Store credit is a store currency given to customers to purchase items or services at a specific business or group of businesses in a brand’s network. Store credit cannot be used in other stores and is not the same as a discount. A great way to stand out from competitors is through store credit. Customers are more likely to spend more at shops if they can purchase on credit. Three common types of store credit include gift cards, returns and exchanges, and loyalty rewards.
Gift cards are a great way to increase cash flow and increase brand awareness. Customers often spend more than the amount on the gift card which increases revenue. Gift cards are a convenient way to gather data to understand your customers. Digital gift cards allow customers to purchase a gift for an individual in their lives without leaving their house. According to the Gift Card Granny, about 40% of shoppers favour digital gift cards over physical cards. Many individuals also do not end up using the few dollars or cents left in a gift card which can add up for businesses.
Returns are a major way that businesses lose revenue. However, with store credit, businesses can turn returns into exchanges. Through store credit, businesses can extend return policies and allow customers to return items without a receipt or tags. This flexibility will increase customer satisfaction. A study done at the University of Texas on 11,000 retailers revealed that retailers with lenient return policies had higher sales. If your business has a flexible return policy, customers will feel more at ease when purchasing bigger items.
A great way to increase customer loyalty and attention is through loyalty rewards. Loyalty reward programs reward customers for continually purchasing and interacting with a brand. Customers will be encouraged and incentivized to shop at your business if they can receive points for discounts, exclusive perks or free products. Through customer loyalty programs, businesses can show that they highly value and appreciate their customers. In addition to the benefit of increased repeat purchases, businesses can gain and build their customer’s trust. When customers are connected to a store, they are more likely to recommend and support the brand.
A business that has successfully implemented store credit is Starbucks. Through the Starbucks app, loyal customers have unknowingly loaned Starbucks $1.5 billion with no interest. Starbucks customers who pay with their Starbucks app to earn stars and redeem free drinks. Customers are willing to put their money into their accounts because they know they will eventually use it. Starbucks can use this money to open new stores or invest in the market.
Store credit is not just another payment option, it is a strategy that your business can take advantage of today to increase revenue and customer loyalty. It will allow you to analyze transaction histories, control limits on credit and give your customers a wonderful experience with your business. There are multiple ways to implement this successful model into your business today, which way will you choose?