Gift card vs loyalty card is not a choice between two kinds of loyalty: a gift card is something one person buys for another, while a loyalty card rewards the person who keeps coming back. Each does a different job in your business. Here is how they differ, what each one costs you, and how to make them work together.
Two cards, two different guests
A gift card is bought by one person and spent by someone else. The buyer is often a regular who knows your place and wants to share it. The person receiving it may never have been in. So a gift card is first and foremost a way to get a new guest through the door, paid for by someone who already likes you.
A loyalty card is used by the same guest who earns the stamps. It does not tell anyone new about you. It does something else: it gives a guest who has already been in a reason to pick you again next time.
That difference is the whole point. A gift card is about the first visit. A loyalty card is about the tenth.
Gift card | Loyalty card | |
|---|---|---|
| Who pays | The giver | Nobody, it is a reward |
| Who uses it | Someone else, often new | The same guest |
| When you get the money | At the sale | At every visit |
| What it gets you | A first visit | More visits from one guest |
What a gift card does for you
A gift card has two strengths a loyalty card lacks.
The first is cash. You are paid when the card is sold, often in November and December, and deliver later. That can help cash flow at a time of year when many small businesses carry high costs.
The second is the recommendation. A gift card is a recommendation with money behind it. The giver is in effect saying: "This place is good enough that I will pay for you to try it." That carries more weight than a social media post.
It has a downside too. A card you have sold is something you owe. It has been paid for, you have not delivered yet, and unused cards can pile up. How to book them, and how long a card should stay valid, is worth settling with your accountant before you sell them in volume. Print clearly on the card what it can be used for.
What a loyalty card does for you
A loyalty card only costs you something once the guest has been in enough times to earn the reward. You pay for visits that actually happened. And the reward, say a free coffee or a pastry, usually costs you less in ingredients than the guest feels it is worth.
On the other hand it brings no cash up front and no new faces on its own. It only works on people already standing in your shop. That is why the two fit so well: the gift card delivers the new guest, and the loyalty card makes sure they do not come just once.
What the reward on the card should be is covered in how to choose a stamp card reward.
The risky moment: when the gift card is spent
A guest who comes in with a gift card is a special case. They did not choose you; they came because someone else paid. Once the card is used up there is no reason to return, unless the visit itself was good enough and you give them one more reason.
So use the moment at the counter. When the gift card is redeemed, ask whether they would like to join your loyalty card and give the first stamp right away. With a digital stamp card they scan a QR code and are in within a minute, without downloading an app.
If you have a welcome offer for new members, the gift card guest is the ideal recipient: new, in your shop, and already well disposed towards you. How to set one up is in welcome offers for new customers.
The guest is new, and someone else paid for the visit
They scan the QR code at the counter, no app to download
This visit counts straight away
A welcome offer gives a reason for visit number two
Should buying a gift card earn stamps?
Plenty of owners run into this in December. Our advice: stamp when the gift card is spent, not when it is bought.
The reason is simple. If a regular buys a gift card and earns stamps for it, and the recipient earns stamps again when the card is used, you have stamped the same takings twice. Stamp only at redemption and you reward the visit, which is the thing you want more of.
If you stamp per amount spent, the amount a guest pays with a gift card counts like cash once they are in the shop. If you give one stamp per visit, it is one stamp however they pay. Put it in your terms so staff handle it the same way every time.
If you want to thank the giver, do it another way: a word at the counter, or a small gesture next time they come in. They just sent you a new guest.
Gift cards belong to December
Gift cards sell mostly in the run-up to Christmas, and December is already a month when you do not need a discount to fill the room. That makes it the best month for both cards: sell gift cards to people buying presents, and sign the many new faces up to your loyalty card so you can invite them back in January. Planning the year around the busy and the quiet months is covered in seasonal promotions for restaurants.
What MightyLoyalty does, and what it does not
MightyLoyalty is a digital stamp card with rewards, tiers and offers. We do not sell gift cards and we do not handle payments. If you sell gift cards, that happens in your till, your web shop or on paper, and the loyalty card runs alongside. It is the same split described in coffee subscription vs loyalty card, where the payment also lives elsewhere. More on the stamp card itself is on the stamp card app page.
A simple rule of thumb
If you want new guests through the door, sell gift cards and let your regulars do the work. If you want guests to come back, give them a loyalty card. If you have both, make sure every redeemed gift card ends with a new loyalty card member. That is where the two tools give you the most together.
Frequently asked questions
Can a gift card replace a loyalty card?
No. A gift card brings one visit from a new guest, paid for by someone else. It gives that guest no reason to come back afterwards. A loyalty card does, so the two complement each other.
Should I give stamps when someone buys a gift card?
We recommend stamping when the gift card is spent, not when it is bought. Otherwise you stamp the same takings twice, and it is the visit you want to reward.
Can I sell gift cards through MightyLoyalty?
No. MightyLoyalty is a stamp card and customer club and does not handle payments. Sell gift cards through your till, your web shop or on paper, and run the loyalty card alongside.
