How to Use Gift Cards to Build Customer Loyalty

After you’ve successfully built or increased the brand awareness for your retail business and have some new faces coming through the door, the next logical step is to retain those new customers — or in other words, build your customer loyalty program.

Studies show that it costs six to seven times more to acquire a new customer than keep a current one, so it’s important that you’re focusing energy on retaining that loyalty base. One way to do this is through incentives — and you might even have your solution right in front of you (or your cash registers): gift cards.

According to First Data’s U.S. Prepaid Consumer Insights, 68% of consumers actually expressed that gift cards are their preferred type of incentive, with coupons and bonus bucks lagging behind. And when you reward your consumers with something they really want, they’ll keep coming back. Because not only are you meeting your customers’ needs and wants — you’re providing them an exceptional customer experience, too.

Need a little inspiration boost to begin? Consider these eight ways to use gift cards to build your business’ customer loyalty.

8 ways to use gift cards to build customer loyalty

1. In your loyalty program

The easiest way to use gift cards to build customer loyalty? Simple: Make it part of your customer loyalty program. A great place to begin is to offer a gift card to customers on their birthday. It doesn’t have to be a hefty expense either.

Think about the number of people you have in your customer loyalty program and the amount of money off a purchase you could comfortably provide to each of them. Keeping this in mind can help you stay within your budget, especially if you’re a newer retailer.

If your business has a mobile app, you can also take this a step further by making gift cards accessible through the app. By making e-gift cards available on the app, you’re providing an incentive at the tip of your customers’ fingers — which can lead to more immediate purchases for your business.

Are your products available on Amazon? Their Amazon Incentives program provides Amazon gift cards — or Amazon Prime and Audible membership codes — to reward new customers or help you motivate potential ones, too.

2. In your brand partnerships

When you have a brick-and-mortar store, chances are you’re aware of a similarly sized business that provides a complimentary service or product to yours. By partnering with a business like this, you can use gift cards to benefit each business while increasing customer loyalty.

According to Paycorp, a partnership with a complementary business can help to widen the services and/or products you offer to your customers, resulting in a win-win for all parties involved: increased sales for the business and discounted prices for the customer.

One example of two brands that used cross-promotion through gift cards is Subaru and Merrell. After Subaru was the presenting sponsor of Merrell’s Down & Dirty National Mud and Obstacle Series, Subaru leveraged its partnership with the shoe brand to provide $100 gift cards to each consumer who took a test drive.

“We were able to drive traffic to our dealerships while introducing consumers to the Merrell brand," said Todd Lawrence, Subaru’s promotions and sponsorship manager.

It was a win for us, a win for Merrell and a win for consumers that took advantage of the offer.

FURTHER READING: Learn more about how retailers can collaborate with other businesses to reach broader audiences (and make more sales).

3. Through a seasonal approach

When you think of gift cards, what’s the first thing that comes to mind? The holidays, particularly last-minute gift shopping. So, of course, it should come as no surprise that more and more retailers are incorporating gift cards into their holiday strategies. Why? Because it can help to boost customer engagement and loyalty, according to the Association for Customer Loyalty.

Plus, it’s easy: Customers can pick one up at checkout, online or in-store, even when shipping deadlines have passed. This helps to position you, the retailer, as reliable. The result? Shoppers who keep coming back — season after season, holiday after holiday.

Taking a seasonal approach with gift cards is another way to incentivize customers to come into your brick-and-mortar store, too. Encourage customers to come on specific days, like Black Friday, to redeem a gift card with purchase. Or try pairing a free gift card with other sales strategies like a buy-one-get-one (BOGO) promo to get customers through the door during the holidays.

Sorbet, a franchise beauty salon, offers a great example of a creative approach to using gift cards seasonally: During a previous World Cup, they offered 25% off Brazilian waxes to all gift card holders, which helped encourage new customers to try a service for which they’ll keep coming back.

4. With a discount included

Gift cards are incentivizing in themselves, but when combined with a discount, it’s difficult to ignore. Consignment stores like Plato’s Closet have used gift cards as an incentive for sellers to spend their money in-store, as they get more in-store credit than they would in cash.

Or you could also use a discount with your business’ gift cards as a way to encourage customers to visit your physical store. For example, you could offer an extra 15-20% off a purchase if the gift card is used in-store versus online.

The discount doesn’t have to be used with the gift card either. Instead, encourage customers to use their gift card (either online or in-store) by advertising that they’ll get a special offer, coupon, or reward upon purchase.

FURTHER READING: Learn more ways to use digital tactics to get more foot traffic to your storefront.

5. As a response to complaints

When customers bring a complaint either in-store or through email, there’s a way to resolve it in terms of what you’ll provide to apologize for the specific inconvenience. With a gift card, you can easily do this in a way that says you hear the complaint, are taking it seriously, and appreciate their business.

When you acknowledge the customer and make their input feel valued, you can reap the rewards of increased brand loyalty and sales.

6. In a social media contest

We all know what it’s like to be on Instagram and scroll past countless reposts from family and friends trying to win a product, service, bundle, gift, or other variation of something free. While it seems like a one-in-a-million chance, there’s still an inkling of hope that you could be chosen — especially if it’s a product you want from a brand you love.

This method obviously resonates well with shoppers, and social media contests and giveaways can be easily executed with egift cards. So, what do you, the retailer, need to bring this idea to life? First, make the gift card come with a hefty, appealing price tag, so people will surely consider reposting on their own feeds — but always make sure it’s within your budget first. Then, create an engaging image with a clear set of simple rules to enter the contest.

After you initially promote the contest, be sure you stay active on your social media platforms. If someone responds with a complaint, always respond. And even if someone simply retweets your post, give it a like so they know you’re paying attention and are appreciative of their participation.

FURTHER READING: How retailers can create engaging online contests that convert.

7. In your brand awareness campaign

upper east side, be on the lookout for random acts of sweetness 🌸

A post shared by sweetgreen (@sweetgreen) on Jun 10, 2016 at 8:25am PDT

If you’re considering a marketing campaign for your business, you’re likely seeking to increase your brand awareness. But, you can actually use it to build customer loyalty, too.

Sweetgreen is one example of a brand that did just this, using gift cards throughout their campaign “Random Acts of Sweetness.” With the help of brand ambassadors, the company sent people out on the ground to give out gift cards to people they see doing an act of kindness in the community.

And they even take it a step further with their own acts of kindness: When it rains, they put shower caps over bike seats with a gift card underneath. These little acts are first meant to spread the word (or increase brand awareness) but also help consumers to become loyal to your business.

Here’s even more inspiration to start your own campaign using gift cards: Atayne once gave $10 gift cards to those who sent photos of themselves wearing Atayne apparel to the company.

8. When items are left in carts

How many times have you received a notification that a customer has never made a decision to purchase the items in their cart? Use that abandoned cart information to your advantage and give them an incentive to purchase the items they were considering. Again, it doesn’t have to be big either — and that’s where an e-gift card comes in.

Imagine leaving five items in your cart. A day or two passes, and you get an email from the retailer with a $5, $10, or even $15 egift cards inside. What are you most likely to do? Check your cart ASAP, to see if those items are still in stock. Chances are, it takes you no time to make your final purchase and keep you coming back.

With this small incentive, customers can make their purchase with confidence, which leads to a positive customer experience — and one that will keep them coming back for more.

FURTHER READING: Lower the number of abandoned carts on your ecommerce store using these tactics to reduce friction during checkout.

Gift cards build customer loyalty

Gift cards aren’t only for last-minute gifts for holidays, birthdays, and everything in between. And, they definitely shouldn’t be left to collect dust in front of your store’s cash register or buried at the bottom of your website’s menu.

With more and more customers seeking excellent customer service and a unique brand experience, these eight ways to use gift cards not only help you build customer loyalty, but also increase your brand awareness, provide an unmatched level of service, and even drive up sales.

Customer gift cards FAQ

Is a gift card a loyalty card?

No, a gift card is not a loyalty card. A loyalty card is a type of card that rewards customers for their loyalty by offering discounts, coupons, and other rewards. A gift card is a prepaid card that can be used to purchase goods or services from a particular store, restaurant, or online retailer.

What are the 3 R's of customer loyalty?

Recognition: Acknowledging customer loyalty through rewards, discounts, or special offers to make them feel appreciated.
Retention: Keeping customers engaged through compelling offers and incentives to ensure that they remain loyal and keep coming back.
Referral: Encouraging customers to refer their friends and family to your business or service, building your customer base with minimal effort.

How do customer loyalty cards work?

Customer loyalty cards are typically used by businesses to reward their customers for repeat purchases. When a customer makes a purchase, they can present the loyalty card to the cashier. The cashier will scan it and the customer will earn points or rewards for that purchase. Once the customer accumulates a certain number of points, they may be eligible for discounts or other rewards from the business. Loyalty cards may also be used to track customer purchases, allowing businesses to tailor offers to individual customers.