David Pogue, tech columnist at the New York Times, blogged yesterday about receiving an email from Apple reminding him that he has an outstanding gift certificate in the iTunes Music Store:
I thought that the whole point of gift certificates, from the merchant’s point of view, was that only a small percentage of recipients actually cash them in, leaving a huge profit for the merchant. I mean, I’m delighted (and I promptly cashed my iTunes certif). But this business of Apple reminding people that they’re about to lose their credits is either a really dumb business move — or a really smart one.
It’s an incredibly smart move, David. It’s likely that Apple’s accounting rules won’t allow them to book revenue from gift certificates until they’re redeemed. Plus, while you’re busy redeeming that gift certificate, maybe you’ll add an extra track or record to your cart. It’s a win-win. You get music and don’t feel like your gift certificate is going to waste. It helps their bottom line, and maybe you’ll buy a little more.
And, from a customer service perspective, you might get a nice warm fuzzy feeling that the company is looking out for you (even though, they really just want you to spend more money). And that’s okay too.

One Response
Aaron Forgue
17|Jul|2007 1I used to work for a gift card company. The term for unused dollar amounts left on gift cards/certificates is “breakage”. You are right about not being able to book the revenue, however, you have to consider that they are most likely holding that money in an interest-bearing account . So, it is also in Apple’s interest to float as much money for as long as possible.
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