Award Employees

If you compare what companies pay for traditional incentive merchandise items with those same items at retail the answer is emphatically….YES!  The problem is that the people who receive the value of these awards…your employees, are rarely if ever the same people who purchase them.  They often don’t see the price or value because they are hidden in “points” or “award levels” or other schemes.  For example, a company issues you a recognition award and tells you to pick an item from a booklet or grouping of awards.  You have no idea of what your company paid for that award.   Although you do have an idea of what the award is worth.  Frankly any employee can easily find out what an item is worth by quickly browsing the internet and reviewing any of the many shopping sites, the most prominent of which is Amazon.com.  If the actual cost of the award ever does come to light, and it often does, employees start to question why their company paid so much for the award.  Then the questions start…can I get a gift card for the same price you paid for the award?  This is probably the main reason why gift cards have jumped to the top of the list of most used recognition and incentive awards…because of the value. Read the rest of this entry »

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After New Year’s it’s always fun for me to sit back and review all the articles and blog posts that I never got a chance to read over the Christmas and New Year’s madness.  While I thoroughly love the madness of the holidays, it certainly isn’t conducive to intellectual pursuits, at least not for me.

When I do get the chance to go through my inbox, and RSS Feeds, I inevitably run across articles and posts that go out of their way to hold gift cards in a negative light.  Since AwardEmployees is a gift card fulfillment company, offering the highly successful Awardofchoice card I try to stay on top of what other award companies are saying about them.  In truth in spite of what you may read, gift cards have  become yet again the most favored gift of all..

 This time of year has a lot of articles on gift cards, and they become fodder for those traditional merchandise incentive companies who just itch at the opportunity to use them to distort the truth.  They do this I surmise, because they sell traditional merchandise awards, the antithesis of gift card incentive awards.  They do it because gift cards constantly undermine their profits.  They do it because clients are constantly asking them for gift card options and they are constantly thinking of ways to tell those clients that gift cards are just not a good award option for reasons that are always less than transparent.

 It is obvious to anyone who compares the two award options that gift cards make traditional merchandise award items look outrageously expensive.   And the choice of awards between gift cards and the online merchandise catalogs are not even comparable.  So these companies in an attempt to differentiate themselves from the evil gift card empire jump at the chance to relay anything remotely negative they see in print as gospel.  It’s a shame they have to stoop to this depth in order to make their products look better. 

Let me give you an example.  This blog post from a recognition award supplier headquartered in both Canada and the US appeared in December.  As the vast majority of their readership is obviously from the US, I found it somewhat ridiculous when it mentioned that “only 17% of us wanted gift cards”.  I guess the Canadians are far different from their US cousins as according to what I read “gift cards are the most requested gifts for the holiday season for the fourth consecutive year.”  Of course the writer of the blog was the president of the company…you don’t think he had an ulterior motive for making the statement, do you?  He went on to the brilliant deduction “that another reason gift cards aren’t used is because they are not appreciated.  I also believe the same thing holds true in corporate recognition programs.”  That’s an interesting deduction as every survey I’ve seen conducted by Incentive Magazine over the last several years shows that gift cards are by far the #1 award in the recognition industry.  I guess he must have missed those. 

One last thing, he refers to the article in the Toronto Globe as breakage on “gift cars” as being close to 25% including non-redemption because of expiration dates and fees, he might be correct.  Trouble is, the vast majority gift cards used in the majority of recognition programs, are merchant gift cards that don’t have expiration dates, or any of the high fees that bank cards have (Visa, Mastercard or Amex) and are therefore more likely to cost less than 10%, not the 25% he claims.   Of course that is all a moot point as the price of the precious merchandise he is so fond of is averaged at least 50% higher than retail and has been for years.  Gee if he is so keen on presenting facts I wonder why he didn’t mention that one?

A couple years back I attended the largest incentive buyer’s show in the industry.  While there I was introduced to a buyer from this company.  She was very interested in gift cards as being an added choice in their programs because so many of their customers wanted them.  I sent her some information, but on a call back she simply said she couldn’t afford to have them, not because it’s not what their customers wanted, but because they were afraid to add them as too many would take the option and she would lose a tremendous amount of their high margin merchandise business.  Guess there is someone in that company who believes in transparency, just not with clients.

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We hear so much these days about employee engagement and incentives and how they help to improve the bottom line of a company, but we rarely hear just how that happens.  Here is a list from the Employee Engagement Alliance newsletter of some important studies and data you might want to consider:

• There is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and financial success, according to “Linking Organizational Characteristics to Employee Attitudes and Behavior,” a study by the Forum for People Performance Management and Measurement, Department of Integrated Marketing Communications at Medill School of Journalism, Northwestern University.
• The shareholder performance of organizations on Fortune magazine’s list of 100 best companies to work for outperformed the general S&P index by as much as 300 percent over a seven-year span according to the Great Place to Work Institute and the Russell Investment Group.
• Knowledgeable and attentive employees account for 80 percent of the reasons that consumers feel satisfied, according to a PNC Bank Corp. survey.
• Incentive programs can increase performance by up to 44 percent in teams and 25 percent in individuals, according to “Incentive, Motivation, & Workplace Performance,” a study by the International Society of Performance Improvement.
• Fewer than one in four American workers is working at full potential; half of all workers do no more than directly asked; and 75 percent of employees say they could be more effective in their jobs, according to research by the Public Agenda Forum.
• 70 percent of unhappy customers abandon vendors because of poor service, according to the Forum Corp.
• A 5 percent increase in customer retention can increase lifetime profits from a customer by 75 percent, according to The Loyalty Effect (Harvard Business School Press), by Frederick Reichheld.
• Some 65 percent of executives believe that incentive programs using travel and merchandise are more memorable than those using cash; 60 percent of executives believe that sources of merchandise and travel are more helpful in creating an incentive program than are sources of cash, and 57 percent of executives believe that bonus payments are often regarded by employees as something they are due, according to the most recent “Survey of Motivation and Incentive Applications” by the Incentive Federation.

When you discuss an employee incentive program as a potential strategy to improve performance, consider using gift cards as your award.  They have proven effective to increase performance because they are what employees want.  Award of Choice is the only gift card system that provides over 500 of the most popular gift cards in the country to choose from, and the only system that is available without an administrative fee.

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As mentioned in this blog post at Your Baby’s Ugly a couple months back, Amazon.com discontinued fulfilling merchandise for points based incentive programs for independent incentive companies.  Recently they started to work with clients directly, and now the incentive houses are scrambling to come up with a new model to provide their customers the vast choice of awards that they truly enjoyed with Amazon.  Initially, incentive houses fought the evolution to Amazon because they would lose the high profit margins of past traditional points based catalogs where the ridiculously high prices were hidden by the points schemes.  But the demand for choice remained the same, and has become the rule, not the exception.  Now the incentive houses are in a quandary.   What do they do to fulfill on the demand that they created now that Amazon no longer sells to them? 

Incentive Weekly recently published an article about a “former Amazon.com partner who has released details of an extensive merchandise fulfillment catalog that will offer participants the ability to redeem their points for millions of awards.  The core is partnership agreements with major Internet retailers, wholesalers, and manufacturers in specific various categories, ranging from electronics to books to furniture.”
Personally I think that’s terrific.  We’ve been preaching for years that the traditional incentive industry needed to find a way to give participants what they want, rather than force participants to choose from traditional incentive award catalogs that had little choice.  

But, another big problem still remains, the PRICE OF THE MERCHANDISE.  The incentive companies can increase the choice of awards that participants receive but they can’t eliminate their need for profit.  Along with a huge difference in choice, customers are moving directly to the new Amazon.com model to pay the Amazon price without the incentive house markup. 

Let me give you an example.  We were shopping for a new Blu Ray DVD Player and wanted to use points from our bank card loyalty program.  We found one for 47000 points on our award points site….$470.  We found the same model on Amazon.com, for $194, or 240% LOWER!  So we used 20000 points for $200 in Amazon.com gift cards and redeemed our gift cards for the $194 DVD player at Amazon.com.   By using gift cards it saved me over half the points.  Do these companies actually think we’re stupid?  It’s too easy for participants in award programs to find out what the value of an award is.  When they can go online to one of these partners, they will be able to determine the real value of the award, and it’s only a matter of time before they will complain that the “points price” of the award is out of line. Participants should get full value for what they earned, not part value because the price is too high. 

Lately we are seeing more and more companies doing away with the points based incentive systems of the past and replacing them with direct issuance of gift cards as their award of choice.  It saves them time, the high cost of administering points based systems, and they are able to get a much better value for the budget.  In these types of programs, the employees receive over 90% of the company’s budget.  In traditional points based online incentive systems sometimes only 50% of the budget actually got down to the participant. 

Award of Choice is one the new gift card systems that they are using.  This system is especially cost effective because they do not charge a fee on top of the actual value of the gift card.  This is the real wave of the future.

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It was recently announced that American Express cardholders can now use their Membership Rewards points to pay for all or part of Amazon.com purchases.  To the traditional incentive industry merchandise companies this means that the “retail threat” is back.

It was only a couple short months ago that Amazon.com was getting out of the incentive business, now they are back in but in a way that should scare the pants off any of the incentive merchandise houses that fulfill point loyalty programs.   Essentially, what Amazon.com has done is bypass the middleman …the incentive merchandise fulfillment companies…and is now selling directly to the user. 

This does not bode well for fulfillment companies as more and more companies with points based award programs are likely to contact Amazon.com to fulfill their programs.  Most American Express members should like the change, even with the slightly higher conversion rate.  The merchandise pricing at Amazon.com has always been substantially below any pricing that the traditional merchandise companies have used.

If you do not have an employee awards points based program, you can still take advantage of Amazon’s tremendous buying power by using an Amazon.com gift card.  And, when you use a gift card you will bypass any of the fees that burden the point redemption conversion.  This article from the New York Times discusses that issue. 

Award of Choice is a gift card system that provides not only Amazon.com as an option but over 500 other popular merchants such as Wal-Mart, Best Buy and Home Depot.  Award of Choice is the first gift card award system available without a fee.

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