Feature Article - May/June 2015

All in the Cards

For Gift Cards, the Future Is Now

By Rick Dandes

The fast pace of worldwide technological change, and the need to accommodate rapid mobile delivery has significantly altered how engagement and loyalty programs that incentivize end users with gift cards hand out those rewards.

"Technology has revolutionized the business," said Dennis Borst, president COO, Patriot Marketing Group, and Footlocker Gift Card Sales, Los Angeles.

Everything changed with the ability to deliver rewards such as gift cards via phones and computers in a very short period of time.

"When I started in this industry in 1988," Borst recalled, "it was, 'Please allow six to eight weeks to receive your reward.' In time that became four to six weeks. Until, by the late 1980s, for those of us who were doing gift cards, delivery was in the seven-to-10-days range. That was considered fast.

"But now gift cards can be activated and delivered in a matter of minutes," he added. "We can drop it right into an employee's phone, drop it into their computer—it's revolutionized reward delivery. Of course, it has made it tough on the merchandise people, who, by the way, can get things out much quicker now by drop shipping, but they can't deliver something in an hour. And that is why gift cards are king."

That's right, agreed Eric Thiegs senior vice president, National Gift Card, Crystal Lake, Ill. "Ten, 15 years ago, those in the gift card business were dealing with paper certificates," he said. "Then there was the evolution to the plastic gift card that people carried around. Plastic cards are still popular, but now with the millennials as people and technology evolve together at breakneck speed, there is a huge push in what the industry calls e-codes and mobile delivery."

All of this makes sense when you look at the research. A 2014 report by Emarketer.com estimated there are 4.6 billion smartphone users today—everyone has a cell phone. There are more cell phones in the United States now than there are people, as many people own multiple phones, such as one for work, and one for personal use. Apps are everywhere.

On the business side, between 68 percent and 80 percent of all business applications are currently available over smartphones and laptops, and the Incentive Research Foundation (IRF) expects that mobile apps designed by businesses for their internal use and competitive advantage will explode over the next two years—a market expected to reach $63 billion by 2017.

The rapid adoption of smart devices in and outside the workplace will raise expectations about accessibility and user experience across all content providers—including meeting and incentive vendors.

"So, if you are running a program, such as a loyalty, incentive or reward system," Thiegs said, "if you don't at least have the option to allow your end user, your member, your employee, your recipient or your credit card holder, to consume their reward in a digital format, you are potentially underserving that particular user, and you are leaving yourself open, at least from a user affinity standpoint, to them moving to another channel."