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6 reasons why gift cards are the best customer rewards

Engaging customers through gift cards is the hottest engagement tactic; here's why it enhances the customer experience like nothing else.

Gift Cards
10 Min read
Last Updated on
July 22, 2021

In a world of increasing strain, consumers are looking for simpler ways to access their favorite products and services. Gift cards answer this demand for seamless customer experience. They provide a quick and uncomplicated method of purchase to the public.

Over the years, the perception of gift card rewards for consumers has changed from cosmeticized cash to an important gifting tool.

But what you may not know is that better customer engagement through gift cards is quite enticing. By offering gift cards as customer rewards, you encourage them to interact with your business. In this article, I will outline six reasons why rewarding your customers with gift cards increase the ways in which consumers engage with your brand.

1. Gift cards enhance customer experience and loyalty

A good way of ensuring customer engagement is to reward their patronage with a gift card. Such a reward will bloom your customers’ experience, which means that they will return to your brand and build a loyal customer base. “Branded currency”, as it is known in the trade, gives your customers an incentive to return to your product, as well as helping to secure a relationship of trust between your brand and your consumers. The more regularly your customers engage with you, the more trusted you become to your consumers, and this reliability, in turn, breeds loyalty and loyalty programs. So, rewarding your customers with eGift cards ensures that they will return to your brand, helping to secure their loyalty through loyalty cards.‍

Source: GiveX

2. Customer rewards encourage positive company reviews

Over the last decade or so, the emergence of review sites such as Yelp and Tripadvisor have dramatically increased customer engagement with brands and products. Unfortunately, this engagement is not always positive! However, with gift cards as customer rewards, you encourage positive feedback on your brand. If you give consumers a freebie, they will be appreciative, and this may result in them taking the time to write a positive view about you and the products you offer.

Although this might seem obvious, far too few companies have cottoned on to this simple fact. That said, you should be careful not to appear as though you are bribing your customers. In 2009, publishing house Elsevier found itself in hot water after being accused of offering $25 gift cards to anyone willing to write a 5-star review of its titles. Nevertheless, when pitched correctly, customer engagement through gift cards brings fruitful results.‍

 Leaflets like these enclosed with products are a normal sight now. eCommerce reviews are a prized intellectual property for brands and this is a small price to pay for building it.

3. Gift card rewards help win back lapsed customers

Offering gift cards to lapsed customers is a great way of winning back their trade, and retaining their loyalty. In a crowded and constantly evolving marketplace, consumers can easily drift away from your brand. By offering them gift card rewards, you re-engage with customers, reminding them of what makes you unique. 

Furthermore, customers usually spend more than the value of the gift-card – an average of $38 dollars more, according to First Data Corp – so you can entice back lapsed customers whilst still making a profit! The fact that gift cards are personalizable provides further reasons to re-engage or the sake of customer experience. Whether electronic or physical, giving the gift card a personal touch offers lapsed customers even more reason to return to your brand.‍

In shocking research by Bankrate, it’s found that only 1/4th of gift cards are deemed as lost. The rest are either re-gifted or re-sold.
Source: Bankrate

4. Gift cards are simple and convenient

First off, gift cards are very difficult to lose. E-cards, for example, are sent via email or SMS, so customers will always have a copy of the code to hand, whether purchasing in-store or online. So, if a consumer mislays their wallet, for example, they will still be able to engage with your brand. Secondly, they are immediately available. As soon as the email hits your customer’s inbox, they are able to redeem them.  Thirdly, they offer brands zero operational overheads. You can send gift card rewards with just a click of your mouse and a five-star customer experience awaits!

The versatility of gift cards can be highlighted with the reason they are bought/procured/gifted, deeming branded currency as highly flexible
Source: Mageplaza

5. Gift cards provide data on consumer spending habits

Gift cards are an excellent way of tracking data on your customers’ spending habits. For example, gift card rewards can help you build extensive customer profiles. By gathering data on what products and services your customers prefer, you can better engage them by knowing what else you can offer. Suppose a customer uses their gift card reward to purchase gardening equipment from an online retail store. Using this data, the website can, in the future, offer this customer additional relevant products, such as lawnmowers, leaf blowers, or even gazebos. By compiling customer profiles, businesses can cross-sell other products that they offer.‍

With the gift card market about to cross half a billion-dollar mark in the near future, customer spending habits would be more predictable with easy tracking
Source: Statista

6. There are signs that consumers increasingly prefer gift cards

In 2015, a CEB TowerGroup report revealed that consumers were spending $130 billion per year on gift cards in the USA alone, and predicted that it would rise by a further $30B PA in the following 3 years. Furthermore, the average consumer bought 6.1 gift cards in 2017, up from 4 in 2016. CEB Principal Executive Advisor Brian Riley stated that “consumers continue to enjoy the convenience of giving and receiving gift cards in all forms. Both retailers and financial institutions have prioritized gift cards as central to their strategies for gaining a share of customers’ wallets.” 

31% of Gen-Z and Millennial shoppers have become a regular customer of a new brand or organization after being given a gift card.

But why is this the case? Well, firstly, as already covered, gift cards are simple and convenient. However, there are other reasons why customers prefer engaging with brands using gift cards. A Cashstar survey found that 66% of customers tend to feel less guilty about making purchases using a gift card. This figure jumped to 78% among 18-34-year-olds. The Cashstar survey also found that consumers appreciate the personalized aspect of such rewards. By simply offering a personalized message and suggesting gifts that the consumer will be interested in, customers feel engaged with the brand.

So there we have it. Six compelling reasons why rewarding your customers with gift-cards leads to better engagement with your brand. Such rewards make your customers feel appreciated and valuable, which in turn engenders loyalty and trust. All whilst still making a profit! From a business and marketing point of view, offering consumers gift card rewards is a no-brainer.

Experiential Gifting

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