In today’s competitive business landscape, gift cards are a significant and often underutilized opportunity for brands. With economic uncertainties affecting consumer spending patterns, gift cards can provide an added revenue stream while potentially strengthening customer relationships.
Beyond their convenience as presents, gift cards can drive revenue, engage customers, and enhance loyalty program performance. Let’s explore some innovative ways retailers can integrate gift cards into their loyalty marketing and customer relationship management (CRM) efforts to achieve measurable business results.
The hidden value of gift cards
The U.S. gift card market is projected to generate $447 billion in revenue during 2025, growing at an impressive annual rate of 11.4%.
One of their most compelling business appeals is “float”—meaning brands enjoy the financial benefit of upfront cash that’s held between the purchase and redemption of a gift card. Furthermore, a significant portion of purchased funds goes unspent. A remarkable 43% of American adults hold unused gift cards—resulting in an estimated $23 billion in unredeemed value. While brands want customers to engage with them and enjoy their purchases, the economics of breakage provide a clear financial advantage.
Even more exciting is what happens when gift cards are redeemed. Data show that 61% of consumers spend more than the gift card’s value, with an average additional spend of $31.75—so the business benefit of gift cards extends beyond recouping the face value. Evidence shows that gift cards drive incremental sales and introduce customers to a wider array of your brand’s offerings.
Gift cards’ inherent potential to fuel new customer acquisition and enhance engagement with existing customers makes them a natural fit for loyalty strategies and programs. Loyalty members are often a brand’s most fervent advocates, making them an ideal audience for gift card initiatives.
Which brands handle gift cards well?
Brands with loyalty programs that include a currency should consider how to leverage that framework in gift card promotions. This avoids providing a pure discount by keeping members invested in the program. 
Clothing retailer Tillys and restaurant franchise Moe’s Southwest Grill, for example, incentivize gift card purchasers by leveraging program currency. Then, in turn, they use redemption of the gift cards as opportunities to enroll nonmembers.
Delta Air Lines illustrates another strength of gift card marketing—cross-promotional potential. The offer shown below supports travel purchases while promoting Delta’s partnership with the rideshare company Uber.
Five strategies to fuel loyalty with gift cards
How can you effectively harness the power of gift cards within your loyalty ecosystem? Consider these actionable opportunities—tailored specifically for retailers—to integrate gift cards into your loyalty and CRM efforts:
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Deliver personalized marketing with specific spend or cross-sell objectives.
Leverage your customer data to deliver highly targeted gift card promotions. If a customer has previously used a gift card for a particular product category, create follow-up messaging with customized content or targeted promotions for that category—or even product recommendations for complementary items. Use proactive reminder campaigns for members with unused gift card balances to nudge them toward redemption and further engagement.
This individualized approach delivers greater relevance to members. Customers expect personalized experiences—and by delivering tailored communications, you not only drive future sales but also foster deeper connections with your members.
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Allow loyalty members to redeem program currency for gift cards.
By letting them convert their well-earned points into gift cards, you provide additional utility to your most engaged members. This differentiated benefit also expands brand awareness when members give gift cards to their friends and family members who aren’t currently customers.
Consider structuring this as a tiered benefit. For example, higher-value members might receive better redemption rates or exclusive access to the most appealing gift card options, which may also help drive cross-sell in particular product lines.
Establish and monitor success metrics—e.g., redemption rates, average order value (AOV) of gift card transactions, post-redemption sales lift, and acquisition of new members through gifting. Use that information to optimize your gift card strategies.
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Offer gift cards as member acquisition or engagement incentives.
Gift cards are a powerful motivator. Whether you’re looking to grow your member base or encourage specific engagement behaviors, they can be incredibly effective. Consider a refer-a-friend program where both the new customer and the referrer receive a gift card upon the new customer’s first purchase. This approach inspires word-of-mouth marketing with a tangible reward.
Beyond acquisition, gift cards can incentivize engagement among your brand’s existing customers. Consider offering them as a reward for leaving product reviews, participating in social media campaigns, or sharing brand content. It’s useful to structure limited-time offers for gift cards to create urgency and measure their impact on new customer acquisition, cost per acquisition, and social media engagement metrics such as likes, shares, and comments.
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Create a memorable welcome experience for first-time gift card users.
When a new customer uses a gift card for the first time, it’s a golden opportunity to make a lasting impression. Don’t let it be a one-and-done transaction. Invite them to enroll in your brand’s loyalty program. If they don’t choose to enroll initially, follow up with a personalized email—maybe with styling recommendations based on their purchase, a discount offer on their next purchase, or even a simple thank-you—to reinforce their connection to your brand.
Creating a wraparound welcome experience builds a positive first impression. It also provides an excellent opportunity to gather robust profile information to fuel future personalized marketing efforts. Measuring new customers acquired, cost per acquisition, and the AOV for both initial and follow-up transactions will help you evaluate the success of this strategy.
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Implement surprise-and-delight gift card drops.
Sometimes, the most impactful gestures are the unexpected ones. Surprise high-potential members with small gift cards to celebrate milestones, like their anniversary of joining the program. To make the gesture even more meaningful, personalize the gift cards based on their past purchase history.
This surprise-and-delight tactic strengthens the emotional connection with your members and incentivizes your most valuable customers. It’s relatively easy to execute and allows for controlled costs by limiting the number of recipients. Track your success by comparing audience spending against control groups and monitoring sentiment indicators across touchpoints.
The right approach for your brand
When determining the gift card strategy that best aligns with your objectives, weigh the potential business impact against the required effort for implementation. Some initiatives, like personalized marketing and surprise-and-delight campaigns, offer moderate business impact with relatively low effort. Others, such as currency redemption programs, are more complex. They may deliver higher impact, but they likely demand greater technological investment. Whatever your chosen strategy, have a measurement plan in place to help your team understand the results and strategize refinements.
A shared win for retailers and customers
Gift cards are no longer just a convenience for last-minute shoppers—they’re a strategic asset for driving revenue by encouraging future purchases, strengthening relationships, and delighting current and new customers.
Whether you’re looking to boost acquisition, drive engagement, or simply add a fresh dimension to your loyalty program, gift cards offer tremendous possibilities.
Nina Rose is senior director, Loyalty and Membership Design, at The Lacek Group. For more than 30 years, The Lacek Group has been perfecting the art and algorithms of brand devotion. We help world-class brands identify their highest-potential customers, engage them across channels throughout their lifecycles, personalize each relationship for optimal long-term results, and measure the true effectiveness of those efforts. The Lacek Group is an Ogilvy One company.
