Should Companies Give Gifts to Customers and Employees?

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By: Wise Marketer Staff |

Posted on September 22, 2020

With the holiday season looming, organizations will begin debating these timeless questions:

  • “Should we send customers a gift?”
  • “Are gifts worth the expense?”
  • “How much should we give?”
  • “What should we get them?”

Gift giving is common to all human societies. Regardless of the continent you are on, the nation you live in, or your race or ethnicity, giving gifts is ubiquitous. The cultural norms of offering and receiving presents may vary but offering gifts has been a universal norm throughout the history of humankind. It seems encoded into the very DNA of most living animals.

Some primates give gifts of food to those outside their group presumably to expand their social network. Many birds and insects woo mates with presents. Cat owners are often presented a dead mouse or bird by their adoring feline eliciting a worried, “You really shouldn’t have.” 

By: Ric Neeley

Throughout history, gifts have served very distinct purposes irrespective of the relationship: 

  • Expressing appreciation
  • Providing symbols of the importance and value of the relationship
  • Demonstrating respect to build even stronger bonds
  • Affirming loyalty

But should we really give gifts to customers or even employees for that matter? Corporations provide valuable services to patrons at fair and market-driven prices. Employees are provided a fair wage and a secure future for the work they do. So, why give them presents? Would any goodwill even be worth the cost of the gift?

Economists Hate Gifts

That is really overgeneralizing. To be more exact, economists like Joel Waldfogel, author of Scroogenomics: Why You Shouldn't Buy Presents for the Holidays, argue gift-giving is economically inefficient. The thinking goes like this. One who buys a gift for another is likely to miss the mark on the value the gift represents to the recipient. Let’s say Peter gets a $120 argyle sweater from Aunt May. He only wears it a few times when going to see her, simply to make her happy. For Peter the sweater wasn’t worth the price Aunt May paid for it. It would have been much more economically efficient for her to give Peter the $120.  That way he could have purchased something he really valued.

That seems a reasonable defense for nixing customer and employee gifts unless, of course, you’re going to give them cash. But offering customers or employees cash has its own problems. Cash to a customer means you’ve been overcharging them. To an employee, the message is you’re underpaying them. So, a wad of money may not be the answer to corporate gifting. This leads to the question, are we better off just not gifting at all?

The Psychology of Gifts

We all know a thoughtful gift from a friend can have a deep and lasting emotional impact on us, encouraging us to reciprocate their kindness. Offering something to show our appreciation and esteem to customers and employees does this as well. In his book, The Gift, sociologist Marcel Mauss argues “gifts are never free” and are “irreversibly tied to the giver”. While offering a gift seems like a simple and voluntary gesture, it actually creates complex social bonds and an obligation to reciprocate. In business, customers and employees repay gifts with their loyalty to the brand and the organization. This means the value of a corporate gift lies in reinforcing and maintaining the relationship over time rather than in the economic efficiency of the gift itself.

The 2020 Loyalty Barometer Report found “59% of consumers indicate that the most important way a brand can interact with them is through surprise offers and gifts.” The report goes on to say, “Customers want to be acknowledged and feel appreciated for their loyalty.” It also found, “Appreciative gestures (like gifts) go a long way in developing emotional connections.”

Gift Value and Ideas

A thoughtful and meaningful gift helps nourish and strengthen a relationship. But how much should we spend on a gift, and how do we determine if it is meaningful to a customer or employee?

First, don’t make the mistake of thinking you need to send each customer a gift of the same value. Some customers are more valuable than others. The American Marketing Association says, “A business’s top 10% of customers spend 3x more than the average customer. The top 1% of customers are spending 5x more than average.” It only makes sense to offer higher value customers a more valuable gift. Segment your audience to show more appreciation for those more loyal to you. Make gift values proportional to the relationship just as you would in a personal relationship. While you value both your spouse and your sister, you probably give your spouse a better birthday present than your sister. 

Segmenting recipients is good, but overspending is bad. Outrageous presents disproportionate to the relationship may feel like a bribe to a customer and a waste of money to employees. Gifts don’t need to be excessive to be meaningful. A thoughtful corporate gift reflects your organization’s values and reinforces the importance of the recipient. If you are offering B2B customers gifts, remember most companies have strict rules regarding the gift value an employee can accept from their suppliers. Make sure any gift you send is within those guidelines.  

Gifts should be personal, not promotional. Engraving your logo on a gift does not mean the gift reflects your values. That just makes it an advertisement. Gifts should be personally meaningful to the recipient. A gift that clearly demonstrates the organization’s value proposition will be appreciated by customers and employees. They must share your values, or they would not work with you.

You probably don’t have the time and resources to shop for the perfect gift for each customer as you would for your mother. That’s why we encourage corporate gifts offering recipients a choice. Consider choices like these to help your gift recipients find something that appeals directly to them:

  • A gift selection with various items to fit different lifestyles and demographics. This allows recipients to choose something that speaks directly to them. It also lets you focus on personalizing the presentation experience to highlight their value.
  • Charity donations can offer a tremendous value in a tumultuous year. Allow them to choose from a list of charities and provide a contribution in their name. Receiving an acknowledgement from a personally important charity makes it a fulfilling experience.  
  • Food can be popular. Turkeys or hams for employees or fruit baskets for customers are traditional. However, consider the logistical challenges especially with perishables. Think about the option of transferring the value of the gift into points in their loyalty account. This can expand the gift selection for recipients and show you their preference as well. 

In uncertain times, it is even more important to reinforce relationships. Done thoughtfully and respectfully, gifts can help strengthen bonds and show appreciation in a heartfelt and compassionate way. Take the time to think about and plan how you are going to thank those people most important to your business.

Ric Neeley is a Director of Marketing for Hinda Loyalty Group, a US-based loyalty solutions provider that helps engage, inspire, and reward the people most important to your business.