Gift cards and loyalty programs are often run by different teams, with different systems and different goals. But they do a lot of the same work: both give customers a reason to come back, and both keep a brand in front of people between purchases. Brands that connect the two get more from each. This guide explains how gift cards and loyalty programs differ, the most common ways to combine them and the mistakes to avoid.
Gift cards vs loyalty programs
| Gift cards | Loyalty programs | |
|---|---|---|
| Who pays | The buyer pays upfront | The brand funds rewards |
| Who uses it | Often someone new to the brand | Existing customers |
| What it holds | Money, spent like cash | Points or perks, earned by spending |
| Main job | Bring in new customers and upfront revenue | Keep existing customers coming back |
| On the books | A liability until redeemed | A cost or liability for unredeemed rewards |
The two complement each other: gift cards bring new people in, and loyalty programs give them a reason to stay.
Why gift cards build loyalty on their own
A closed-loop gift card can only be spent with the brand that issued it, so every purchase, balance check and redemption is a touchpoint with that brand. The card carries the brand’s design, and customers return specifically to spend it. Those who enjoy the visit often come back without one. Reloadable cards go further: customers top them up and keep using the same card, much like a membership.
Five ways to combine gift cards and loyalty
- Rewards paid as gift cards. Members redeem points for a gift card or bonus card, so the reward is simple to understand and brings them back to spend it.
- Points for buying gift cards. Members earn points when they buy gift cards for others, which rewards your best advocates.
- Bonus cards as promotions. A bonus card with a larger gift card purchase works as a loyalty perk, especially in quieter periods.
- Reloadable cards linked to membership. A reloadable card tied to the member’s account, with rewards for topping up.
- Your cards in other companies’ reward programs. Businesses buy gift cards for employee and client rewards, and incentive platforms offer them as reward options. Getting your cards into those programs through third-party distribution puts your brand in front of new customers at someone else’s expense.
Turning gift card recipients into loyal customers
A gift card recipient is often a first-time customer, which makes redemption the best moment to win them over:
- Make the first visit easy. Simple redemption online and in store, and clear balance checks.
- Invite them to join. Offer loyalty sign-up when the card is redeemed or registered, so the relationship continues after the balance runs out.
- Encourage a second visit. A small reward for joining, or for spending the remaining balance, brings them back.
- Track where they come from. Measure how many recipients make a second visit, and which channels and promotions bring in the most.
Pitfalls to avoid
- Two liabilities. Unspent gift card balances and unredeemed points both sit on the books. Track them separately and accurately. Our guide to gift card breakage explains the gift card side.
- Confusing terms. Customers should be able to tell a gift card balance from a points balance and know the rules for each.
- Rewards that are hard to use. A reward customers can’t easily spend damages loyalty instead of building it.
- Fraud. Rewards, points and digital codes attract fraud, so the controls you apply to gift cards need to cover rewards too. Our guide to gift card fraud prevention covers the main controls.
How epay Conductor helps
With epay Conductor, brands can:
- issue branded digital and physical gift cards
- build, test and track promotions and bonus offers
- distribute cards through third parties, including corporate and incentive channels
- see sales and redemption data in real time
See how epay Conductor works or request a demo.
Gift card and loyalty FAQs
Is a gift card a loyalty program?
No. A gift card holds money that’s paid for upfront, while a loyalty program rewards customers for spending. They work best together: gift cards bring in new customers, and loyalty programs keep them.
Can loyalty points be turned into gift cards?
Yes. Many brands let members redeem points for a gift card or bonus card. It’s a simple reward that brings the member back to spend it.
Should gift card purchases earn loyalty points?
Many brands award points when a gift card is bought, the card is spent, or both. Awarding points only once, usually on purchase or on spend, keeps rewards fair and costs under control.
