Archive for the 'gift cards' Category
Recognition and Reward Program Patterns
Author: Ley
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.
The Gift Card IQ Report….Between the Lines
Author: Ley
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.
Wellness Tips to Engage Employees…Nutrition
Author: Ley
Weight loss is always a key ingredient of any wellness program as it is one of the health problems that effect so many diseases, including high blood pressure, high cholesterol, heart disease and diabetes. If we could better manage weight loss we would have a head start on managing our overall health.
But as been noted by psychologists, the managing of weight loss is often more of a behavioral issue than a physical one. Granted, there reasons medical reasons for weight gain, but it is also clear that the choices people make in their everyday lives that have a great effect on weight gain. Often, the knowledge of what and what not to eat and how much is a good way to start people on the road to weight loss.
Corporations are engaged in many ways to influence their employees to gain interest and action on weight loss. As mentioned in the article from Corporate Wellness, a good way to start an engagement on weight loss is to sponsor a Nutrition Fair. Some ideas fun things to do might include:
Nutritional Menus…teams bring prepared foods for competition with a nutritionist as the judge. The foods are examined based health considerations and taste, after which a cookbook of recipes can be distributed to the employees and winning teams receive a prize.
“Control Cholesterol Club”…individuals are invited to voluntarily join and get a screening and are then given a variety of help such as the Gordian Health Solution management program. They can receive a simple award for joining, and then an incentive to continue the process and achieving the desired goals.
“Label Reading Contest”…choose specific foods or food category each week. Employees search out and find the products in the category with the highest and lowest fat (or sugar, salt, etc) content in the supermarket. Awards are given for the ones who find the highest and lowest products
“Healthy Food Samples”…provide food samples based on label information and compare to less healthy options
“Coffee Taste Test”…have decaf and caffeinated coffee available and have a taste test to determine which is which. Winners enter a drawing for a prize
“Healthy Desert Bake Off”…taste test and voting on the offerings provided, with 1st, 2nd, and 3rd place winners
“Vegetable Dish Taste Test”…same as Desert Bake Off with winners for the best recipes, or have a guess the veggies used in the recipe
The Award of Choice is a terrific way to award for any of the various games and contests mentioned. It is an inexpensive and fun way to support the overall wellness effort, It is a low cost but effective way to reinforce the folks who take part in these efforts.
We found this recent blog post on HR.com to be quite interesting. Not so much because of the clarity of its content, but for the the it is loaded with the kind of ridiculous rhetoric that is reminiscent of days gone by. I would have thought by now that the dinosaur merchandise award companies would be getting tired of using the same trite arguments they used when gift certificates were first used as awards in the incentive industry many years ago.
Their opinion, stated as fact, is that gift cards, because they are denominated in dollars “ go to pay the bills, groceries, gas or other common household costs,” and therefore are not tangible evidence of success and are not positive and don’t have a long lasting impact on employee performance. Sorry, gift cards are tangible, they are in effect what they can be redeemed for, and the TV set purchased with a Best Buy gift card is every bit as positive a reminder of how they earned the award as the TV set ordered from the merchandise incentive catalog. The big difference of course is that with the gift card, they get that TV for about half the price of the incentive merchandise catalog, and they’ll still have money left over to purchase a DVD player to go along with it. These merchandise award companies have been hiding their pricing behind point schemes that are frankly laughable in today’s business world where determining the value of an item is a short click away. If they are still using these arcane arguments, my guess is that they are still losing business to the lowly gift card….you think?
The way this post is written is typical of an HR world that has been duped by the award industry for years regarding cost and value of awards. But Gen X & Y and the Millennials will have nothing to do with it. They know the value of things and are not easily swayed by the rhetoric of days gone by.
What is a little disturbing about this post is that they take the very difficult subject of employee retention and correlate it to the award being used to recognize performance. That’s quite a jump; obviously the author was reaching for some way to tie the article to awards, but saying that “the question employers need to ask themselves is “are we using the right reward to retain employees?” is rather ludicrous. If it were as simple as that, every award company in the world would be researching and investigating every possible combination of awards to prove their “package” was the best to retain employees. The winning company would have access to billions of dollars in non-cash recognition award budgets, not to mention cash recognition that is significant budgets as well. Recognition awards may play a part in employee engagement, and employee engagement certainly plays a part in retention. But there are many pieces to the employee retention puzzle; awards may be one of them, and only a small one at that.
Lastly, I was interested in the reference to the World at Work Trends Report 2011 and the mention that “employers should use non-monetary rewards and exclude cash-equivalents such as gift cards from the mix, regardless of how popular they appear to be,” as if that were a part of this study. Having written for World at Work I am well versed in their position on fact based vs. opinion based material. I have also reviewed this report on several occasions and it is completely fact based. I can find no mention of the qualitative use of non-monetary awards. That’s just a clever way to gain credibility by positioning your opinions as if shared by a well-known compensation association, which of course they don’t.
In fact, gift cards are gifts. They are often the best gift to receive especially by those who want to make their own selections.
Related Posts:
Misleading, Deceptive, Uninformed, or Just Plain Dishonest Blog Posts?
Why Do Merchandise Companies Hate Gift Cards?
Reprise: Incentive Companies Do Hate Gift Cards.