Feature Article - May/June 2014

Pathways to Success

Tracking the Next Phase of the Gift Card Revolution

By Rick Dandes

The notion that gift cards are more effective as incentive program awards than cash is nothing new. In fact, a 2012 B2B Gift Card Benchmark Study initiated by The Incentive Gift Card Council (IGCC) and the Incentive Research Foundation showed 52 percent of U.S. businesses ($22.7 billion) use gift cards for recognition programs. Businesses love that gift cards can be purchased in various denominations, allowing them to tailor their recognition programs and improve employee tenure and on-the-job satisfaction. Studies also have shown that eight out of 10 consumers prefer gift cards.

"What we are finding out," said Shaun Krusmark, president, IGCC, "is that companies emerging from the Great Recession with leaner, tighter budgets have devised new and exciting ways to leverage technology to create gift card efficiencies, cost savings and customization."

Whether they're plastic or digital gift cards, most can be personalized by adding a photo or company logo and co-branding with the gift card merchant. Features also can be added, such as recording a personal message from the company president thanking the employee for a job well done.

"Look, it's our organization's mission to explain all this to our members," Krusmark said. The Incentive Gift Card Council is a strategic industry group that grew out of the already-established Incentive Marketing Association. And the goal of IGCC since its initial charter in 2001 has been to promote an awareness of gift cards and gift certificates as a viable option for use in premium and incentive programs. "We aim to educate the incentive marketplace and the corporate community on the benefits of gift cards." And those benefits include choice, value and service, and other key attributes recipients say that they want in their awards.

Gift cards are so effective in an overall reward and recognition strategy because they provide such flexibility from an employer or marketer standpoint, she added. They can be used as "spot" rewards for in-person recognition. They're easily distributed for programs that may span multiple offices and locations. They greatly expand a participant's choices in a reward catalog. From a marketing standpoint, they have broad appeal across varying consumer bases, as well. The versatility of gift cards, avoidance of warehousing, and shipping, as well as the flexibility of denominations are some of the other reasons why gift card programs are easy to manage for small and large programs.

What's News?

There has been a proliferation in the past couple of years in the use of virtual gift cards, e-cards and mobile-delivered gift cards, observed Dennis Borst, president, COO of Patriot Marketing Group, and Footlocker Gift Card Sales, in Los Angeles.

Borst, who has been in the gift card business for more than 25 years, said "Last year was the first year that virtual cards outsold our plastic cards in the B2B world. And today's virtual card can be used online, of course. You can print them out and carry them into the actual brick and mortar store and redeem them there, as well."

Where do we go from here, after the virtual cards? Borst isn't sure. "But what we're seeing now starting and really taking off is gifting of the gift cards utilizing social media and the technologies associated with social media to deliver the award. Social media is starting to take a big part in expanding the B2B gift card channel."

Paul Kelly, director, business development, SVM, Des Plaines, Ill., agreed. "The use of digital gift cards in marketing efforts continues to grow," he acknowledged. "On the marketing side, I think we'll see broader use of the personalization, location-based marketing and instant issue capabilities these offer."

On the traditional plastic side, Kelly said, "We're seeing an increased demand for inactive gift cards to be used in direct mail, on-pack and on-site marketing campaigns. Once they're in a recipient's hand, a gift card can be a powerful motivator to execute on the desired call-to-action."