More profits are possible with more liabilities
How do liabilities in your books mean more profits?
Owen received a gift card to Banana Republic from his brother Evan. Owen’s gift card is a perfect example of how a liability equals more profits. Banana Republic collected $50 from Evan, but since the $50 is still owed for merchandise it has to sit in a liability account, possible called “unclaimed gift cards”?
Until Owen uses the gift card, the $50 dollars is a liability, a liability backed by cash though! Cash that’s non refundable, cash that will equal more profits one day.
The dangers of gift cards!
Gift cards are great when your liability is covered by real cash! However where businesses can get in trouble is when they print their own money. We have a spa with 3000 clients in their email list, the minimum amount they wanted to give their customers was a $25 gift card. Do the math…$25 multiplied by 3000 = $75,000 in liability…whoa! That is not the right way to more profits.
The moral of the story is DO NOT hand out gift cards (print your own money) unless you are collecting cash from your customer.
Send Points or Coupons, both of which have no cash value. No cash value means no liability which is a much better way to more profits. Points can be redeemed against rewards and Coupons have expiry dates.
The KiSSGC app offers all 3! Gift Cards, Rewards (redeemed with points) & Coupons for your business. Your marketing possibilities are only limited by your imagination. With detailed customer analytics (gender, birthday, spending habits) to help you make educated decisions you can promote how you want. Use sms, push notification or email to reach your customers and gain more profits for your business.
Learn more here
Statistics show between 10% – 30% of gift cards are never spent which means your liability account will always grow.