Gift cards are a staple of e-commerce, offering customers a convenient and flexible way to shop, while giving store owners a chance to increase sales and attract new customers. When setting up a PrestaShop gift card system, one of the key decisions you’ll need to make is whether to offer percentage-based or fixed-price gift cards. Both options come with their unique benefits and challenges, so understanding the differences is crucial for making the best choice for your online store.
In this blog post, we’ll explore the pros and cons of percentage vs. fixed-price gift cards, helping you decide which option will work best for your business. We’ll also show how the right choice can influence sales, customer satisfaction, and your store’s overall success.
What Are Percentage and Fixed-Price Gift Cards?
Before diving into the details, let’s first define the two types of gift cards:
- Fixed-Price Gift Cards: These cards have a specific monetary value, such as $50 or €100. When a customer purchases a fixed-price gift card, they pay the stated amount, and the recipient can use that value in full.
- Percentage Gift Cards: These cards are based on a percentage of the recipient’s purchase. For example, a PrestaShop gift card might give the recipient 10% off their next purchase, or it might provide a discount on specific items or categories.
Each type offers unique advantages, but the right choice depends on several factors, including your product pricing, customer base, and promotional goals.
The Benefits of Fixed-Price Gift Cards
1. Simplicity and Transparency
Fixed-price gift cards are easy to understand, both for the buyer and the recipient. The customer knows exactly what they are paying for, and the recipient knows exactly how much they can spend. This simplicity makes them a great option for PrestaShop stores that want to offer a straightforward gift card solution with no complexity.
2. Predictable Revenue
When customers purchase fixed-price gift cards, you know the exact value you will receive upfront. This helps with budgeting and cash flow management. For example, if a customer buys a $100 gift card, you immediately receive $100 in revenue, regardless of whether the card is redeemed fully or partially.
Additionally, fixed-price gift cards often encourage customers to spend more than the value of the card. A customer with a $100 gift card might add an extra $20 worth of products to their cart, resulting in an increased average order value. This type of predictable revenue stream is especially valuable for e-commerce businesses looking for a steady influx of sales.
3. Great for Gifting Occasions
Fixed-price gift cards are highly popular during gift-giving seasons such as Christmas, birthdays, or anniversaries. They are a go-to option when people aren’t sure what to buy someone but still want to offer something personal. By offering a PrestaShop gift card, you give the recipient the freedom to choose exactly what they want, which increases the likelihood that the card will be redeemed.
The Benefits of Percentage Gift Cards
1. Encourages Repeat Business
Percentage-based gift cards are great for driving repeat business. By offering a discount on future purchases, you create an incentive for the recipient to return to your store. For example, a PrestaShop gift card offering 10% off a customer’s next order could encourage them to come back sooner rather than later, thereby increasing customer retention.
Research by Harvard Business Review found that increasing customer retention by just 5% can lead to an increase in profits by 25% to 95%. Percentage-based gift cards are a tool that not only brings customers back, but can also make them more likely to purchase additional products in the future.
2. Higher Conversion Rates
Percentage-based gift cards also help improve conversion rates by lowering the perceived cost of a purchase. A customer who receives a 10% off card might feel like they are getting a deal, which can nudge them toward completing their purchase.
Moreover, offering percentage discounts on specific product categories or even first-time orders can help you drive sales in areas where you need a push. This flexibility allows you to tailor the gift card to your marketing needs and seasonal promotions.
3. Perceived Value
While a fixed-price gift card offers a clear monetary value, a percentage discount can sometimes feel like a better deal to customers. The perception of getting “more” off a larger purchase can be very appealing, even if the discount is technically the same amount. This can be particularly useful in marketing campaigns where you want to entice customers to spend more in order to get the discount.
Deciding Between Percentage and Fixed-Price Gift Cards
The decision to offer percentage or fixed-price gift cards will ultimately depend on your store’s goals, your customer base, and your overall marketing strategy. Let’s look at a few considerations:
1. Customer Segmentation
If your customer base is highly price-sensitive or you’re looking to target first-time shoppers, percentage gift cards might be a better option. They provide a discount on future purchases, which can make customers feel like they are getting more value for their money. For example, a 20% off gift card might be irresistible for someone who is hesitant about buying from your store.
On the other hand, if you cater to customers who prefer simplicity and clarity, fixed-price gift cards are likely the better choice. These are ideal for those who prefer knowing exactly what they’re getting, such as gift-givers purchasing for a loved one.
2. Business Goals
- If you want to increase the average order value, fixed-price gift cards might be a more effective tool. Customers will often spend more than the value of the gift card to use it up, increasing your revenue.
- If your goal is to increase customer retention and drive repeat business, percentage gift cards are the better choice. The promise of a discount on future purchases can entice customers to return.
3. Marketing and Promotions
Percentage gift cards can be used as a strategic tool during sales and promotions. Offering a percentage off on specific items or during certain times of the year (like Black Friday or end-of-season sales) can create urgency and excitement. Fixed-price gift cards, however, are perfect for general promotions and holiday campaigns where a simple, clear offering works best.
Using the PrestaShop Gift Cards Module
Regardless of whether you choose fixed-price or percentage gift cards, using the PrestaShop gift cards module can help you seamlessly manage gift card sales and redemption. The module allows you to set both types of gift cards, customize their design, and manage the customer experience.
By integrating the PrestaShop gift cards module into your e-commerce store, you can automate and streamline the entire gift card process, from purchase to redemption, ensuring a smooth and professional experience for your customers.
Conclusion: Choosing the Right Gift Card Strategy
Both fixed-price and percentage gift cards have their place in a successful PrestaShop store. The right choice depends on your specific goals, whether that’s driving higher average order values, building customer loyalty, or creating targeted promotions. By understanding the advantages of each type, you can tailor your gift card strategy to best meet your business objectives and customer needs.
With the PrestaShop gift cards module, implementing and managing either type of gift card is easy and efficient. By providing your customers with flexible gift options, you can increase sales, improve retention, and enhance the overall shopping experience.
