Putting the OUCH into vouchers
In Paul’s ludicrous fantasy world of truth and light, business is cherished, money is prized and value lasts longer than six months.
In the real world of vouchers, however, none of this happens.
And I can’t see why.
Purchase
My wife and I bought a friend an $80 voucher from his favourite restaurant. It wasn’t a venue we were into, so Chez Ripov got a new client for free.
When the voucher arrived, the small print said it would self destruct in six months. This upset and bewildered me.
Vibe
This was a dining experience for our friend and his partner to enjoy. Suddenly, they had to have their fun within six months, or forgo it.
If their schedule and preferences didn’t match the restaurant’s, stiff cheese platter.
Time
Paradoxically, by forcing the diners’ hands, the restaurant increased its chance of having to honour the voucher.
Left to their devices, the lucky couple could leave town, lose the voucher, break up, fall ill, die or otherwise fail to claim their steak.
In other words, the restaurant could’ve had its cake and eaten it.
Money
Today’s $30 main is tomorrow’s entree (starter). With inflation eating the voucher’s value, each passing day worked in the restaurant’s favour.
So why the great rush?
Reputation
Instead of naming and praising an amazing, enlightened eating place, I’m fuming in a blog post.
I’m also miffed at all the other vouchers I buy which, mysteriously, now last half as long as they used to.
I therefore defy any business owner to justify time-limited gift vouchers. Shoes, books, fashion, music, massage, ‘gold’ class – here’s your chance to correct my stand.
Your time starts…
Now.
Paul Hassing, Founder & Senior Writer, The Feisty Empire
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I agree,it does not make much sense to time limit a voucher. As Paul says the longer it takes to use it the less value the client would get. This would work in favour of the vendor I would think.
Great post
My vouchers expire after a year – I figure if you aren’t going to come for a massage or training session in that time, you aren’t coming. I think 6-12months is fine for a voucher, but less than 6 months is not.
Thank you, Matt; both for your comment and your kind retweet. It’s nice to know that a chap with your financial background concurs with my analysis. Best regards, P.
I am wondering if the business needs some idea of the potential numbers of people who may come knocking to claim their meal? Is that one reason they do it? So they have certainty? That said, I think anything under 12 months is just silly. (Although my fave boutique does 3 month free vouchers which work every time to get me in to spend my free $50 and about 5 x more out of my own pocket, so…)
Many thanks for your comment, Sam. And good luck with your amazing Olympic dream!
I have two questions for you:
1. If you’re certain clients are not coming back, do you lose anything by letting your vouchers ‘live’ forever?
2. By removing the expiry date, would you agree that you get free goodwill with zero risk to your business?
Best regards, P.
Hi Joanna. A jolly nice post on YOUR blog this morning!
Even voucher holders have to book to dine at a restaurant, so I’m not convinced by your first argument.
However, your point about the 3 month vouchers could be our first clue…
Thank you kindly.
Paul,
If you look at it another way the gift voucher is just another promotion and as such needs to have an end date. How can you track or measure the effectiveness or against objectives if it is open ended?
I’m a photographer.
When my clients buy a gift certificate (usually for a portrait session), there’s a good chance I’ll sell the recipients more prints than the gift certificate covers. So time limiting each gift certificate ensures this money comes into my business sooner rather than later.
There’s also the fact that my gift certificates are typically for a service, rather than a cash value. In 12 months time, my portrait session fee might have doubled due to demand, and honouring old gift certificates and/or pricing essentially means working at old rates, which will take its toll on my cashflow.
Paul, I don’t think there is zero risk to a business. Say for an example a restaurant issues 50 $80 vouchers over a 3 month period and 30 all come in on the one day (may not be realistic however could happen) then their cash flow for that day would be terrible. The best business practice would be to place the funds from the sale of the voucher in a separate account and allocate the funds back into the business when the voucher is presented. Most small business would not do this as thier current cash flow is tight in most cases
Regards Matt
Thanks, Matt. I still reckon a reservation system would prevent this.
But I suppose some diners would ignore the fine print and just rock up out of the blue. You could hardly knock them back.
I like your accounting solution. What I’d give to have that kind of discipline!
Dear Susan, I hadn’t looked at vouchers as a promotion. To my mind, they are equal to money. But perhaps this view is a bit too precious for the cut and thrust of business. If they are a promotional tool, your point about measurement is a very good one. Thank you!
Hi Luke. What a stunning website you have!
Your comment (and Susan’s) marks the point where I start learning from my audience.
I’d completely failed to consider vouchers in the light of services. Many thanks for bringing your perspective to our debate.
I would make a distinction between vouchers/coupons for a marketing campaign, and gift vouchers.
Really for using coupons and vouchers to advertise changing them often and making new offers to captivate would make sense. A gift voucher on the other hand, is a purchase someone has paid money for and should be entitled to redeem at their leisure. If the length of time is a worry, then it can have a dollar value.
The other realllly poor practice is when businesses don’t give change on gift vouchers, so a new voucher for the difference to be redeemed later. If I buy a $50 voucher for someone and they select an item worth $40 they should have credit for the remaining $10. Anything less than that is just theft.
Good show, Lindy. Your distinctions, reflections and observations are most welcome. Many thanks!
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I wouldn’t say it’s as simple as Lindy makes it sound. Not for my business, anyway.
I need to juggle selling gift certificates that are affordable, with providing a service (and end product) that doesn’t *force* the recipient to spend more money, increasing my prices as my business and name grows, and providing reasonable gift certificate longevity.
Assigning a monetary value and long expiry to these gift certificates would mean the recipient gets far less than the original giver expected. So, selling service certificates and assigning a short expiry is what works for my business.
Thanks for the clarification, Luke. May I ask whether your approach has ever triggered any gift voucher recipient aggro? Or is everyone cool with it?
@Luke – Context is marvellous isn’t it!
I appreciate your position. And that is a real issue to work through – what works for your business.
Yet that’s probably not the customer’s concern. And probably rightly so. A solution that works for the merchant and the customer would be a nice resolution.
Hey Paul, I always thought this was an accounting thing – are vouchers are classed as liability to your business and appear on your balance sheet? By giving them an expiry date you are certain of an end time to reduce that liability amount. If your customer never redeems it and it doesnt expire, I’d think your business would still end up carrying that liability forever. Happy for an accounting expert to prove me wrong here though.
-Sonia
P.S. Luke, Josiah is a complete cutey, and I’m not just biased cause of my own angelic sleeping 8 week old (for now anyway!).
Hi Sonia. I’m afraid you’ve got the wrong guy! I don’t do gift vouchers myself. And the mere mention of accounting implications is enough to put me off them for life!
I will, however, be happy to watch this element of the debate unfold behind my trusty bulletproof screen.
Lindy’s idea of a solution that works for all parties would be grand. I wonder if we can bash one out together.
Paul, Lindy … no worries so far
That said, I do exercise my freedom to honour expired certificates occasionally 
Sonia … thanks!
Thanks, Luke. So it seems some gift recipients do leave their run too late.
Does the fact that you honour some expired certificates mean you know it’ll cause bad blood if you don’t?
Please tell me to put a sock in it if you feel I’m prying.
In all honesty, gift certificates aren’t a huge part of my (very young) business, but I do sell a few (especially with Christmas coming up), and until recently I gave them a 12-month expiry. So I’m not working with a huge set of sample data
If it’s only been a few days since the certificate expired, I’ll honour it as-is.
Beyond that, I tend to honour it but provide less product. Part of the reason I set a shorter expiry is to protect my cashflow through price changes, so in keeping with this, I’ll negotiate a change to what the certificate is worth.
Thank you, Luke. Yours is a world of which I know nothing, so it’s great to learn how you operate.
Now @Luke… some of the difficulty you face might be alleviated with gift vouchers… for someone else’s product. Lots and lots of ’stuff’ that is needed around weddings, etc. Might be a way to parlay some goodwill and open an opportunity for other service providers in that marketplace.
Hi guys,
You have to get in quickly for a comment today! The issue of vouchers comes in two quite separate forms as Lindy suggests. The first is an exchange of money for a specified value to be spent with the retailer. These are hugely popular particularly at Christmas and not only come from individual stores but are also offered by shopping centres for any purchase in that centre.
These are very convenient, particularly when buying for teenagers with fickle taste, but are counter institutive to successful retailing because they are bought before Christmas at full value and then cashed in after at 50% off the merchandise!
That’s beside the point. The issue is that gift certificates are deferred sales where the retailer has the benefit of the use of money for cash flow before supplying the goods and therefore should not expire. A promotional voucher offering a discount or a cash value can legitimately have an expiry date that coincides with the running of the promotional period.
It’s an interesting fact that even cash back offers have less than a 20% redemption rate even if the cash back was the motivator to purchase in the first place. Other reward vouchers are well below 10% so to make a big splash in your market you can offer a higher value incentive which will grow your sales when you know the redemption rate will be low.
And I particularly hate it when Gold Class vouchers expire – what a waste!
Good point, Lindy. Such ‘client sharing’ arrangements (e.g. a bakery with a coffee shop) are supposed to be very powerful. You can double your customer base at one stroke.
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Welcome back, Malcolm. Always ace to get your input. When I realised this debate was broadening, I had half a mind to go back and add ‘gift’ to my title and second paragraph.
The dual threads are a bit hard to follow, but the extra stuff we’re throwing up is well worth it, I reckon.
While we’ve got you, do you have any thoughts on why redemption rates are so low?
@Lindy: I’ve already started doing this. Unfortunately such an arrangement is useless when people approach me to buy portraits for their friends and family, which is what I’m talking about here
Perhaps. Still it remains. There is more than one way to skin a moggie.
Thanks Paul,
Customers buy in the heat of the moment and will put aside the voucher for later. Many just forget or don’t get around to it even if it’s just sending in the warranty card – address and envelope and a card.
Without wishing to get between Luke and Lindy it appears that Luke’s business will be better served by offering a value added promotion rather than a gift voucher. Book your portrait shoot before November 10th and we will gift you an enlargement of your favourite shot and guarantee to have your order ready for Christmas.
An extension would then to do a back end promotion (host beneficiary) with a framer that will offer 10% off to any of your clients so you are seen to be adding extra value and the framer is happy to give the 10% off to secure the additional business.
Thank you, Malcolm. You could get on the radio with this sort of thing!
Paul, thanks for raising this issue. I agree that shoppers should ideally get ‘forever’ to redeem their vouchers. As mentioned above, there are unfortunately accounting and tax reasons why that can’t happen. (and the numbers can be significant).
I think retailers should be upfront with shoppers – ie. not in the super fine print – where do they find those font sizes ? In my view, there should a standard 12 month period – across the retail industry – that way everyone knows where they stand.
I hope that is helpful – having spoken as both retailer and marketer
Thank you very much, Stephen. I was hoping you’d weigh in and you didn’t let me down. Anyone who glances at your new ebook will see why I’m so keen for your opinion.
You make excellent points and this is the closest we’ve come to a solution of best fit. Best regards and good luck with your launch. P.
Wow! Whooda thunk there is so much involved with vouchers?…a fine and interesting weave of comments indeed
I see that the topic has also touched on ‘Coupons’…we also put that through the wringer in ‘All Washed Up’ ( http://mybrc.myobnet.com/2009/08/25/all-washed-up/ ), back in August…another great and valuable discussion…and it was in 2 Parts no less :- ). This conversation builds on that nicely
I don’t think I could add any business acumen to these fine insights and experiences, so I’ll just add my 2 bobs worth from my personal perspective:
I hate vouchers AND coupons. I find them complicate, wasteful and demeaning. Call me a paranoid, elitist snob, but mate, if you’d given me even a $200.00 voucher for a restaurant you’d never been to, I’d be wondering what was wrong with, and why you didn’t want to have dinner with me?
Maybe I’m just more ‘high-maintenance’ than I like to think 
I was given a voucher by an Australian Org last year as a Christmas thank you for my services throughout the year as a Carer. It was a $50 Voucher. I didn’t use it. Why?
When I walk into a shop with either vouchers or coupons and go to hand them over, I feel cheap. I feel like a charity case. Yeh! I know it’s ridiculous…but it’s how I feel. Call it a ‘boy pride’ thang if you must…
I also don’t like the eye-rolling and shoulder-dropping of shop-owners who at best seem to think of it as ‘not actual money’…it’s almost resented that I don’t have cash/card…and sales assistants seem to view them as just another anomalous and time-consuming fiddly thing that takes longer to process through the accounts than the voucher is worth and it’s just all too hard, and this guy must be some kind of a cheapskate.
If you’re going to give me a gift and you can’t be bothered thinking of a ‘proper’ one (the psychology of gifting is a mine-field on its own
), cash money is a great and even more convenient substitute.
I have NEVER given ANYONE a voucher or coupon…probably never will.
As far as promotion is concerned…well most of you guys know me well enough by now to just smile patiently and say “Oh! Here he goes”, when I get on my puritanical ’sustainability’ and ‘what the hell are we ACTUALLY’ doing, ‘high-horse’…
But you know what really frightens me? That with all this promotion, and promotion and promotion…are we creating a culture of consumers with unrealistic expectations? Is that a viable long-term business model/strategy? And don’t get me started on the rubbish, etc, that it produces…:-P
Cheers
Stephen G
How funny. I laughed out loud reading this and yes I probably resemble that remark. I am very poor at using vouchers too, and yes probably is an elitist thing. Note that in the US ‘coupon clipping’ is alive and well.
Better not even think about the dreaded “Rebate” horror.
Hi and thanks Lindy
…That’s such lovely and reassuring feedback, as it was not my intention to make anyone (except Malcolm ;-P), cry 
…though I just love a good ‘bleet’ (perhaps the ‘boy’ equivalent to a good cry 
), I do try to keep it at least a bit wry.. 
Cheers
Stephen G
So glad you could make it, Stephen. Nobody can replace your mix of experience, passion and opinion. Lindy’s chord isn’t the only one you’ve struck!
Thanks Cobba
But looking back through my comment, the chord that I am deducing that I may have struck with you may not have made you laugh?
I make no apology, but in ‘compense’ may I extol and praise your many virtues…first, that you consistently display the awesome courage necessary to place yourself in such a constructively vulnerable position…second, that your humility, grace and resilience amazes even me…third, that in keeping with the aforementioned you constantly avail yourself to actually exposing your mistakes and indeed rapidly learning from them.
IMHO, nothing values a person’s input more than actually being heard…which is likely why I comment here more than on my own blog
The only thing I would apologise for is perhaps becoming a bit complacent and familiar with your ‘fine form’
Tissue? ;-P
Cheers
Stephen G
Geez, Stephen. With those fine words you’ve got me ringing like a set of half-time cow bells at the Hofbrauhaus!
I shall have to install an extol booth if you keep this up!
Thank you. You are most kind.
Wow. I’m starting to think this community is a little TOO nice!
Don’t be scared, Luke. We do a great line in Stepford traders. You should’ve seen Malcolm before we got to him. A complete madman. Now he can move freely about his home and even visit the shops when it’s quiet.
Haha
Just had a chance to read back over some earlier comments … Lindy, I’m not sure how you think your point remains when my clients are approaching me for gift certificates to give others for MY services? Giving them a voucher for another vendor would be ridiculous … the only way this cross-pollination works is after the photos are taken, when I can give discounts at print labs, framers, etc.
Malcolm, great idea, except it doesn’t really transfer to portrait sessions being given as gifts.
Stephen, would you value your gift certificates more if someone had paid hard, cold cash for them? I’ve had clients buy gift certificates for portrait sessions as Christmas presents at $200 a pop. I’m pretty sure the recipients don’t feel cheap when they use them
I suspect we’re thinking along slightly different lines here … I’m harping on about gift certificates that are purchased by my clients as gifts for friends and family, while others seem to be coming at the discussion with more of a “promotional voucher” mindset. Still, lots of helpful thoughts here so far
As an aside gift ‘vouchers’ are rapidly being replaced by gift ‘cards’ (stored value) – which are much easier to handle and look a lot better as a gift. I am not sure whether anyone is recycling them, other than as general plastic waste.
Stephen, I am sure most people value their gifts – aren’t you perhaps just difficult to buy for ?
I agree we’ve got twin threads running, Luke. Maybe once we’ve thrashed out all the dos and don’ts of both, Megan and I can collate the findings into a neat decision matrix to help people work out what kind of voucher to use when, and how.
@Luke – You seem to be very sure of that. Perhaps you do have the right of it.
Thank you, Stephen S. Your asides are better than some posts!
Dear Paul,
Glad I didn’t do any permanent damage
And I wouldn’t have said that stuff if I didn’t mean it 
Dear Luke,
Yeh! We have our mushy moments…but we don’t mind the smell of nepalm some mornings either
Dear Paul again,
Whadya mean “before we got to him”?
Dear Luke again,
Re: “would you value your gift certificates more if someone had paid hard, cold cash for them?” Nope! I think it’s an emotional response to the medium itself rather than any underlying fact regarding it’s origins…which is pretty unusual for me…not to mention a bit precious…I think Stephen S maybe correct
I suppose it could be because I don’t have many friends
…therefore I may perhaps place an accentuated intrinsic and personal value on gifts that to me, has less to do with the content than the intent and meaning of the gift?
I’d still rather have the money. The specification on the part of the giver, that I can only spend this in this shop and/or in this way and/or in this time frame, feels to me more like a set instructions than a gift…in my eyes it ‘value-subtracts’.
That your client’s ‘giftees’ do not feel ‘cheap’ when they use their certificates in your establishment is a good reflection on you…that you consider the ‘giftees’ as valuable as any other client. I find this to be uncommon amongst voucher weilding businesses.
I think Malcolm has well illucidated (in other posts), the distinctions between actual and perceived value. And I really like how this guy puts it too – http://www.ted.com/talks/rory_sutherland_life_lessons_from_an_ad_man.html
Personally, I find little distinction between a gift certificate and a promotional voucher…they both promote. However, and as much as it pains me yet again, I have to agree with Malcolm’s distinctions…though I would venture to suggest that they are more semantically distinct than functionally (e.g. Car v SUV), and that any actual functional distinctions would only be apparent from the business owner’s perspective…?
What would I do in your business Luke (and being a new small business nowhere-bluddy-near-owner, I would stress, if you can afford to
)? I’d put up a nice little recycled cardboard sign informing folks that you have taken another major step towards reducing your carbon footprint – you’ve ditched vouchers &/or gift certificates because you reckon $200 is $200 and that a cashless society full of vouchers is reminiscent of ‘fighting for peace’… 
Ok! Got my helmet and eye protection on…go nuts!
Cheers
Stephen G
Just one question, on reflection, Stephen G:
Let’s say you know a young couple. They love dining out but are too poor to do it often. They’ve just gotten together, so they prefer each other’s company to groups. They’re hard-core vegos. There’s only one restaurant in their town that caters to their desires. It’s their favourite. They live 200 km from you. They’ve been amazing friends for many years and have just done a particularly nice thing for you. One of them is about to have a birthday.
Under these conditions, would a gift voucher for their fave restaurant still not be an option for you? P.
Pass me the fondue set and a bottle of Blue Nun. I feel a game of Scruples coming on!
Nope! I’d either spend the $80 to go and see them and let that be their present (the best kind if you ask me:-P). Or just send ‘em the $80 inside Stephen S’s suggestion…a ‘gift card’…80 bux in a card looks pretty much like ’stored value’ to me
Nice try though Cobba
.
I’ll have a Schooner o’ that Blue Nun stuff thanks mate
Cheers
Stephen G
PS I don’t like groups much either mate…perhaps you and Fonnie & Karen and I could all not go out for dinner together one night? If it’s my shout, I’ll send you a card with $100 in it, telling you what a great time we had..;-)
So, you’d go and see them even if they’d rather be alone. Perhaps the sheer force of your personality would make them see reason!
I certainly can’t argue with your excellent ’stored value’ call.
Dinner sounds hideous. We’re busy tonight, if you’d like to strike while the iron’s cold.
Oops! Misread that bit mate…my bad :-/. No I wouldn’t go and see them if they preferred to be alone…but then the 80 bux would drop to 40, ’cause if they’re that smitten they wouldn’t notice or care anyway…and you’d get 2 bottles of Blue Nun and just as much Kudos…
Yep! You’re right about dinner…how about tonight then? ;-P
Cheers
Stephen G
You are a killer! There’s a job in the UN with your name on it. I just can’t recall the title at this time.
There’s a job in the UN called Stephen? ;-P
An old mate o’ mine had a Labrador called Steve…that was pretty weird
Cheers
Stephen G
Watch out for dinner – it would probably be pizza
Ooh! There’s a bluddy job in the UN for you mate…it’s called Sniper ;-P
And no ‘probably’ about it ol’ Bean…spiffing good form of you to highlight this delightful fact however…
Consider it a bulls-eye and mission accomplished
Cheers
Stephen G