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
