'Old fashioned' maybe, but saying 'thank you' should never be forgotten or under estimated.
Appreciation and recognition have long been acknowledged as important human needs. So, apart from being 'a nice thing to do', it makes business sense to value every single client and employee.
The benefits certainly make it very worthwhile. Taking time to convey thanks with a tangible gift, will showcase the value your company places on its relationship with the recipient.
There is an important distinction between a client or employee thank you gift and a promotional product.
The later has a very strategic role. Promotional products are used to build profile and brand awareness. It is perfectly acceptable to be bold and brazen with branding. A gift on the other hand, should be very subtle with inclusion of any logo identification.
While the end of the year is the most popular time for gift giving, other occasions may be ideal (the completion of a successful project and after a particularly busy period for employees).