Yes, you absolutely can use gift cards as effective promotional tools for your business, and many entrepreneurs are discovering their potential beyond just being simple gift options. Gift cards have evolved into powerful marketing instruments that can boost sales, attract new customers, and strengthen brand loyalty. The gift card market was valued at USD 744.1 billion in 2024 and is projected to reach USD 2.39 trillion by 2034.
When strategically implemented, gift cards can transform your marketing approach by providing immediate revenue, encouraging repeat business, and expanding your customer base. Rather than being merely plastic cards with stored value, they serve as miniature billboards for your brand that recipients carry in their wallets or smartphones. They create opportunities for new customers to discover your business and can motivate existing customers to spend more during redemption visits.
How Gift Cards Function as Promotional Tools?
Gift cards work as promotional tools in several distinct ways that make them uniquely effective compared to other marketing strategies:
1. Immediate Revenue Generation
Unlike traditional advertising which may take time to yield results, gift cards provide instant revenue upon purchase. When a customer buys a gift card, your business receives the money immediately, even though the products or services haven’t been delivered yet. This creates a positive cash flow situation where you can reinvest those funds into your business operations while waiting for redemption.
2. New Customer Acquisition
Gift cards are natural customer acquisition tools because they introduce your business to people who might not otherwise discover you. When a loyal customer purchases a gift card for someone else, they’re essentially recommending your business to that person. Research shows that most of the people trying a business for the first time do so because of a gift card, making gift cards remarkably efficient for expanding your customer base.
3. Higher Transaction Values
When customers use gift cards, they typically spend more than the card’s value. This “lift” significantly enhances profitability:
- Customers using gift cards spend 72% more on average
- 61% of gift card users spend beyond the card’s value
- Many customers view gift cards as “free money” and are more willing to splurge
- Recipients often “round up” to the next price point when making purchases
4. Brand Awareness and Visibility
Custom gift cards featuring your logo, brand colors, and messaging serve as miniature marketing pieces that keep your business visible. Every time someone looks through their wallet or digital wallet and sees your gift card, they’re reminded of your business. This repeated exposure reinforces brand recognition even before the card is redeemed.
5 Major Types of Gift Card Programs for Business Promotion
Different types of gift card programs can serve various promotional objectives:
1. Traditional Purchase Cards
These are the standard gift cards customers buy as presents for others. They can be designed with seasonal themes, special occasions, or your distinct branding to appeal to gift-givers. Available in physical and digital formats, these cards allow customers to select a specific value amount that the recipient can redeem.
2. Promotional Gift Cards
These cards are offered as incentives rather than sold. For example, “Spend $100, receive a $20 gift card for your next visit.” These promotions effectively drive initial higher-value purchases while ensuring future visits. They’re particularly effective for encouraging customers to return during slower business periods.
3. Loyalty Reward Cards
Gift cards can be integrated into your loyalty program, offering cards as rewards for frequent purchases, referrals, or spending milestones. For instance, after ten purchases, a customer might receive a $25 gift card. This approach reinforces loyalty and encourages continued patronage.
4. Digital Gift Cards
Electronic gift cards delivered via email or text message are growing in popularity due to their convenience and immediate delivery. They eliminate shipping costs and can be purchased and delivered instantly, making them perfect for last-minute gift seekers. Digital cards are particularly effective for reaching younger demographics who prefer digital transactions.
5. Bulk Corporate Gift Cards
Businesses often purchase gift cards in bulk for employee incentives, client appreciation, or corporate gifts. Creating a corporate gift card program can open significant revenue streams, especially during holiday seasons when companies are looking for appropriate gifts for staff and clients.
4 Benefits of Using Gift Cards as Promotional Tools
Implementing gift cards as promotional tools offers numerous advantages:
1. Improved Cash Flow
Implementing gift cards as promotional tools offers numerous advantages:
- Improved Cash Flow: You receive payment before providing products or services
- Breakage Benefits: Approximately 2-5% of gift card values are never redeemed, creating additional profit
- Timing Advantage: The gap between purchase and redemption improves financial planning
- Reduced Return Impact: Using gift cards for returns instead of cash keeps money in your business
2. Increased Customer Spending
When customers use gift cards, they tend to spend more liberally:
- 72% of consumers spend more than the gift card amount
- Average overspend is $31.75 beyond the card’s value
- Recipients view gift cards as “free money” and are less price-sensitive
- Customers often “round up” to higher price points when using gift cards
3. Enhanced Brand Loyalty
- Gift cards turn customers into brand ambassadors when they give cards to friends and family
- Recipients associate your brand with positive gifting experiences
- Cards can resolve customer service issues more effectively than discounts
- Gift card rewards create incentives for repeat business and ongoing loyalty
4. Valuable Customer Data
Gift card programs, especially digital ones, provide opportunities to collect customer information and track purchasing behavior. This data helps you understand spending patterns, popular products, and redemption timing, allowing you to refine your marketing strategies based on actual customer behavior.
5 Top Strategies for Implementing Gift Cards as Promotional Tools
To maximize the effectiveness of gift cards as promotional tools, consider these strategies:
1. Strategic Timing and Seasonal Promotions
While the holiday season accounts for a significant portion of gift card sales, nearly half of all sales occur during other months. Implement year-round gift card promotions tied to various occasions like Valentine’s Day, Mother’s Day, graduations, and back-to-school periods. Create special limited-time gift card designs for these occasions to increase their appeal as gifts.
- Offer bonus gift cards during pre-holiday shopping periods
- Create special graduation gift card promotions in May and June
- Run “treat yourself” campaigns during January when people have received holiday gift cards
2. Cross-Promotional Opportunities
Partner with complementary businesses to create cross-promotional gift card offerings. For example, a hair salon might partner with a nail spa to offer joint gift card promotions that benefit both businesses by sharing customer bases. These collaborations can significantly expand your reach without additional advertising costs.
3. Incentivized Purchase Programs
Encourage higher spending by offering bonus gift cards with purchases above certain thresholds. For example, “Receive a $25 gift card when you spend $100 or more.” This approach not only drives immediate higher-value sales but ensures future visits when customers return to redeem their bonus cards.
- “Spend $50, get a $10 gift card for your next visit”
- “Buy one, get a 50% off gift card for a friend”
- “Purchase three services and receive a $30 gift card”
4. Customer Recovery and Satisfaction
Use gift cards to resolve customer service issues more effectively than simple discounts. A gift card offered in response to a service failure encourages the customer to return and give your business another chance, turning a potentially lost customer into a returning one. The perceived value of a $20 gift card is often higher than a 20% discount on a single purchase.
5. Digital and Mobile Integration
Make your gift cards available through digital channels, including your website, social media platforms, and mobile app if applicable. Digital gift cards eliminate shipping delays, reduce costs, and allow for immediate delivery, perfect for last-minute purchases. They also simplify tracking and can be easily integrated with loyalty programs and promotional campaigns.
Final Call
Gift cards are versatile marketing tools that can significantly impact your business growth. Businesses that leverage gift cards for business as promotional tools have a competitive advantage in building customer relationships and driving sustainable growth. They can become one of your most effective promotional tools, delivering ongoing returns while creating positive experiences for both gift-givers and recipients.
At Duracard, we create powerful business accelerators disguised as plastic. Our proprietary print technology produces cards that outlast the competition, ensuring your brand stays in wallets (and minds) long after others have faded or cracked. Each custom design combines your unique brand identity with our marketing psychology expertise to maximize impact at every glance.
Call our team today and discover why businesses using Duracard’s promotional systems see higher redemption value than industry standards!