Gift cards are playing a growing role in driving customer loyalty and engagement, according to the latest research published by the UK Gift Card & Voucher Association (UKGCVA).

The State of the Nation report, compiled by GlobalData and sponsored by First Data, surveyed 2,000 UK shoppers and found that almost a fifth (18.5%) have become a regular customer of a brand or organisation after being given one of their gift cards.

This loyalty increases amongst a younger demographic, with 31% of Generation Z/Millennial (16-34 year-old) shoppers stating that they have become a repeat customer after being given a gift card.

The in-depth research, which looked into perceptions, attitudes and habits within the industry, also pointed to signs that gift cards could be leveraged as a strong weapon in the wider fight to maintain loyalty. It found that almost three-quarters of UK consumers (73.5%) would be interested in the ability to collect points or to receive cashback on future purchases when redeeming gift cards.

However, despite this, less than one quarter (23.1%) of gift card managers (surveyed separately as part of the study) said they use gift cards as part of a customer loyalty scheme.

Gail Cohen, director general of the UKGCVA, commented: “Our research found that gift cards are set to play several crucial roles in the coming years and, in particular, will serve an important function in driving brand awareness, engagement and customer loyalty.

“Gift cards are a great way to introduce a customer to a new brand and also help to build continued customer engagement when used as part of a customer loyalty or incentive programme.

“It is therefore more important than ever that the industry seeks to satisfy rapidly-evolving shopper requirements by ensuring the most effective programmes and systems are in place.

“Part of this, is for senior management and the c-suite to work closely with the gift card professionals within their organisations to understand the true value and potential that gift cards can play in their marketing, loyalty and sales strategies.”

“The research further highlights that gift card programmes must meet the expectations of ever-evolving purchasing habits across multiple age groups,” said Dom Morea, Head of Gift Solutions at First Data, and sponsor of the State of the Nation report. “Additionally, the research reinforces that a business’ branded currency strategy should incorporate an omni-channel consumer experience across a brand’s physical and digital assets.”

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*Please note that gift cards refers to digital, voucher and physical products.