Gifts are a useful, effective marketing tool for customer retention however you need to make sure you get the basics right first.
Giving away free gifts to customers could be a good method for building trust and encouraging repeat custom. This is largely due to the psychology of reciprocity; customers feel they should repay the favour, and they also feel a loyalty to your company. It’s a good way of forging a friendly relationship with clients, and it’s a great way to defend against new competitors launching in your market.
The only caveat is that you have to get your basic customer service right first. A gift isn't going to make up for faulty products or lousy service.