Compare Open & Closed Loop Recognition & Reward Cards

Companies purchasing gift cards for recognition, loyalty, and goal achievement often debate the advantages of purchasing and awarding open loop cards vs. closed loop gift cards.

Open loop payment cards are prepaid cards carrying the MasterCard, American Express, Discover, or Visa logo. These cards may be used like cash wherever credit cards are accepted.

Closed loop payment cards are those limited to a specific vendor and can only be spent at the merchant listed on the card.  Starbucks and Amazon gift cards, for example, are “closed” because they are only accepted at those specific merchants. 

At first glance, it appears that open loop cards are the best solution as they offer the widest range of purchasing options.  But before you make that decision, consider these open loop attributes:

n  Often impose a per card fee above the face value – can be as much as $5.95 per card;

n  Often expire and/or decline in value after 6 or 12 months if full balance is not used;

n  Often impose fees when the card is swiped, when you check your balance via customer service, and other situations included in the “fine print” on the card;

n  Often result in a decline at the merchant location if cardholder does not know the exact balance and the merchant cannot tell the cardholder how much remains on the card;

n  Can be confusing at checkout if the cardholder wants to use an additional method of payment for any outstanding balance on his/her purchase (i.e. a “split tender” transaction).

Closed loop merchant cards, while restricting the cardholder to a speciic merchant, have no declining values and rarely impose expiration dates.  In addition, the merchant can "read" the card and tell the cardholder the exact balance that remains.  The user experience is usually much smoother with closed loop cards than with open loop.

How about a solution that offers the best of both worlds? Award of Choice gives each recipient the open loop flexibility of hundreds of merchants with the ease of closed loop gift card use. One Award of Choice opens the door to over 500 closed loop gift card brands including those that are requested most – WalMart, Target, Amazon, Starbucks, Best Buy, Costco, etc.  With no fees, no expirations, and no minimums, Award of Choice combines the best of closed loop and open loop cards -- offering hundreds of merchant choices, favorable economics, and a great user experience.

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

Reward Managers and Have More Engaged Employees

Managers and supervisors are essential players in any type of employee reward and recognition plan.  In fact a study conducted by Dale Carnegie Training few years ago showed that an employee’s relationship with their direct supervisor is one of the top drivers of employee engagement.

However, it is our experience that while many corporations today have a reward and recognition program in place to recognize the achievements of employees, too few have specific initiatives in place to reward managers for how well they manage and support the recognition system all together.

As supervisors and managers are often involved in the design, implementation performance metrics, measurement and feedback of the programs, they can be reluctant to insert themselves in the reward phase, but that can be counter-productive.

They should be involved, they need to recognized for how engaged they are.  Their enthusiasm will spread to their employees.

• Train them so they understand not only how to explain the program to their reports but
  
  to be excited about its success. 
• Specifically define management engagement and include it as a goal for each manage
• Develop specific performance metrics that encourage managers to encourage engagement
• Give them the authority to make decisions and set the direction of their areas of responsibility
• Be available as a sounding board to help them determine the right course of action.
• Formally reward them with tangible program awards and with greater responsibility when appropriate

Formally recognizing managers or supervisors sends a strong message that giving proper credit and recognition is not a task reserved for a select few, but something the organization values from the top down.

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

RVOLPC

RVOLPC is an acronym coined by Dr. Brooks Mitchell of the University of Wyoming and founder of Snowfly, an incentive company specializing in gamification.  RVOLPC stands for Readily Verifiable On-Line Price Comparison. 

After years of study within the behavioral sciences field and firsthand experience in implementing incentive programs, Dr. Mitchell soon learned (as we have) that the traditional merchandise awards used in the incentive industry are extremely overpriced and the companies that use them run the risk of having unhappy participants, which can result in de-motivation.

With RVOLPC it is easy for your employees to compare prices of your awards on-line and

determine the real value.  Even with points based applications where the reward company attempts to hide the pricing, it’s not too difficult for an industrious web surfer to uncover the price.  Rest assured that not long after that all the employees know about it as well.  Do you think they will be satisfied with a wide screen TV that cost them (you) $2000, when they see it all day at Best Buy for $699?

There are definitely negative consequences of having an incentive or recognition award that is priced higher than even the highest retail are.

Your employees start to question many things about the program value.  They see the company wasting money at a time when budgets could be scarce.

With more and more millennials now in the workforce, the use of technology is almost inbred.  They are more than comfortable on the web, and can easily become disgruntled when think their company is wasting money.

Overpriced merchandise awards are a fact in the award industry. You can see them in any loyalty program you participate in.  If you are bound to use some of these types of merchandise systems in your incentive or recognition effort (especially long term years of service programs) you might want to consider giving your employees a gift card option.  Your merchandise award supplier will fight you on this with a lot of hocus-pocus about trophy value, but your employees know better.  When employees have a choice of gift cards over merchandise awards, they choose merchandise over 90% of the time.  

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

Does Higher Employee Engagement Really Produce Better Bottom Line Results?

In October 2012, the Employee Engagement Alliance created a stock index (ECSI) to attempt to show a connection between a company’s performance in the stock market and employee engagement.  Engaging the services of McBassi & Co (an HR analytics expert) the EEA developed the ECSI based on McBassi’s Good Company Index which tracks several hundred public companies based on their levels of customer, employee and community engagement collected from about a dozen different sources.

From the Good Company Index list of companies, the EEA extracts about 45 each year to form their ECSI.  Traditionally it turns over about 40% of that list as it calculates new scores.  The methodology for the Good Company Index can be found here.

The current ECSI showed it outperformed the S&P by 21.4% over four years. Obviously from this perspective, you may want to conclude that the companies with higher employment engagement, as measured by McBassi, had great bottom line results than those that don’t.  However the stock market has volatility based on a number of various factors.

 

Is this a case of the tail wagging the dog?  Maybe.  Is this empirical proof that recognition and employee engagement produces better bottom line results?  No.  Are ECSI companies cherry picked to skew the outcomes?  Probably not.  

Or is this the case of the cart before the horse?  Possibly.  And while we are certainly not experts in analyzing the methods or strategies used to develop the ECSI, we are pleased that the EEA has made the attempt to connect the dots between employee engagement budgets and bottom line results. 

As one of these articles mentions “Companies that ignore stocks selected based on environmental, social and governance factors (ESG sector) do so at their peril…Good corporate governance plays a winning hand in capital allocation and is critical to corporate longevity.”  

From our experience we know that highly motivated and satisfied employees will produce dramatic results.  And that employee recognition is the cornerstone of a highly satisfied employee. 

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

The Tug-of-War Between Recognition and Engagement

The incentive industry has been struggling with putting teeth into employee recognition programs for many years.  Most of the large performance improvement companies of today were founded to create and manage incentive programs to increase sales for their clients.  But in the last two or three decades, the entire landscape of the business awards industry changed.  Executives realized that if merchandise and travel awards could motivate their sales force as well as their channel partners to increase sales and profits, many of the same techniques and strategies could be used to motivate their non-sales personnel to better performance as well.

But for one simple reason, the incentive companies ran into a roadblock and it wasn’t as easy to sell these new programs (commonly referred to employee recognition).  Sales programs had a built-in a measurement and an ROI.  That isn’t true for the employee recognition efforts where the goal was more loosely defined and based on satisfaction levels, rather than clear cut bottom line performance.  And executives wanted to see more results they could take to the bank. Recognition budgets were a hard line budget item with no or little ROI.  Sales programs were implemented based on incremental performance, often without the constraints of the budgetary process. 

So now, over a half century after the large incentive houses were selling millions of dollars of sales incentive programs, the other award companies are competing to convince the C-suite to spend more and more on their non-sales personnel, and it seems to be working.  Now they have another interesting quandary, the recognition programs have been overtaken by the employee engagement programs.  And it appears that some of the same issues exist…how to justify the expense to senior management.

This  Recognition & Recognition Network article of the same title as this blog provides a comparison and insight into  the 

world of recognition / engagement and how it has changed and grown.  Essentially, all the employee performance gurus (read research, training, communications, employee satisfaction consultants) and everyone else who wants to have a piece of this pie have now taken over the recognition industry called it engagement and simply moved “recognition” out of it to stand alone as an integral piece. 

In reading the article, there are two perspectives we feel need further examination.  First, the three “industry leaders” as mentioned amount to only a fraction of the sales revenues of the top three full service performance improvement companies who that are still with us, and still selling “recognition programs” so the lines of “leaders” are blurred.  And second, the distinctions between recognition and engagement programs offered appear to be without any empirical evidence to justify the distinctions…and the lines between recognition are still somewhat blurred as well. 

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

Unspent Recognition Budgets Don't Improve Performance.

You don't have to throw your remaining 2016 recognition budget down the drain.  Here's how you can use it in 2017.

If you have incentive dollars that are as yet unspent, be sure to use them! Often unspent funds can be “found” by the budget police looking for ways to cut back next year. So adopt a “use it or lose it” attitude and protect your employees from missing out on recognition and reward resources. Anticipate future needs and use those dollars to secure awards that will neither expire, decline in value, nor become outdated. 

When your first 2017 recognition event rolls around, you’ll be happy you did. If your organization is mandating budget cuts and perhaps suggesting that recognition is one of the “best” areas to reduce or eliminate, do not allow your reward and incentive programs to fall prey to those cuts! 

Statistics gathered from an actual program with a life-cycle of 10 years reflect that engaged employees will perform better in ANY market condition. In an up market, a recognition and incentive program will help exceed performance; and in a flat market, a reward program will help you maintain your performance. In a down market, taking care of your employees helps you protect your position and lets your key stakeholders know that you are grateful to them for sticking it out during the rough ride. 

At Ultimate Choice, we can suggest ways to ECONOMICALLY recognize and engage employees with our gift cards solutions that do not expire or decline in value. As always, we impose no program or per card fees, no expiration, and no minimums. Each employee gets his CHOICE of what is personally most enjoyable, meaningful and engaging.

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