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?
Any date that you put on a gift certificate that is less than 6 months away is adding to your cost to fulfill that gift certificate obligation.
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, the value of goods that can be had for the original purchase amount is less.
For example, $20 today will most likely buy more than $20 will three years from now, because of inflation, and other factors.
This means that the longer the time between purchase of the gift certificate and when it is redeemed, the more profit you will make.
Don't think you have control over when a gift certificate is redeemed? Studies have proven that the expiration date on either warranties,guarantees or gift certificates is a motivating factor in when that obligation has to be fulfilled because the more time a person has to make a decision, the more likely they are to procrastinate because the sense of urgency to take action has been removed.
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.
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 routine.
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.
