Award Employees

We are often asked by prospective customers why we feel that gift cards make the best employee awards.  The simple reasons are that they provide the best value and choice than any other merchandise award, mainly because with gift cards you can get just about any kind of merchandise available in the incentive industry, but your choices of just the right one will be dramatically greater, and the cost will be dramatically less. 

In our daily surfing of the net on the subject of awards we come across many articles, this one, giving us another reason why gift cards make great awards, caught our eye.  It relates a new shopping event for the after holiday season designed to entice those who received gift cards for Christmas to come in and spend them on a certain weekend…the GCW or Gift Card Weekend Sale.  Many partner companies have used this concept to drive incremental sales in January.  The gift card recipients can redeem their gift cards from participating retail partners and receive extra value through special deals posted on the GCW website that will be offered that weekend only.  

As a very large percent of the incentive and recognition awards budgets are paid out to participants at the end of the year, having sales like the GCW actually increases the value of the award to the participant.  If they earned a $100 gift card, it could be worth $125 to $150 on these sales. 

For years, the traditional merchandise award companies have used “sale” pricing on a few of their items to entice participant redemption, unfortunately most of the awards in the typical incentive catalogs are so overpriced that even by offering a discount the prices are still quite high compared to the sales that a gift card holder can take advantage of. 

If you want to give your participants the items they really want, let them have the gift card that they want.  Let they choose from over 500 of the most popular gift cards in the country by giving them the Award of Choice card.

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According to Ceridian Stored Value Solutions Inc., the holiday season promises to be robust and outlines optimistic expectations for gift card sales throughout the upcoming winter holidays.

They report that retail buying patterns show consumers continuing to purchase gift cards for their flexibility, while the business embrace them as a way to increase sales.   

The article goes on to say that:    

•  “Nearly 60 percent of consumers say gift cards are the #1 item they plan to give this year. 
•  Consumers named gift cards as the most desired gift to receive this year (5 years in a row) 
•  Consumers spend an average of 80-90% more than the face value of the gift cards 
•  Over 50% of US employers use gift cards to recognize employee’s contributions
• Use of gift cards as employee incentives is forecast to increase 23% by 2012 
• 15% of U.S. corporations have annual gift card budgets of more than $100K”

 The Award of Choice, with its extreme flexibility and choice is ideally suited to take advantage of this market need.  Take a look at our merchant list to see the vast selection that we have, much more than other gift card fulfillment companies. 

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On the heels of the research we mentioned from Young America in our last blog come the findings of The Incentive Research Foundation in conjunction with The Incentive Federation on mapping reward and recognition program patterns.  Of particular note it shows that while award types are dispersed into a wide variety of items, by far the most used award are gift cards.  Of the firms reporting that have reward programs, 65% said they use gift cards, and 26% are using them exclusively.   

As we’ve mentioned many times on this blog, gift cards are the best award to use for a variety of reasons, not the least of which are that they provide the best choice and they do have the best value.   

That’s not to say that they are the only award you should consider.  To make your program the best that it can be, in your planning phase you need to take a look at all awards that make sense for you.  To build the best incentive program you will need to spend some time and effort determining what award best suits your program audience.    As the research points out, travel awards are overwhelmingly used for the larger budget programs.  Of course that does stand to reason as group travel programs cost the most of any award on a per person basis. 

The next time you’re planning your incentive or recognition program, look at all the awards available to produce results.  Ask yourself what you would want if you were a participant?

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As reported in the September 2011 of Incentive Magazine, according to new research from Young America, a Minnesota based incentive marketing firm, 46% of HR executives are gift cards for their recognition and incentive reward programs while only 33% are using cash.  Having studied this industry for many years, we have noted several reasons for this.  In addition 48% of the respondents said they would add gift cards in place of other types of employee awards.   

This is not a new phenomenon; this transition from traditional forms of employee awards to gift cards has been going on for years.  Twenty years ago you couldn’t find a traditional merchandise award supplier who would add gift cards to their award mix for fear of losing their highly profitable merchandise award business.  In fact they would do everything they could do to dissuade a client from using them, now they tout them as part of their entire award mix.  

Gift cards are highly promoted today by the major retail stores in the country.  Consider these facts as compiled by the sources mentioned below: 

• There is projected to be nearly $100 Billion in gift cards purchased this year.
• Over 95% of adults have given or received a gift card.
• Average consumer purchases gift cards six times a year, for holidays #1 and for birthdays #2.
• For the last several years, gift cards have been the #1 choice for holiday gifts, and average gift card purchases exceeded $150 per person for the season.
• 45.8 % purchased gift cards so that recipients could choose their own gifts.
• Over 85% of gift cards are still purchased from traditional stores. 

Sources: Consumer Reports 2010, First Data Resources 2010, Tower Group 2010, NRF/BIG Research 2010

 As in the retail world gift cards have become the #1 award in the incentive industry.  It was just naturally going to happen.  That is what people want.   Gift cards are by any measure the best value in the award industry and by far provide the best choice to participants in the programs. 

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Last week’s blog reported on Incentive Magazine’s survey on gift cards, something they do very well on an annual basis.  This week we’d like to take a look between the lines and provide some answers on why we believe the data is like it is. 

We have been in the world of gift card systems for the incentive and award industry for years, almost from the start.  We’ve seen a lot of changes and have our perspective on why the phenomenal growth of gift cards as awards.  The Gift Card IQ survey as reported on in last week’s post prompts us to provide some thought on just what caused this un -paralleled growth when the growth of other more traditional awards is relatively small and even stagnant in places.  Let’s start with major points of the data. 

Annual Budgets for Gift Cards Have Grown from Year to Year 

While annual award budgets have virtually stayed the same, the gift card portion of these budgets have  grown as a % of the total for the same reasons that are shown for the primary benefits of offering gift cards.   They are much easier to administer, with far great choice than any other award, the have the broadest appeal to the diverse culture we live in, and they have unquestionably the best value of any award.   

The incentive industry, because of profit, will stay with their traditional hard lines of awards.  But inherent in these awards are incremental purchasing costs (the buying power of Amazon.com or Wal-Mart is decidedly better than even the largest incentive house) and the need to include shipping, handling and taxes, and insurance.  Then instead of selling their expertise as part of their overall program costs, they include this margin as part of the award cost.  The combination leaves the price of these awards at least 50% higher than retail, and often 100% or even 200% higher.  Gift cards have an exceeding higher value. 

The Use of Gift Cards 

In the beginning, gift cards were mainly used in short term recognition programs; now according the data they are accepted as proven awards for a cross section of award initiatives: from recognition efforts, to service awards, sales efforts, business gifts, spot awards, safety awards, consumer promotions etc.   They are filling the gap left by the traditional award s because of inflexibility and pricing. 

Gift Cards are Very Suitable for Smaller Incentive Programs 

The traditional award industry for many years had a difficult time in sourcing smaller priced awards for small incentive programs.  These were the programs that typically had budgets of under $50000.  Today, with the variable denominations of gift cards, they are ideally suited for these kinds of incentive efforts guaranteeing a true value of the awards.  Today a first level award in a program might be $25.  A $25 gift card is worth $25, a traditional $25 award because of inherent prices might only be $12.50. 

Gift Cards Aren’t Related to Cash Anymore 

Today the survey compares the effectiveness of gift cards to cash.  The automatic implication is that gift cards are not cash.  And the comparison shows very favorable results of gift cards to cash, that they are either more effective or at least as effective in over 75% of respondents. 

Traditional award companies take great pains, creative license and much Kentucky windage to say that gift cards are just like cash because in the past most of them could be converted to cash.  Today, virtually no gift card merchant will allow their cards to redeem for cash.  The old argument no longer holds water. 

So here is our perspective on some of the reasons reading “between the lines” of the 2011 Gift Card IQ Report.    If you have other another perspectives or would like to share your feelings, please let us know.

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