7 Reasons to Avoid Gift Cards If You Want to Win and Keep More Customers

When it comes to incentive marketing, there are lots of different ways to attract new customers and boost the loyalty of your existing ones. In fact, we identified 12 different types of incentives in our ultimate guide, some more effective than others. 

Gift cards were one of them. They’re a good option to reward your customers, new and existing. But are they really the best option?

Or should you avoid gift cards if you want to win and keep more customers? 

Let’s take a look. 

Why do brands give gift cards as incentives?

Businesses and brands will often offer gift cards as incentives to acquire new customers because they’re easy to market. Prospects can easily recognise the cash value of a gift card. 

Gift cards are used as incentives because they: 

• Are easy to promote 
• Are quick and simple to share with customers 
• Are easy to redeem 
• Can be used anywhere
• Are a gift we can all identify with

They’re the default choice when we can’t think of anything more relevant to offer to our friends, our family, or our customers. 

And that’s just one of the reasons why your brand should avoid gift cards if you want your incentive marketing efforts to be as successful as possible. They’re the default, standard choice. 

That’s just one of the reasons to avoid gift cards for your next incentive marketing campaign. 

1. They’re boring and predictable

Gift cards are the obvious choice for anyone not sure what to buy for someone. They’re the safe bet. 

That logic extends to businesses offering gift cards as an incentive. They’re a safe option. Reliable? Yes. Exciting? No. 

And that means they won’t stand out. Many other businesses competing for your customers’ attention will be offering gift cards. If you do the same, your offer will just be another boring and predictable one, lost among all the noise of your competitors. 

It’s unlikely your prospects – or your existing customers – will see your brand, your product or your service as anything special or different. 

2. They lack thought

If you can’t think of what to buy, you get a gift card. Everyone knows it’s the gift of choice when you don’t know what they’d like. 

Some businesses see gift cards as a good option for their customers, because they’re giving them the choice to get what they’d like. Some customers will appreciate that. 

But there will always be the underlying feeling that there was a lack of effort, a lack of thought. Gift cards are the simple, easy option – almost like the ‘can’t be bothered’ option. And your customers will know that. 

It can often be the case that offering a gift card – and not putting the thought in – shows your customers that you don’t really care about them. 

3. They feel impersonal

Giving a gift card as a reward can seem like you’re just offering an incentive because you have to. Because you have to offer something. They lack any personal touches. 

Again, it can feel to customers like your brand doesn’t care about their loyalty. 

Because gift cards are so flexible, useful to almost everyone, your customers can feel like they’re just another number. They’re not special, you don’t value them, so why should they choose your business? 

4. They can’t be easily matched to your campaign or brand

By their nature, gift cards are generic. They can either be used on any product at a specific retailer (closed-loop), or used like cash for any product at practically any store (open-loop). They are hugely flexible. 

But that means it’s hard to get specific. It’s hard to tie them in with themed campaigns

or relate them directly to your brand. 

Unlike physical rewards, which can be changed and adapted to match your product offer, your industry, the time of the year or any other theme, gift cards remain open ended. 

5. They actually feel less valuable

Despite basically being equivalent to cold hard cash, gift cards are treated differently by recipients. According to a study in the Society for Personality and Social Psychology, “individuals experience less guilt when paying with a gift card, compared to credit cards or cash.”

That benefits customers, because they’re more likely to use a gift card to treat themselves, to buy a luxury item rather than an everyday essential. 

But it also means that your customers don’t recognise the value of that gift card in the same way as if they had cash or a physical gift they could hold. As a digital amount, our brains struggle to see the real value of a gift card; the money almost seems imaginary. 

The result is that your customers won’t associate the real value of a gift card with your brand. 

6. They lack the psychological connection of a physical gift

One of the main reasons customers struggle to recognise the real value of a gift card is because there’s no real connection. There’s nothing to hold onto, no real link between the reward and the incentive offer. 

A physical gift creates an instant psychological connection between your business and your customers. It builds stronger, longer lasting connections with your brand because there’s something real, something tangible, that represents that link. 

A gift card can’t replicate that. 

7. They often go unspent

Lastly, and perhaps more importantly for your customers, many gift cards go unspent. 

They’re forgotten about, saved for a later day and misplaced, or they expire before they’re used. In other cases, they’re partially redeemed for a gift and the small amounts left over go to waste. 

In the UK, over £300 million is left on expired gift cards. In the US, it’s about $3 billion, with around 3% of gift card dollars never spent. 

That defeats the object of your incentive marketing campaign. Your customers won’t feel like they ever received an incentive, and they won’t thank your business or brand for giving them their reward. 

Offer physical gifts for your incentive marketing rewards instead of gift cards

Although they can be beneficial, there are lots of reasons why you should avoid gift cards if you want to win and keep more customers. 

Instead, offer real, valuable, relevant gifts that your customers can actually hold. Gifts that show your brand is thoughtful. Gifts that show your customers you care. 

With the right gifting software, offering and redeeming those physical rewards can be just as quick, simple and hassle-free as gift cards. 

With Gift & Go, you can easily replace gift cards with physical gifts, attracting more prospects, converting more customers, and increasing your retention rates. 

See how Gift & Go works for yourself:  

Apply for a free trial or book a demo and claim your free gift.