Putting Expiration Dates on Gift Certificates Cuts Profits
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Do you put an expiration date on gift certificates when
someone buys one from your business?
If you do and the date is less than 6 months away, you are adding to the cost of your fulfilling that obligation and here's why.
Your cost to fulfill a gift certificate bought last week is the same as it would be if the certificate holder paid cash. That gift certificate will can buy 100% of the goods and services that your business offers today.
But, if that gift certificate is not redeemed for 6 months, 12 months or longer, amount of goods or services received for an equivalent dollar amount as the gift certificate is less than if those goods were purchased on the same day the gift certificate was purchased.
For instance, a $20 gift certificate today will buy more goods and services than $20 will three years from now, due to inflation, and other increased costs over time.
This means that the longer the time between purchase of the gift certificate and when it is redeemed, the more profit you will make.
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 is not my speculation or postulation, but has been proven on all types of things, but specifically on money back guarantees for all types of products.
The best direct response marketing companies know that fewer people will ask for a refund if the expiration date for honoring the refund or guarantee is a long way off.
The purchaser thinks, "I have a whole year to change my mind." And like everybody else, they get busy and a year has come and gone and they have made the product a part of their lives.
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.
About the Author:
Duncan Alexander is a web-entrepreneur and creator of Fog Marketing which is one of the best sites on the net for information about promoting your business. If you want more information on getting super, laser focused PPC traffic for your business, please go to: http://www.fogmarketing.com
