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gift cards2

According to recent research on gift cards published by Incentive Magazine 97.6% of all incentive users reporting felt that gift cards were effective, very effective or extremely effective.  Actual research results were:

The diversity of today’s workforce demands something different from the same traditional merchandise awards that were used for their parents and grandparents.

Total Effectiveness of Gift Cards as Employee Awards  

% of Responses

Effective 17.6%
Very Effective 48.85%
Extremely Effective 31.2%

By any measure, gift cards are the most effective recognition award for two simple reasons:

  • They provide the greatest choice and value for the award winner
  • Unquestionably they give the client the most cost effective means to recognize performance



01 5th, 2016

gift card generic

Gift cards as we know them started 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.

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

Please let us know if you would like some strategies for including gift cards within your employee recognition or years of service programs.



10 9th, 2012

The September issue of Incentive Magazine published the results of their annual “Gift Card IQ” research.  The findings are much the same as in the past, with the added emphasis on the fact that gifts cards once again were more effective cash in incentive and recognition programs.  These results are as follows: 

 

Cards Compared to Cash Incentives 2011 2012
Gift cards are more effective than cash 27.8% 36.7%
Gift cards and cash are equally effective 45.7% 38.6%
Gift cards are less effective than cash 8.4% 9.3%
Do not use cash awards 18.1% 15.4%

 

 In the report there was indication that in 2012, companies increased the frequency of when they used gift cards throughout the year as well the size of the gift cards they were using.   

It was interesting to note how these companies were using gift cards in their incentive programs.  Or, what were they attempting to improve or reward?.  Following is a ranking comparing 2011 and 2012 on this question. 

How Do You Use Gift Cards?

2011

2012

Recognize performance

65.9%

74.3%

Sales Incentives 42.1% 45.7%
Business gifts 31.5% 33.8%
Service awards 32.8% 32.9%
Spot awards 26.9% 29.5%
Non-sales recognition Awards 26.7% 28.6%
Consumer promotions 17.1% 15.9%
Wellness  programs 11.7% 10.7%
Safety awards 14.7% 10.1%
Start/maintain business relationship 9.6% 8.4%
Dealer incentives 9.1% 8.4%
Other 6.7% 4.9

 

Most of these numbers were consistently up in each of the months preceding the holidays.  December continues to be the month when most respondents purchase their gift cards.  It is the time when many of these types of programs conclude, and the vast majority of clients purchase on a “just in time basis.”  This helps cash flow and avoids the security issues of thousands of dollars’ worth of gift cards sitting in managers’ desk drawers. 



10 2nd, 2012

The September issue of Incentive Magazine reports on the 11th Annual incentive industry roundtable on several topics relevant to the incentive industry. 

The roundtable is composed of “some of the top thinkers in the incentive business.”  They meet usually in a nice resort or hotel (the resort & hotel industry is part of the incentive industry) and discuss many issues, usually including in part the state of the industry overall as well as specific awards within the industry.   Awards like individual travel and group travel, advertising and specialty items, merchandise and gift cards.  As these products compete with each other for corporate budgets, we enjoy reading the different opinions depending on their point of view.  If you were a client in the room, you could leave with a lot of confusion over what award you should use for your incentive budget. 

As we are of course bias toward gift cards, it was fun this year to compare the views of a couple of the “top thinkers”, one the head of award merchandise fulfillment company, the other the CEO of a national gift card incentive supplier.   

Let’s take a look at their opinions.  Mind you they are talking about the same industry at the same time and they both count as customers many of the top Fortune 500. 

Merchandise President 

“We are seeing a leveling off of traditional gift cards as a reward option because …the gift card economics are inferior to other reward options…gift cards have an inferior trophy value, and the introduction and development of digital media.” 

Gift Card CEO 

“Our clients continue to invest in four major areas…home improvement, electronics, experiential (I’m going to do something for me  (spa, cooking classes etc.) and family dining,  Gift Cards give ultimate choice and the latest research by the Incentive Research Federation shows the gift cards are preferred five times more than cash, and five times more than merchandise.  I’m not trying to talk negatively about merchandise but when we offer merchandise and gift cards, we always get at least 90% of the spend on gift cards.” 

Now, suppose you are a client trying to make up your mind between using merchandise or gift cards as the award in your incentive or recognition program and which one would make the most sense to offer? 

As long as there are incentive salespeople being paid five or even ten times more in commission to sell merchandise over gift cards, this argument will continue.  Frankly we don’t really have a bias; we think you should use them both as an option.  Our research over the last ten years shows that we will receive over 90% of the business anyway. 



12 27th, 2011

There is some interesting data that has come out of the 2011 gift card survey of subscribers to Incentive magazine.   

First, the number of responses from large budget incentive users has nearly doubled over 2010 figures.  Traditionally companies with these large programs who have used other forms of awards for their programs now seem to be embracing gift cards as their award of choice.  One reason we believe is the value and choice given by gift cards that was not readily apparent in the traditional merchandise awards.  This trend has been increasing for several years, but 2011 seemed to be a peak.  According to the survey: 

“Of special note to gift card suppliers are the survey responses that place more value on gift cards than merchandise – gift cards are overwhelmingly seen as a more influential incentive or reward than other options.  Since 57 % of respondents said their budgets were untouched for 2001, the outlook for gift card suppliers is even brighter this year.” 

A significant survey question was: 

How gift cards compared to traditional merchandise awards? 

  • 59.6 % said more effective
  • 27.6% said equally effective
  • 5.7% said less effective
  • 7% didn’t use merchandise. 

These types of responses would have been unheard of twenty years ago.  Traditional merchandise awards had been the backbone of the incentive awards industry because they drove all the profit.  There was only a small handful of suppliers selling gift cards and only to a limited market.  Today gift cards are very well accepted as an award that will drive performance.  They no longer have that “impersonal” label that was given to them by all the traditional merchandise suppliers when faced with them as competition.