Pull out a $20 bill – or indeed, any bill – and take a look for an expiration date.
There isn't one, of course. Yet gift certificates are increasingly being printed with expiration dates. In my book this goes against the idea that certificates are as good as cash.
In fact, savvy marketers realize they're better than cash. A gift certificate is money received without immediate distribution of product. This lets the marketer have the float on what is essentially a loan – and there is a certain percentage of certificates that aren't going to be redeemed at all.
That's free money. Why would a marketer do anything to discourage this?
But they are. Some marketers are actually attaching service charges if the certificates aren't used by a certain date, with ever-increasing fees based on how old the coupon is. Home Depot, for one, deducts $5 per month for any card not used within two years.
These charges are on top of the fees some levy for selling the gift certificate in the first place.
The excuse is that certificates need to be redeemed within a specific time frame, to allow the revenue from them to be appropriately recorded. Expiration dates, marketers say, are a necessary inducement.
Rubbish. Want a certificate redeemed in a timely manner? Make sure each one is accompanied by a real inducement – like, oh, a catalog or a flyer.
If a giver offers a $100 gift certificate, and later finds out that it could only be redeemed for $90 worth of products, the next gift is going to be cash.
Cash, for those unfamiliar, is that green paper that is accepted by marketers' competitors.
To respond to the opinions in this column, please contact rlevey@primediabusiness.com.
