2017 Escape Room Trends: Gift Card Sales and Redemptions

by Ian Maier

Escape room gift card sales are an important part of any escape room marketing plan. They are an excellent way to promote new business, generate sales, and improve cash flow.

With the holiday shoppings season still fresh in our minds, we analyzed gift card sales and redemption data across hundreds of US-based escape rooms who use Xola as their online booking softwareOur analysis is limited to gift card sales and redemptions from January through December of 2017.

Escape Room Gift Card Sales

When we look at the percentage of gift card revenue sold and redeemed by month, we see a clear increase in both percent of sales and percent of redemptions in November and December of 2017.

Our analysis reveals the following:

  • 79.86% of escape room gift card revenue generated in 2017 was made during the months of November and December.
  • 50% of escape room gift card sales revenue generated in 2017 was redeemed during the months of November and December.

In short, gift giving traditions during the winter holidays drove the majority of escape room gift card sales. Escape rooms looking to get the most out of their gift card program should focus on holiday promotions in November and December.

Gift card redemption rates also increase during the winter holiday season. However, the data does not tell us if the gift cards being redeemed came from winter holiday sales, or from sales made earlier in the year.

Escape Room Gift Card Redemptions

Gift cards can help improve cash flow by collecting payment up front for the promise of future service. If a gift card is never redeemed, that revenue can eventually become free money for your business.

However, between the time of sale and redemption (or expiration), gift card revenue is commonly treated as a liability. It is important to stay up-to-date with legislation regulating gift offers, and always keep track of incoming gift revenue. If you rely heavily on gift card sales, we recommend investing in escape room booking software that automates sales, redemptions, and financial reporting.

23.57% of Gift Card Revenue Collected in 2017 Was Redeemed in 2017

Based on our analysis, only 23.57% of the gift card revenue collected in 2017 was redeemed in the same year. Although the redemption rate is low, many gift cards sold late in 2017 may still be redeemed in 2018.

To understand how gift cards are redeemed over time, we analyzed redemption rates based on the number of months after the initial sale.

Gift Card Redemptions Decrease Over Time

Our analysis suggests that gift cards are most likely to be redeemed within the first few months of purchase. And, as time goes by, redemption rates fall.

For example, our analysis shows that:

  • 9.04% of escape room gift card revenue generated in 2017 was redeemed within 30 days of purchase.
  • Only 1.52% of the escape room gift card revenue generated in 2017 was redeemed six months after the purchase.

In general, gift recipients are less likely to redeem their gift as time goes by. Intuitively this makes sense. Gift cards can easily get dropped in a drawer or left in a wallet and forgotten (or simply get lost).

The low and decreasing rates of redemption over time makes gift cards an excellent source of additional sales and can improve cash flow for escape room owners, especially during the winter holidays.

It is unclear, however, if the decline in redemptions will result in “free cash” for escape room owners. The majority of revenue generated in 2017 occured in November and December, and much of that revenue could still be redeemed in 2018. Additionally, federal law in the United States generally requires that businesses accept or reimburse any gift card purchased within a five year period (although legal requirements can vary by state).

Gift Cards Sold In Spring and Summer Months Are More Likely To Be Redeemed

To understand if the month of sale affects gift card redemption rates, we analyzed redemption rates of gift cards sold in a particular month (regardless of when the gift was redeemed).

If a gift card was sold in January and redeemed in December, for example, that redemption would be counted in the January column of the chart.

Our analysis shows a clear rise in revenue redeemed from gift cards sold in the spring and summer season.

In fact, the revenue redeemed in 2017 from gift cards sold from April through September was 2.78x that of gift cards sold throughout the rest of the year.

The higher percentage of redemptions for gift cards sold during the spring and summer months could be explained by the changes in customer behavior around school vacations. An increase in students out on spring and summer break, for example, could explain the rise, alongside an influx of tourists. Whatever the reason, escape room owners can expect a higher redemption rate for gift cards sold in the spring and summer.

Conclusion

Gift cards are an effective promotional tool for escape rooms, especially during the winter holiday season. With nearly 80% of the gift card revenue in 2017 being generated in November and December, escape room owners should consider running focused and dedicated gift card promotions during the winter holiday season.

Even with low sales during the off-months, gift cards sales can improve their cash flow thanks to a low redemption rate that declines over time. While a low percentage of redeemed revenue in 2017 cannot necessarily be interpreted as “free money,” the cash can provide some extra relief during slower months, or be reinvested in other marketing efforts.

Looking forward, there is a lot to gain from a well run gift card program. To learn more about gift cards and other ways to grow your escape room business, take a look at our free escape room marketing guide. To learn more about how Xola’s escape room booking software can help you grow your escape room, contact us +1 (855) 909-9652 or click here to schedule a demo with a product specialist.

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