage them to have the recipient take up the sessions from the gift card – now this business has the records of all the gift cards so they can connect with the purchaser. Some businesses won’t have this
- create a poster for the studio to encourage people to dig out their gift cards and “cash them in”
- when they sell a gift card they are now going to record the details of the recipient and make it part of the gift card, where possible, so that they can follow up with information and invitation to come into the studio
The more personal they can make the connections the more likely they are to have success
Having a lot of outstanding gift cards in any business is a liability and one that does need attention
Do you have gift cards as part of your business offering?
Do you know how much liability you have for outstanding and unredeemed gift cards
Do you have a strategy for encouraging people to redeem their gift cards – remember they are potential new clients and especially when being recommended by someone who is such a fan of your business they want to encourage the person to experience that through giving them a gift card
Let me know your thoughts
How do you manage gift cards in your business?
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