When gift cards are
referred to as “the reward of choice,” the description comes with solid
research. A study by the Incentive Research Foundation (IRF) and the Incentive
Gift Card Council (IGCC) found that U.S. businesses spent $22.7 billion on
cards for employee incentive and customer loyalty programs. While more than 59%
of businesses rely on non-cash rewards, a full 87% of those companies are using
gift cards.
Data from the company's perspective includes:
- 60%
of companies using gift cards favor them for ease of administration
- 59%
cite broad audience appeal, 52% for redemption and flexibility
- 48%
appreciate a gift card’s perceived value over cash rewards
- More
than 75% of gift card program owners believe they “are among the most effective
of all rewards – especially in driving loyalty and engagement.”
Data from the
recipient's perspective includes:
- The
largest share of respondents – 44% – say gift cards, not cash, are their
favorite award type
- They
appreciate the redemption flexibility gift cards offer: the ability to redeem
them in a brick-and-mortar store, at an online retail site, or via a phone
order.
- Recipients
find gift cards have greater and longer-lasting impact than cash rewards
- More
than 79% of the study said they remembered what they purchased with their card
- More
than 79% linked that positive memory of the gift back to the people or company
that awarded it.
Electronic
gift cards are increasingly popular. Through codes delivered via e-mail and
mobile devices, they allow for immediate rewards, offer a variety of redemption
choices for issuers as well as recipients, and are an environmentally friendly
way to deliver awards.
Purchasing
gift cards
Sending
employees to purchase gift cards at retail locations or “card malls,” while
appearing on the surface to be an easy purchase decision, can actually cost a company
more than it may realize. In addition to
travel time while it takes only a minute or two to activate a single gift card
at a retailer’s point of sale (POS) terminal, the task multiplicity of
activating and verifying a large quantity of cards (not to mention dealing with
various denominations within the purchase) takes much longer, and could be
prone to error.
The
grossed up average hourly wage of the above, amortized over the volume of the
cards purchased can be substantial. It
can easily amount to over 10% of the purchase.
Other cost considerations would be lost time productivity, actual travel
costs, and in particular safety and security concerns.
Consider
using a third party B2B gift card provider to do your gift card sourcing. According
to Sales and Marketing Management Magazine (July, 2013), “you get client
support, fulfillment services, budget control, cardholder support, and more.”
By using an outside source
Most
card providers perform this service for fees added to the face amount
of the cards purchased. Ultimate Choice provides this service without fees.
Choosing
a card or cards
You
can find almost any gift card imaginable.
So what gift cards should you use?
Do you want to offer just one or two cards, or more? How many different cards should you
offer? Many companies avoid the entire
issue by using an open looped bank card that can be used to make purchases
anywhere the card is accepted. But these
cards will have fees as high as 10% of the value especially for lower
denominations, and are very difficult to use when combining them with other
forms of payment…an occurrence that happens more often than expected.
In
our experience the best motivation for your employees will come when you offer
them any card that they want. If you
want them to perform, let them have what they want, instead of what you want
them to have. Using a B2B card provider
will do just that. There are many to
choose from. In your selection process,
please include Ultimate Choice, we think we offer the best solution at the
absolute best price.
For
more information on Ultimate Choice Inc.’s products or services or other white
papers please contact us at Ultimatechoiceinfo@cox.net
