Putting Expiration Dates on Gift Certificates Cuts Profits
When somebody buys a gift certificate from your business
do you put an expiration date on when it has to be used in
order for it to be valid?
When you put a date on a gift certificate that is less
than 6 months away you are adding to your cost to fulfill
that gift certificate when it is redeemed.
A gift certificate that is purchased today can buy 100% of
the goods and services that your business offers today. So
if a gift certificate is redeemed soon after it was
purchased, your cost to fulfill that obligation is the same
as it would be if the person just paid with cash.
But, if that gift certificate is not redeemed for 6 months,
12 months or longer, the value of goods that can be had for
the original purchase amount is less.
Let me explain. Since everything is going up in price, it
seems to reason that $20 today will buy more than $20 three
years from now will.
This means that the longer the time between purchase of the
gift certificate and when it is redeemed, the more profit
you will make.
[Editor’s note: This of course holds true for gift certificates for a speicifc dollar amount, but not for those covering a particular product or service. For those, it’s to your advantage to get them redeemed quickly. And some percentage of gift certificates are never redeemed, of course.]
Now before you say that you have no control over when a
gift certificate is redeemed, let me address a proven fact
when it comes to deadlines or expiration dates. The further
out the date, the lower the sense of urgency to take action
before the date.
This fact has been proven time and again in scientific
A-B Split tests on on money back guarantees for all types
High powered, profitable direct response marketing
companies understand that the longer the time to request a
refund, the fewer the people who actually follow through.
The mindset is, “I have time to wait, its a whole year
before my decision is final and I can’t return it.” And as
you know, the customer gets busy and before they know it,
the year has past and they no longer think about asking
for a refund because the product has become a part of their
Take some pressure off your customers and increase your
profits by extending or removing expiration dates from
your gift certificates and guarantees. You’ll see less
returns and higher profitability.
Duncan Alexander is the author and president of Fog Marketing which provides high quality PPC traffic at fixed prices. If you’d like to learn more about getting traffic for your niche market, please visit my website at: