Gift Cards as a Tool to save Local Businesses: Essential Tips for Supporting Initiatives

It was only just over a month ago when cities around the world started to impose strict lockdown measures on their citizens due to the Covid-19 pandemic, forcing millions of SMEs to close their doors and consider new ways to keep their businesses running.

Encouragingly, a multitude of citizens and companies have been active in supporting their local businesses, and have innovated with a wide array of schemes to help keep bars, restaurants and cafes afloat.

One of the best ways they have found so far is by encouraging the purchase of gift cards as a “Buy now, use later” mechanic to give businesses some much-needed cash during the crisis. Quite simply, customers can purchase a digital gift card for either themselves or someone else to use once their favourite local place re-opens.

Many of these save-local-business initiatives focus on helping as many SMEs as possible, offering a simple onboarding process, low-to-no fees and a heavy focus on promoting gift cards via aggregated sites where many businesses are shown together.

To new arrivals in the gift card industry, how can you start and sustain a local support-local-business initiative?

It is far from simple to get a solid project off the ground without the support of a specialised technical partner. Over the past few weeks, I’ve been approached by several clients seeking to help SMEs set up their own gift card programmes in order to recoup some lost income during this time. Some of the main challenges they are facing are related to national legislation, gift card security, fund transfers and financial regulations. Suffice to say, setting up a substantial programme for potentially thousands of local businesses that can take it to scale at speed is not easy.

My advice to them was simple: get a holistic understanding of how gift cards work before you venture into such a project head over heels wanting to help ASAP. In that case, with issues such as considerable fraud and misuse as common threats, getting it right the first time – even if it takes a little longer certainly beats rushing into it. If you don’t have your own payment technology or knowledge of how to set up a secure gift card system, partner-up with someone who does. There are a number of specialised gift card providers who are providing a solid technical backbone during this crisis and will be more than willing to team up with you to support local businesses. You’re considering setting up an initiative in your area and don’t know where to turn to? Feel free to reach out, I might know a matching player or two.

How can you really make an impact?

Once your core proposition is up and running and you are able to offer a stable mechanism for businesses to start selling their own digital gift cards, focus on promoting your initiative as quickly as possible.

I’ve seen initiatives take advantage of both traditional and social media, securing promotion across national and local newspapers, TV, radio, magazines as well as Facebook, Instagram and Twitter. Promotion is key because it will drive more customers to your initiative and thus increase the chances of making an impact on local businesses.

Furthermore, you should think about broadening your scope from just-food and drinks businesses. Bars, restaurants and cafes have received by far the most publicity and support from such initiatives – but what about small boutiques, hairdressers or beauty salons? They are unable to even offer a takeaway service during this crisis, so will be critically at risk during the lockdown period. If you find the local market is saturated with plans to help hospitality SMEs, why not focus on these instead?

Offer extra benefits for your customers

Some local initiatives have promoted discounted gift cards, or gift cards whose purchase value will be matched by a cash donation to the business. (I.e. the customer buys a €20 gift card and you send another €20 to the SME.) Why not get a large corporation to sponsor your site in order to provide some extra financial support for a scheme like this?

Protect your customers

Sadly not all businesses will survive the pandemic lockdown, meaning customers may be unable to redeem their gift cards once the crisis is over. Try to communicate the potential risks to your customers too, so that they fully understand the implications of their purchase and aren’t left angry and frustrated at a later date.

Learn from other successful initiatives too!

If you want to start an initiative, you don’t have to reinvent the wheel. Get in touch with organisations that have already launched and pick their brains! Some of the most successful “save your local business” initiatives are savethemainstreet or diningbonds in the US, support-your-restaurant or savepublife in the UK, horecacadeaukaart in the Netherlands, #cuandovolvamos or #salvemosnuestrosrestaurantes in Spain or or HilkeLokal in Germany.

Finally, how can you continue to support SMEs once the crisis is over?

Local initiatives are doing a fantastic job of helping keep businesses afloat. But also think ahead and start shaping a plan how you can translate your efforts into long-lasting help for them once things start to normalise and places re-open. You don’t just want to shut down what you have built up. Gift cards are an equally great tool for businesses in regular mode of operation to encourage and retain patrons in the long run.

Make sure you keep your page active and keep promoting it, but also think about how to transfer matters into the hands of the businesses themselves so they can continue with their own gift card programme. And of course – share your knowledge about gift cards you have acquired during this strange and unprecedented time with them.

RL Consulting would love to see these initiatives succeed in the long run and is hoping for more of them to emerge. We would be happy to contribute to your continued success by offering a pro-bono consulting session where we can discuss your challenges and map out key opportunities. Just get in touch – we’re in this together!

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