With the holiday season fast approaching, it’s a good idea to start preparing some smart marketing strategies now (if you haven’t already). As customers look for fun, flexible gifts for family and friends, gift cards are an ideal solution—they offer an inexpensive way to simplify gifts for your customers’ shopping while simultaneously promoting your brand.

Gift cards have come a long way in recent decades: According to Smithsonian, Neiman Marcus was the first retailer to sell gift cards (back in 1994), but Blockbuster was the first to display them in-store, and it wasn’t until 2001 that a reusable card hit the scene at Starbucks. Today, the holiday season would seem somehow empty without racks of plastic “money” adorning retailers’ shelves—and not surprisingly, restaurants are a perennially popular category for gift card giving.

Reaping the Benefits

According to a 2016 study by Mercator Advisory Group, a financial firm in Maynard, Massachusetts, today’s prepaid card options can be divided into three broad categories. Physical cards, made of plastic or coated paper carry a magnetic stripe that encodes the value. Virtual cards are sent to a recipient in electronic form (email or social media), then redeemed through paper printouts brought into a store, or via a code entered on a website. Mobile cards are also sent to a recipient in electronic form (app, SMS message or email), but redeemed via phone or other mobile device. 

Kamron Karrington, founder of Las Vegas-based Repeat Returns, outlines three potential outcomes in gift card programs: The customer uses the gift card and has credit left over, known as “breakage,” which may never be used. The customer uses the gift card toward a purchase that exceeds the value of the gift card, so the restaurateur receives additional revenue, or the gift card never gets used. In any case, the owner wins. However, according to statistics from GiftCards.com, customers who do utilize gift cards will usually try to spend the entire amount—or exceed it. 

Beyond impacting your sales stats, gift cards serve as ongoing advertising for your pizzeria. Selling cards emblazoned with your company logo enables your regular customers to share your brand with potential new fans, who are reminded of your business every time they open their wallets. “I think gift cards are a great way to grow business,” says Jeff Shapiro, CEO of Impact Mailers in Marietta, Georgia. “I think it’s better than couponing, because it’s more incentive-based. Gift cards should be part of every restaurant’s marketing.”

Hungry Howie’s utilizes its POS system to offer these birthday deals to repeat customers.

The Loyalty Tie-In

Gift cards can also be a great way to reward your loyal customers or get new customers to sign up for your loyalty program. “You can offer your loyalty customers bonus points for buying the gift card,” Karrington suggests. “It’s a no-brainer to say, when somebody new comes in with that gift card, ‘You can start earning points with this purchase. Would you like to join our rewards program?’ It’s a way to convert them and get their information and get them in your program. It’s the gift that keeps on giving.”

Cynthia Hollidge, president of CCS Creative, a Toronto-based marketing company, agrees. “Gift cards should be seen as a loyalty program,” Hollidge says. “Getting people to come back into the store is the biggest issue for any operator, but gift cards help bring that customer back so you can give them a good experience.” When the full value of the gift card is not used in one visit, customers have a reason to return. 

You can also run a holiday season special with your gift cards, encouraging customers to sign up for your loyalty program with a birthday promotion: Sign up now and receive a gift card for $X on your birthday. “For a birthday mailer program, the cards can then be customized for that customer specifically. It can read, ‘Happy Birthday, John, from Enzo’s Pizzeria! Enjoy a free pizza on us,’” Shapiro says. “That way, you’re not promoting discounting, but loyalty, and that’s the key factor in this strategy. If you can get people loyal to your restaurant, they will come back—with or without that discounted offer.”

Finally, use your POS system to track gift card spending and the return on your investment, and make it easy for customers to find out exactly how much they have left remaining on their gift cards. “I think more people are now attaching gift cards to a digital platform so that you have the ability to say, ‘You have $X left on your card,’ or ‘Here’s a special offer,’” Hollidge says. “It’s a method of getting your logo and operation in the face of your customers on a regular basis. It’s an essential part of any foodservice operation today: making sure you have a loyalty program and the ability to communicate with the customer.”

Blaze Pizza sells seasonal gift cards in conjunction with its Pizza Pass promotion.to entice customers.

Holiday Helpers

The holidays are a peak season for pizzerias, including some of the biggest pizza days of the year: Halloween, Thanksgiving Eve, Christmas Eve, New Year’s Eve and New Year’s Day. Karrington notes, “Restaurant gift cards, in general, are the most popular and requested gift cards at this time, surpassing even retail cards by a small margin.” By beginning to promote your holiday gift cards in October, you gain a step up on the competition and get your customers to start thinking early about the upcoming holiday season. 

“It’s the top thing that people want and the top thing people are buying,” Karrington concludes. “You just have to wave your flag and say, ‘Hey—I’ve got them.’ You can even use them for holiday fundraisers. Sell a $25 gift card to a local organization for $15 to $18. They drive more traffic for you while making money for charitable and community causes, and you’re a community hero. It’s a win-win.”  

Bill DeJournett is PMQ’s managing editor.