1.Create a saved search to target the customers to whom we are providing Free gift item.
2.Create a dynamic customer group using the above said saved search
3.Add a base price in the free gift item record or custom price in line level of Sales order.
4.Create promotion by adding the free gift item and selecting the audience as newly created dynamic customer group.
5.Create SO by choosing a customer from the saved search result and select any item and add amount if custom price selected. Then free gift item will be added automatically and add amount if the amount column is empty
6.Click on the promotion subtab and verify whether the promotion is applied. Please make sure that, the free gift item added column is not empty.
7.Click on save.