More Recognition and Reward Firms Shifting to Engagement

Lately several traditional incentive companies (those whose core competency is to sell merchandise/gift cards and travel to motivate or recognize employees) are shifting their focus to being a part of the Employee Engagement community.  Actually, this is not too unusual as some of the very large incentive houses did just that back in the 1980’s when market conditions eroded profits and they needed to open new areas to produce sales.

From a purely unscientific viewpoint, the simplest way to explain why all these companies are now making this shift to an already crowded field of employee engagement companies is…. MONEY!  They all want a piece of the growing pie. 

Merchandise/Gift Cards and Travel are commodities, and the price is more or less governed by market conditions.  Because they are commodities, those margins tend to be far less than the services sold using the traditional time and materials model used by suppliers to the employee engagement programs such as consultants, research, training, advertising, social media and communications agencies. 

In the last ten to twenty years there has been considerable budget growth in the employee engagement activities, and less in the traditional recognition programs.  Essentially, traditional incentive companies make the shift to employee engagement because they want to swim in a larger pool where the water is warmer

To make the shift effective and be considered a serious competitor in the employee engagement world, each of these companies has to build or buy a complete technology platform especially designed to address the key components of employee engagement as mentioned above. In addition these platforms also contain an awards mall which, in effect, sets them up to be a “one stop shop.”

As a prominent gift card supplier, we interface with many different tech platforms to provide over 500 of the most popular gift cards in the country.  If asked by a client, we will be glad to source a technology platform, or to recommend ones that have proven successful.  Our core competency is implementing gift card award systems, and we excel at it as attested by long time clients. When putting together your platform, don’t forget that gift cards are by far the number one award redeemed in these points based programs.  In fact in the largest loyalty bank card programs redemption for gifts comprise over 95% of all the redemptions of all merchandise type awards.

A word of caution for those who are considering or have a points-based employee engagement rewards platform…

It is better for you to invest separately in the technology platform and have complete control over the purchasing of the awards.  Remember…they are commodities and as such should command a lower price. 

When the incentive supplier sells you everything as a package, your control of cost and value of points, how many points an award can be redeemed for, what extras are involved, etc., all usually left up to the supplier.  It is not unusual in cases like this for the supplier to garner high margins on things like gift cards…and that only hurts your employees at redemption time.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net