Why Do Businesses Promote Gift Cards?

Gift cards. Customers love them (like, really love them). They are now the most popular type of holiday present and a perennially popular all-occasion gift.

But from the retailer’s perspective, why spend the time and advertising cash to promote gift cards so heavily? Wouldn’t it be easier to just stick to cash or credit card sales?

As it turns out, gift cards offer retailers much more than a simple one-off sale.

Here are a few reasons many retailers promote gift cards as part of their growth strategy:

Capture uncertain shoppers

Let’s say a customer is browsing through your store or online shop in search of a gift. After looking through your product line-up they sadly come up empty-handed. In a traditional cash or card only scenario, things would likely end with the customer leaving your store without a sale.

But they might not have had a gift card as an option. Under the same scenario, promoting a gift card option would give that same customer a way to still buy a gift from you while keeping the actual item selection open for their recipient.

Gift in hand. Sale captured. Everyone walks away happy.

Drive overspends from card recipients

When a customer purchases a gift card they set a monetary value that can later be redeemed by their recipient. These cards basically act like cash except that they can only be spent in the issuing store.

But what’s really intriguing, is that card recipients treat them much more like a license to splurge than they do cash—often making purchases that overspend on the card’s value.

And those overspends are substantial.

According to FirstData, the average customer spends $38 more than the value of their gift card. For businesses, these overspends present an incredible upside and opportunity for their overall growth strategy.

Take this scenario. Two customers walk into your store. Each has been gifted $25—one via cash the other by gift card.

The cash-only customer decides they should save some of their money for lunch and bus fare home. They quickly buy an item valued at $12 and exit your store.

The gift card customer on the other hand walks in and takes their happy time to explore your entire shop. They’ve found an item that they’ve had their eye on for a while but couldn’t justify splurging on. But now with the help of the gift card, the purchase suddenly feels much more realistic.

They go for it.

You see, there’s an intriguing psychology at work here. Two gifts of the same monetary value, but perceived and spent very differently.

Cash can be used anywhere and on practical and necessary life things, or it can be saved.

A gift card on the other hand must be spent in your shop. This very structure then eliminates the paradox of choice that is presented by a cash gift. And without the choice to spend their gift elsewhere, that same $25 suddenly becomes free fun money that they can spend guilt free.

And spend they do, and then some.

Entice new customers

Gift cards are also a helpful way to nudge wary or new customers into your store. In fact, according to the same study by FirstData, 44% of consumers report visiting a store they wouldn’t have visited because of a gift card.

So while a customer may not have purchased from you before, their gift card acts as a sort of permission to give you a try for free. By selling more gift cards then, it goes to reason that retailers stand to activate a powerful acquisition channel.


Most businesses have customers that demand or desire gift cards (keep in mind, the demand isn’t always obvious). Saavy businesses get this and see the growth opportunity presented by this demand.

In response, they’re offering a range of creative promotion strategies to drive sales and leverage gift cards for their growth—such as simple website advertisements, point-of-purchase upsells and offering them as part of a bundle with other popular products.

So, the next time you review your growth strategy do take some time to consider whether adding and, more importantly, promoting gift cards will be a good fit for your business.

After all, it’s likely just a matter of time before your customers come asking for them.