Guest Column - May/June 2013

Trends in Reward Choices

What Do Winners Really Want?

By Brian Carr

What kind of rewards do winners really want? The answer to that is a moving target that shifts with the season, the state of the economy and with general consumer trends. As a Recognition and Rewards provider, the goal is to monitor the latest trends to make sure the rewards that are offered are popular and move people to action. Because when the awards choices lose appeal, you lose the power of motivation. Brand-name merchandise, travel experiences, event tickets, digital downloads and e-gift cards are all possible through the redemption of earned points. So, which to choose?

By looking at historical data of actual redemptions, combined with a knowledge of retailing best practices and the experience of product partners, some interesting patterns emerge.

Tough Times, Easy Choices

In sifting through Dittman Incentive Marketing's own data, there are some initial trends that make sense given recent events. During the financial crisis and through the recession that followed, there was an understandable move toward using redemptions to help with everyday expenditures, as opposed to premium merchandise or travel rewards. For example, gift cards for Walmart and clothing stores were significantly more popular in 2010 and 2011. The following year marked a shift back toward the selection of more "luxury" items, particularly in the high-end electronics category. Apple, Amazon (Kindle) and Samsung were all in the Top 5 List of most ordered items in 2012, with the popularity of the iPad pushing Apple to a redemption rate four times higher than any competitive brand. This trend is expected to continue as these companies look set to release new devices featuring smart sensors and increased functionality, and as tech-enabled healthcare products gain in popularity.

Notably, during the first quarter of 2013, travel rewards broke back into the Top 10 category, with redemptions for airline and hotel brands reinforcing the transition back to more personal and extravagant redemptions.

Rewards That Keep on Giving

Digging deeper into the database, there's clear evidence that the use of e-gift cards instead of conventional plastic gift cards for redeeming awards has grown steadily. The percentage of e-gift card redemptions went from 14 percent in 2011 to 33 percent in 2012, and as high as 46 percent in the first quarter of 2013, even though the total value of gift card redemptions has remained fairly steady.

The main advantage of an e-gift card to the reward winner is instant availability?something that no doubt drove the spike in redemptions in November and December (three times the average for the rest of the year). For the provider, e-gift cards require less handling, and are therefore less prone to errors and less expensive to process.

The most popular brands are typically those with a wide range of redemption options—primarily the large box stores and broad-based online suppliers. In 2012 the Top 5 e-gift cards redeemed in the Dittman Incentive Mall were Amazon, Lowe's, JC Penny, Walmart and Best Buy.

While many of the e-cards available are for restaurant chains, these attracted a minority of redemptions. In fact, the Top 10 Brands account for 68 percent of the dollar amount redeemed, and none of these 10 were in the restaurant category.