At the end of the day, when all is said and done, patches are status symbols. With custom patches, you declare your allegiance to a particular group, a specific ideal, or a particular belief system.
Custom designs can be made which specifically show off your business. Wording and pictures can advertise your business' principles. But, in the end, these are truly status symbols and should be advertised as such when giving them away as promotional tools.
High quality, pure embroidering creates a really high-quality custom patch. If your business is hosting a contest or has some sort of community activity with a promotional giveaway, these designs would be perfect for your contest winners.
If your business caters to a certain community, has a very specific following, or perhaps has "ranks" of participation in your various programs, then customized designs would fit really well here. Give your groups something to wear on their jackets or hoodies. Feel strong and help them to be a part of that strength.
There are, specifically, groups which tend to wear a custom patch or two. Bikers, Club Members, Groups which Travel Together, and so on. These people would feel bonded by a common symbol which they all share on their outerwear.
Then there are people who have never been the patch-wearing type. While they may not feel excluded per se, it would help to rope in the "wannabe" stragglers by offering them something which your business can provide: Legitimacy into a bonded group of like-minded individuals.
Like I said, custom patches are status symbols and they give the wearer an honor or a distinction apart from other people. They make someone feel included. One of the strongest things you can do with your business advertising and marketing strategies is to systematically make people feel included. This triggers oxytocin bonding chemicals in their brain which makes them come back for more, again and again.
Custom patches are the way to go when giving out promotional items, rewarding contest winners, creating an "in-group", or simply telling people what you do and how important your products or services are. Community bonding is one of the most powerful forms of business advertising there is.