Gift Cards Can be Used to Achieve Various Corporate Objectives.

 

Gift cards are used to attain many corporate objectives According to ongoing research done by the Incentive Research Foundation, following is a list of the main reasons given by companies using gift cards

 

Primary Objectives for Using Gift Cards	Ave. % of Responses
Recognize individual or team performance	75.5%
Boost morale	57.9%
Increase or maintain sales	46.4%
Build employee loyalty/trust	35.7%
Build customer loyalty/trust	32.9%
Improve customer service	31.4%
Foster teamwork	25.7%
Improve safety/reduce accidents	25.4%
Start/maintain business relationships	15.7%
Improve employee health/reduce insurance costs	14.5%
Create new markets	11.4%
Other	3.6%

 

 

If you want a truly successful recognition or incentive program, be award neutral in your decision of what awards to use in your program.  When you provide the awards that your people want, they work harder to achieve your objectives in order to attain them.

How the Pandemic Year Changed Employee Recognition

 

The pandemic has made it very difficult to manage teams and individuals for improved performance.  In the virtual world that sprang up almost immediately out of necessity, it became harder to measure employee’s needs, celebrate successes and make employees feel valued.  At the same time, HR professionals agreed that taking steps to maintain a strong culture that included frequent recognition was paramount.  

And it’s starting to look like the virtual work week, in all or in part, will be a future reality as many companies seem to be moving in that direction with hybrid models of remote work and office time combined even when it’s safe to return to work. 

It might be beneficial to take a look at how businesses have shifted their recognition strategies to meet these future challenges.  As employees continue to work in new and unfamiliar environments, it is critical to find new ways to inspire improved performance while maintaining a strong feeling of connectivity to the company. 

The marriage of clear communications with an ongoing recognition effort can be a differentiator in achieving results.  As it has been from the beginning of the recognition industry, thoughtful and meaningful communications set up the performance you’re trying to achieve and recognition reinforcement can then turn that performance into a habit.  It will help build a more engaged and effective work-home environment. 

In recent surveys the Incentive Recognition Federation (IRF) has noted the following changes in recognition over the pandemic: 

Increased Purchases of Gift Cards and Merchandise

The IRF showed a 26% increase in the use of gift cards in workplace incentive programs since the pandemic started. They noted that: 

“Gift cards, especially, allow for high levels of flexibility, creativity, efficiency and speed when used to motivate important audiences during the pandemic.” 

Much of this was due to incentive travel programs, corporate meetings, and other business events being canceled and replaced with gift cards and merchandise.  The IRF industry outlook for 2021 reports an overall predicted net increase of 33% for gift cards and 24% for merchandise. The average value of a award ranged from $160 to $225. 

Awards Benefited a Wider Audience 

The IRF reports that lower-priced merchandise and gift cards proved to be effective motivators to broader audiences during the pandemic, and many incentive program owners are applying the lessons learned in 2021 and beyond.  For example, in place of expensive travel programs or special events being attended by only a top tier performing group, the size of the top tiers is being reduced and gift cards and merchandise are added at second and third tiers.  The same or fewer budget dollars are allowing for a wider audience.  

During recovery, it might be necessary to rebuild morale, engagement, trust and collegiality, and these are behaviors that the majority of employees must observe to move the needle. Incentive and recognition program owners may be identifying and rewarding many new behaviors that will reestablish new corporate cultures. Many of these efforts could involve smaller, frequent rewards on a larger scale. 

The mainstay of the incentive travel industry has been the high-end sales and distribution programs favored by executives, many of whom attended these trips as hosts.  But by their nature only the top 5% to 10% of their employees were earning the awards.  The middle 60% of producers were often forgotten, which is a distinct missed opportunity especially as companies work to recover and rebuild when every employee needs to give the incremental effort.  Showing all your employees they are appreciated is at the core of what drives performance. 

Expanding Digital Delivery 

More and more companies took advantage of the digital delivery option of awards for obvious reasons.  The IRF reports that many lessons were learned about the power of virtual engagement. 

“Digital options enable immediate, coordinated, trackable delivery of rewards regardless of geographic location, and groups of employees can receive their reward at the same time, such as during a virtual meeting. Digital delivery can also increase control, enhance reporting, and reduce overall administration time for program owners.” 

The IRF is encouraged by companies’ focus on maintaining a positive corporate culture and keeping workers motivated during the pandemic. IRF officials feel that bodes well for incentive and reward use this year and beyond.

Gift Cards Are Fun Money

 

The 2020 IRF Academic Review offers some interesting peer review research of articles found within the employee engagement industry regarding employee incentives and recognition programs.  Some of the significant points this year that could help inform you on the design and execution of successful programs include: 

• Gift cards have the potential to capture most – and perhaps all – of the well-known benefits of non-cash rewards. Program awardees categorize gift card awards as “fun money.” Many employers find gift cards easy to give and to administer compared to choosing specific tangible gifts or rewards. 
• The greater sense an employee has that a reward they receive is separate from their salary or wages, the greater improvement they showed in their performance. 
• Researchers found that workers classify non-cash, tangible rewards as distinct from monetary compensation, suggesting that delivering non-cash rewards is more likely than cash to result in improved performance.
• Gift cards continue to be widely used as awards, with median gift card amount remaining at $100 
• For many employees, it has become the soft rewards of work such as culture, relationships, trust, and purpose, education and direct management that matter most to them. 
• 94% of executives at top performing firms are strong supporters of incentive programs and consider them a competitive advantage 
• Companies conducting analysis on how programs change behavior increased to 44%, compared to 25% in 2019. 
• While it’s always difficult to establish direct casualty, most organizations measure results based on correlations. Metrics for tangible benefits include decreased staff turnover, increased productivity, sales, revenue, safety, market share, gains in customer satisfaction, and customer acquisition
• Even more difficult to measure, metrics for intangible benefits that include employee satisfaction, collaboration, and impact on company culture 
• Designers are structuring programs with a wider reach, with the goal of each participant receiving recognition or rewards of some kind, rather than exclusively rewarding just top performing program participants.

Gift Card Usage as Employee Awards

How and why did gift cards become the dominate employee award in corporations today?  First because they are ubiquitous and people of any age group or ethnicity love them, and two because they provide the best value and choice of any other award.  Following are some of the ways they are used and why incentive planners like them so much.

How Are They Used?

• To recognize performance 70.2%
• As sales incentives 48.6%
• As business gifts 29.3%
• As non-sales recognition awards 30.4%
• As spot rewards 30.4%
• As years of service awards 47.6%
• For consumer promotions 14.9%
• As safety awards 9.9% • As dealer incentives 9.4%
• Wellness programs 6.6%
• To start/maintain business relationship (referrals) 6.1%

 Why Do Incentive Planners Like Them?

• Ease of administration
• Broad audience appeal
• Redemption & flexibility
• Perceived value Cost effectiveness
• Lasting appeal
• Backend ROI Tracking

Click here for a one page flyer on our five delivery methods to use gift cards in your company.

Compare Open & Closed Loop Reward & Recognition 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 attributes:

• Often impose a per card fee above the face value – can be as much as $5.95 per card.  On smaller denominated ($25 or $50) this can amount to 10% to 12% additional cost.
• Often expire and/or decline in value after 6 or 12 months if full balance is not used;
• 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;
• 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;
• 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).
• In addition, older credit card processing terminals still handle gift cards as though they are credit cards – putting holds (or pre-authorization amounts) on the gift cards when they are first swiped. If the bank card does not have a balance to accommodate a pre-authorization swipe plus the final sale, a gift card might be declined.
• Closed loop merchant cards, while restricting the cardholder to a specific 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

Gift Cards Preferred Gift for Special Occasions

In 2017, research by InComm, the market leader in new payment technologies and solutions, found that consumers turn to gift cards for many life events not just the holidays

For years the award industry judiciously fought the onslaught of gift cards as a reward in incentive or recognition programs.  They asserted that because they are cash like, they are the same as cash and should not be used for awards for the same reasons you really shouldn’t use cash for awards.  The real reason for that debate was that the traditional incentive award companies had profits exceeding 80% onmerchandise awards and 10% or less on gift cards. 

Gift cards succeeded because they have become a way of life in our culture.  It’s what many award winners want because they can get the award they really want in the most cost effective way.

Now, according to the research we find that gift cards are being used for 82% of birthdays, 39% for graduations and 52% as a thank you. 

In these instances the 92% of the survey respondents gave two or more gift cards and 54% gave five or more.

In addition, 82% said they would appreciate receiving a gift card for those occasions as well.

Younger consumers are finding even more occasions in which to give a gift card.  Millennia respondents between 25 and 34 noted they often give cards for things such as new babies and new home ownership.

Gift cards are appropriate for any number of occasions, alleviating much of the stress that can come with shopping for “just the right gift.”  This versatility benefits both the giver and the recipient. 

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

Make the most of your gift card program

(Excerpted in part with permission from National Gift Card Corp.’s white paper “Getting the Most Out of Your Gift Card Program,” www.ngc-group.com/blog/industry-news/getting-the-most-out-of-your-gift-card-program)

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

Primary Objectives of Gift Card Award Programs

The “2016 Gift Card IQ” research conducted by Incentive magazine was recently released.  Following are the results to the question of “What are your primary objectives for using gift cards? 

Following is a recap of that research and a comparison of those same questions to 2015.

Answers	2016	2015
Boost Morale	65.7%	61.7%
Improve Performance	47.6%	56.0%
Build Employee Trust/Loyalty	44.8%	42.9%
Increase or Maintain Sales	33.6%	34.9%
Foster Teamwork	31.5%	23.4%
Build Customer Loyalty	30.1%	26.3%
Improve Customer Service	23.8%	28.6%
Start or Maintain Business Relationships	16.8%	20.6%
Improve Safety	9.8%	12.0%
Create New Markets	9.1%	6.3%
Improve Employee Health	8.4%	10.3%
Other	7.0%	4.0%

If you are sourcing your own gifts cards and want to view a gift card system that has $ for $ pricing with NO FEE and allows your participant to redeem for over 500 of the most popular brands of gift cards in the country, please let usknow.

 Here's just a few of the over 500 gift card brands that we use in our systems.

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

  

Gift Cards Are a Boon To Employee Recognition Programs

Gift cards as we know them became popular in the early 1980’s and actually started to be used in employee award programs only a few years after that. 

The development of the gift card has been a blessing for anyone who wants to award and recognize employees.  If you think you can find the perfect award that fits every employee you can’t. Unless you only have a handful of employees, you won’t know each of them well enough to offer an award that suits them, at that time.   And we've learned that one size really doesn't fit all.

Employee award gift cards have grown in popularity faster than anything else in the award industry.  In the retail world the growth has been exponential.  In 2004 we spent $20 billion in gift cards and that has grown to over $100 billion annually.  Today it is hard to find company that doesn’t use gift cards somewhere in their recognition mix.

Gift cards have gone from being considered impersonal gifts to being the most thoughtful gift of all. The gift card is a sign of the times - tastes change quickly, options should remain open, and when you use gift cards for employee awards, you’ll always be giving them the award that they want. 

Research shows that:

•         93% of U.S. consumers purchase or receive a gift card annually
•         Consumers spend an average of $213/year on gift cards
•        83% of corporations use gift & prepaid cards for employee incentives

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

Gift Cards and the Recognition & Incentive Industry

Recognition and incentive awards have been used in business from the early 1900's.  They started to become prevalent during the depression when companies had to find a way to motivate performance and recognize years of service at work. In those days they used mainly watches, rings and jewelry.




As the incentive industry grew, the number and types of awards grew as well.  Merchandise of all types and price points and travel were the mainstay of the industry up through the late 1970's.  Then, gift cards were introduced and the awards industry was changed forever.  Even though most traditional award companies did not want to offer gift cards as options, (the profits on gift cards were substantially less than the traditional awards)  program participants demanded them.  Today to stay competitive, award companies have to supply gift cards.

Gift cards have grown to over $125 billion in 2015.  And most companies that have award systems for employees or customers use gift cards for a variety of objectives.  Incentive Magazine in their Dec 2015 issue showed the top reason for using gift cards in programs were:

Used in Incentive Programs	2015
Recognize performance	61.9%
Sales Incentives	45.7%
Business Gifts	34.7%
Service Awards	33.5%
Non-sales recognition awards	25.4%
Consumer promotions	22.0%
Start/maintain business relationships	14.5%
Dealer incentives	9.8%
Safety Awards	7.5%
Spot Awards	26.0%
Wellness Awards	12.1%
Other	4.6%

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