Gift card promotions: How to improve your campaign performance

Gift cards are more than just a token of appreciation. When incorporated thoughtfully into your marketing strategy, they can be a powerful revenue driver for your business.

Integrating gift cards into your marketing promotions can encourage customers to take desired actions, from engaging with your brand to making purchases.

In this post, we’ll explore the ROI of gift card promotions and walk you through the process of starting your first campaign. 

The value of gift certificate promotions

Gift card promotions offer several benefits to both your business and your customers.

The benefit for customers is clear. Gift cards are inherently flexible. Rather than saddling new customers with a specific product, gift card promotions give prospects and customers the freedom to spend a sum of money on something they can pick out themselves.

72% of consumers noted in a Capital One Shopping report that they prefer gift cards because it allows recipients to choose their own rewards. 

The benefits for businesses are also significant. Gift card promotions are effective at driving new business or repeat purchases: 80% of consumers have made the decision to shop somewhere based on gift card loyalty incentives at least once.

Better still, research shows gift card promotions can reduce cost-per-lead and customer acquisition costs (CAC). We ran an internal study offering a gift card to prospects for taking a demo. And we reduced cost-per-lead by a whopping 81%.

Gift card promotions are also better for your brand than discounts or buy-one-get-one campaigns. While discounts and free products can persuade some consumers to add more items to their cart, they can also damage brand reputation — especially for luxury brands.

After buying products at a discount, some customers wonder why they paid so much for them in the first place. Others second-guess the quality of the product.

Offering a gift card with purchase cuts the risk that customers will engage with this mindset. It also protects profit margins since your business can sell more products at full price. 

How to use gift certificates in marketing campaigns

Below are a few questions to help you determine the best approach for your campaign.

Who is your target audience? 

Just like any other marketing initiative, your gift card campaign should be shaped around your target audience.

Do you want to focus on returning customers or potential new customers? Are you looking at customers who have been with your brand for more than a year or less than a month?

After you decide which segment to target, dig deep into their buying behaviors, psychographics, and preferences. This can include factors like: 

• Which products they typically buy

• How much they tend to spend per purchase

• What their purchasing journey looks like

• How often they engage with your brand

• Other brands this demographic likes

Understanding these behaviors will help you develop a campaign that motivates your target audience to take the desired next step — whether that’s making a first-time purchase or referring a friend to your business. 

What are your campaign goals?

Is your campaign goal to increase customer loyalty? Re-engage dormant customers? Drive more referrals to your business?

Your goals should directly inform the type of marketing campaign you launch. Once you have a general idea, you can get more granular and attach specific objectives to the goals based on previous campaign benchmarks. 

When do you want to launch the campaign? 

Timing is critical. In most instances, you’ll want to launch a promotion when customers make the most purchasing decisions in your industry.

For example, if you’re in the retail industry, it might make sense to consider seasonality.

Launch a gift card campaign in the weeks before Black Friday or Cyber Monday. If you’re planning a birthday campaign for loyal customers, make sure that they receive the incentive within a week of their actual birthday.

Conduct market research to understand the months or days of the week that lead to the best outcomes in your industry. You can also look at any historical campaign data for insights into which times of the year are most profitable for your business. 

Where will your campaign be promoted?

Another important consideration is your distribution channel mix.

The primary channel you land on will ultimately shape the type of promotion you run.

For instance, if you want Instagram to be the focus of your distribution strategy, you might create a campaign that enters followers into a sweepstakes if they tag a friend.

Your distribution channel also impacts the design of your campaign.

A short-term, time-bound initiative might have a multi-channel distribution strategy to reach a larger group of potential customers, while an evergreen initiative triggered by a specific customer action may be sent via email or in-app message to a much smaller cohort.  

What is the appropriate value? 

To determine the budget for your gift card campaign, it may be helpful to look at key financial metrics. Start by considering your lifetime value (LTV) to CAC ratio. If, for instance, your ratio is typically 3:1, you want to make sure the campaign doesn't significantly disrupt this balance.

Profit margins are also important to consider. The gift card value should be a fraction of the anticipated profit from the customer purchase or engagement.

Keep in mind that the product or service price should inform the gift card value. Higher-priced items such as appliances would warrant larger cash-back or gift card amounts, while lower-priced items like makeup would warrant smaller amounts. 

Gift card campaign ideas 

Consider these promotional ideas for your next marketing campaign. 

1. Gift cards with purchase

Offering a gift card with purchase is a great way to thank a customer for engaging with your brand.

Take Spot Pet Insurance, for example — a company that supports pets and their parents with extensive plan options and cash back on vet bills. Thirty-two days after signing up, all of their new policyholders receive a $25 Amazon gift card as a thank-you — the perfect amount to buy their pet a treat. 

According to Steven Gilliam, Head of Product at Spot, this gift promotion has been a reliable way for Spot Pet Insurance to demonstrate its gratitude to new customers while also attracting new prospects. 

“On the sales side, it's great to tell partners that this is something we do. We can say, ‘Hey, you can offer this to your clients and tell them they could be getting a $25 gift card after their first month.’” 

“It’s really helped us stand out from our competitors,” adds Shane Grosskopf, Compliance and Operations Manager at Spot.

2. Thank-you gifts

Gift cards are an excellent way to show appreciation to a recipient. That’s why 25% of all gift card sales are specifically for thank-you gifts — making it the third most common occasion after birthday and holiday gifts.

Ideally, the gift card can be sent after a significant interaction, such as making a large purchase, reaching a loyalty milestone, or completing a successful project.

For instance, a medspa might send a $50 gift card to a client after they book their tenth massage. This gesture not only expresses gratitude but also helps strengthen customer loyalty. 

3. Social media contests

You can also run a social media contest featuring gift cards as prizes. For example, SUNNYBROW, a microblading studio in Los Angeles, ran a giveaway where people were entered into a raffle to win a $100 Amazon gift card if they followed the brand and tagged three friends in their Instagram comments.

This type of promotion is a great way to bring in new customers and encourage brand engagement through likes, shares, comments, or user-generated content. 

4. Refer a friend gift card giveaway

A referral program with gift card incentives can expand your customer base through word-of-mouth marketing.

For example, PowerMarket is a software solution that connects people and businesses with clean energy projects in their communities so they can save on their electric bills and adopt greener habits. 

To drive new business, they launched an initiative to offer incentives to customers who refer their friends. “We receive positive feedback all the time,” said Leland Gohl, Director of Marketing and CX at PowerMarket.

5. Loyalty program gift cards

Loyalty programs are a powerful tool that many companies use as part of their marketing strategy.

And for good reason. One report found that 81% of shoppers are more likely to keep buying from brands that have loyalty programs. 

Another survey also discovered that customers who join loyalty programs generate 12-18% more incremental revenue than non-members. In other words, loyalty programs drive more sales and keep customers coming back. A win-win. 

While some brands turn to non-monetary rewards as the foundation for their loyalty programs, research has found that these are the least likely to boost customer retention. Gift cards, on the other hand, are an effective way to entice customers and keep them coming back for more.

6. Re-engagement campaigns

Re-engagement campaigns can be an effective way to win back inactive customers. One survey found that 45% of recipients who received a re-engagement email read subsequent emails. 

To boost that number even more, you have to give customers a compelling reason to click. A monetary incentive, such as a gift card, can be a powerful motivator. 

This is a great way to incentivize dormant customers to return and make a purchase or re-engage with your brand. 

What not to do with gift card marketing campaigns

When it comes to gift card marketing campaigns, there are a few common pitfalls you want to avoid: 

Complex redemption processes

There’s no worse feeling than receiving a gift card — only to run into obstacles while trying to redeem the reward. Not only could this hinder customers and prospects from taking advantage of their reward, but it may also leave a bad taste in their mouths. To avoid this, keep the redemption process as simple as possible. 

Short expiration dates

People are busy and may not have the chance to use their gift cards immediately. The last thing you want is for a customer to finally pull out their gift card to use, only to discover that it’s no longer valid. Offer extended expiration dates to prevent this from happening. 

Manual processes

Sending incentives manually can create operational headaches, introduce a massive list of administrative tasks to slog through each month, and increase the chance of errors that may negatively affect your customer experience. Instead, choose a platform that automates this process for you.

Key takeaways 

• Gift cards are a powerful marketing tool that can drive business growth.

• Gift certificate promotions can encourage customers to engage with your brand and purchase more products or services.

• Effective gift card campaigns require defined target audiences, clear goals, strategic timing, and appropriate distribution channels.

• Gift cards can be used in various marketing strategies, including purchase incentives, thank-you gifts, social media contests, referral programs, and customer re-engagement campaigns.

• Avoid complex gift card redemption processes, short expiration dates, and manual distribution methods to ensure a positive user experience.

Want to learn more about the power of integrating gift cards into marketing promotions? Read Spot Pet Insurance's full story.

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