Rewarding Loyalty Points with Gift Cards on Upcoming Holidays

The holiday season is more than just a sales rush. It’s your prime opportunity to connect with the people who keep your business thriving: your loyal customers. As festive spending kicks into high gear, customers increasingly expect more than just transactions. They look for recognition and rewards that feel personal and valuable.

This year, a powerful strategy is gaining traction among savvy retailers: merging traditional loyalty points with the universal appeal of gift cards. Unlocking loyalty points for digital gift cards during the holidays isn’t just a reward; it’s a strategic move that boosts engagement and solidifies retention long after the decorations come down.

Why Are Holidays the Best Time to Reward Loyalty Points with Gift Cards?

The holidays are a unique moment in the retail calendar. Energy is different, and so are opportunities. Leveraging your gift card and loyalty programs together during this time isn’t just a good idea—it’s a strategic powerhouse.

The Holiday Shopping Surge

• Simply put, people are ready to spend. Their wallets are open, and their shopping lists are long.
• By allowing customers to redeem their hard-earned points for gift cards, you give them a direct reason to spend that holiday budget with you. It turns their accumulated loyalty into immediate purchasing power right when they need it most.
• This approach captures a larger share of their wallet during the most critical sales period.

Customer Expectations Around the Holidays

• The festive season brings a wave of generosity. Customers anticipate brands to match that spirit.
• A standard discount is expected. But offering customer loyalty gift cards as a redemption option feels more personal and generous. It’s a flexible reward that acknowledges their individual needs during a busy time.
• This move meets and exceeds the expectation for a valuable, tailored reward.

Strengthening Brand Relationships

• Holidays are about connections. When you reward a customer’s yearly loyalty with a loyalty rewards gift card, you do more than process a transaction. You strengthen an emotional bond.
• This gesture shows you value their patronage beyond the immediate sale. It fosters goodwill that turns seasonal shoppers into perennial fans.
• A customer who feels appreciated in December is a customer who returns in January.

More Competitive Opportunities

• The market is noisy during the holidays. Every business is vying for attention.
• A unique gift loyalty card program makes you stand out. While competitors offer generic promotions, you provide a personalized, member-only experience.
• This isn’t just another sale; it’s an exclusive benefit for your most valuable customers. It gives them a compelling reason to choose you over anyone else.

Connecting Loyalty Points and Gift Cards: The Perfect Holiday Duo

Pairing points with gift cards isn’t just a nice idea—it’s a strategic one-two punch for the holidays. This combination unlocks new levels of customer engagement and spending.

Turning Points into Gift Card Rewards

• Allowing customers to redeem points for digital gift card loyalty program rewards turns abstract points into concrete, flexible value.
• A points balance might feel like a number on a screen. But a $25 gift card? That’s a tangible contribution to their holiday shopping. It increases the perceived value of your program instantly.
• This flexibility is key. Customers can use the gift card for themselves or put it toward a perfect gift for someone else.

Encouraging Gifting Behavior

• Your loyalty gift cards become the easiest gift recommendation for your customers to give.
• When a member can convert their points into a gift card for a friend, you’re activating word-of-mouth marketing. They introduce new shoppers to your store without you spending a dime on acquisition.
• This turns your loyal customers into your brand ambassadors during the peak gifting season.

Hybrid Holiday Campaigns

• Don’t just choose between points or gift cards. Combine them.
• Run a promotion where every holiday purchase earns double points, pushing members closer to a gift card reward. Or, offer a bonus loyalty rewards gift card with any purchase over a certain amount.
• These hybrid campaigns create multiple touchpoints and reasons to shop with you repeatedly throughout the season. They keep your brand at the top of your customers’ minds.

Benefits of Loyalty Points with Gift Cards During the Holidays

1. Increase Average Order Value (AOV)

• The Mechanism: According to Capital One Shopping, 61% of consumers exceed their gift card’s balance, spending an average of $31.75 more.
• The Outcome: This “bonus money” effect directly boosts your transaction values during peak season.

2. Attract New Customers

• The Mechanism: Your gift card and loyalty programs work together when members gift their earned rewards.
• The Outcome: This creates organic word-of-mouth marketing, bringing new shoppers to your store without additional advertising costs.

3. Flexibility for Customers

• The Mechanism: Offering customer loyalty gift cards lets members choose their perfect reward.
• The Outcome: This reduces reward abandonment and increases satisfaction with your gift loyalty card programs.

4. Increased Perceived Value

• The Mechanism: Allowing members to redeem points for digital gift card rewards makes your program feel more valuable.
• The Outcome: A tangible gift card generates more excitement than points, strengthening emotional connection to your brand.

5. Improved Cash Flow

• The Mechanism: Encouraging holiday redemptions through gift cards and reward points converts liability into revenue.
• The Outcome: You clear pending loyalty liabilities while driving immediate sales during your busiest season.

Holiday Campaign Ideas: Creative Ways to Reward Loyalty Points with Gift Cards

1. Double or Triple Points Offers

• The Mechanics: Announce a limited-time period when all purchases earn multiplied loyalty points.
• The Acceleration: Customers quickly build their point balance, creating a clear path toward earning a loyalty rewards gift card.
• The Ultimate Goal: This encourages members to concentrate on their holiday shopping with you to reach their rewards faster.

2. Customized Holiday-Themed Gift Cards

• The Design: Create limited-edition digital or physical gift cards with exclusive holiday designs.
• The Perceived Value: These themed customer loyalty gift cards feel more like a special gift than a standard voucher, increasing their desirability.
• The Brand Impact: The festive artwork strengthens your brand’s seasonal presence and makes the reward feel unique.

3. Exclusive Holiday Coupon Campaigns

• The Targeting: Use your system to identify members who are close to a gift card redemption threshold.
• The Push: Send them a personalized notification: “You’re just 200 points away from a $10 gift card!”
• The Conversion: This targeted prompt motivates a final purchase, helping them redeem points for digital gift card rewards.

4. “Buy Now, Gift Later” Incentive

• The Immediate Action: Customers purchase a gift card for someone else.
• The Instant Reward: You instantly deposit bonus loyalty points into the purchaser’s account.
• The Future Return: This strategy not only sells a gift card but also guarantees the purchaser will return to spend their newly earned points.

5. Exclusive Events for Loyalty Program Members

• The Access: Host a special shopping event (in-store or online) exclusively for your loyalty members.
• The Exclusive Offer: During the event, offer enhanced point values or special gift loyalty card programs not available to the general public.
• The Result: This makes your best customers feel valued and creates a compelling reason for them to redeem their points during the holiday period.

Tips to Track the Success of Loyalty Points with Gift Cards This Holiday Season

1. Gift Card Redemption Rate

• The Metric: Track what percentage of members actually redeem points for digital gift card loyalty program rewards.
• The Insight: A high rate shows your members find the gift cards desirable and valuable.
• The Action: If the rate is low, promote the benefit more clearly at checkout and in email reminders.

2. Increase in Average Transaction Value

• The Comparison: Measure the difference in spending between customers using a loyalty rewards gift card and those who are not.
• The Insight: This reveals the powerful “uplift” effect that gift cards have on order size.
• The Action: Promote this data internally to ensure your team understands the direct revenue impact of your gift card loyalty programs.

3. Customer Return Rate

• The Measurement: Monitor how quickly gift card recipients and redeemers make their next purchase.
• The Insight: This shows the effectiveness of your gift card and loyalty programs at driving repeat business and building long-term habits.
• The Action: A low return rate might indicate you need to improve your in-store experience or follow-up communication.

4. Growth in New and Referred Customers

• The Tracking: Use a unique source code to identify new customers who were referred through a gifted gift loyalty card program reward.
• The Insight: This directly measures the word-of-mouth power of your program.
• The Action: If this number is high, consider creating a formal referral bonus within your loyalty system.

5. Cost-Benefit Analysis

• The Calculation: Weigh the total cost of issuing customer loyalty gift cards (including administrative fees) against the revenue they generated.
• The Insight: This reveals the true ROI of your holiday promotion, proving its financial value beyond just engagement.
• The Recommendation: A positive ROI justifies expanding the program next year, while a negative one suggests a need to adjust reward values or promotion strategies.

Future Trends: Evolving Role of Gift Cards in Loyalty Programs

The landscape of loyalty is shifting from simple points collection to creating meaningful, instant value. Gift cards are evolving to become the central currency in this new era of customer rewards.

1. The Digital-First Movement

• The Shift: Physical plastic cards are giving way to digital and mobile-based formats.
• The Merchant Advantage: Digital customer loyalty gift cards can be delivered instantly, never get lost, and live directly in a customer’s wallet app.
• The Integration: This seamless experience is perfect for modern gift card loyalty programs, allowing for easy sending, gifting, and immediate redemption right from a smartphone.

2. Instant Gratification via Apps

• The Technology: Loyalty platforms now enable members to redeem points for digital gift card rewards in real-time, directly through a mobile app.
• The Consumer Expectation: Customers no longer want to wait. They expect to convert points into usable value the moment they decide to shop.
• The Impact: This instant access significantly boosts redemption rates and turns reward points into immediate sales for your business.

3. Beyond Transactions: Personalization & Experiences

• The Evolution: The future lies in moving beyond generic value. Think personalized gift cards for specific services or bundled experiential rewards.
• The Application: For example, a salon could offer a loyalty rewards gift card specifically for a “VIP Glam Package,” not just a dollar amount.

Related Read: 6 Loyalty Ideas for Salon Owners to Boost Customer Retention

• The Result: This transforms the reward from a simple discount into a memorable brand experience, deepening emotional connection and perceived value.

4. The AI-Powered Personal Touch

• The Backend: AI-driven loyalty platforms can analyze individual purchase data to automatically suggest the most relevant gift card reward.
• The Automation: The system might trigger an offer: “Redeem 1,000 points for a $15 gift loyalty card program reward for our healthy snack section,” based on a customer’s frequent purchases.
• The Benefit: This hyper-personalization makes rewards feel specially curated, increasing engagement and satisfaction without manual effort.

5. The Green Factor: Sustainability

• The Demand: A growing segment of consumers prefers brands that demonstrate environmental responsibility.
• The Response: Promoting digital-first gift card and loyalty programs inherently reduces plastic waste.
• The Brand Lift: Highlighting this eco-friendly approach can become a positive part of your brand story, appealing to the values of modern shoppers and enhancing your company’s image.

Wrapping Up

Combining loyalty points with gift cards isn’t just a clever tactic—it’s a modern strategy where everyone wins. Your customers receive the flexible, appreciated value of a loyalty rewards gift card, turning their dedication into tangible rewards. For your business, it drives higher sales, attracts new customers, and turns points into profitable engagement.

The holiday season, with its unique blend of generosity and spending, provides the perfect backdrop to launch or refine this approach. It’s the time when customers are most receptive to meaningful rewards and are actively looking for guidance on their gift-giving.

Make this holiday season the one where your gift card loyalty programs work smarter, strengthening relationships with your best customers and setting the stage for a prosperous new year.