Feature Article - May/June 2016

From Paper to Plastic to Electronic

Gift Card Incentives & the IGCC

By Joe Bush

In the beginning, there were paper gift certificates, and they were given to employees and customers and partners for recognition of quotas and quarterly goals met and just plain thanks, and it was just OK. Certificates took a while to get to the recipient by mail, weeks sometimes.

Then, the paper turned into plastic, and these gift cards were given to employees and customers and partners for recognition of quotas and quarterly goals met and just plain thanks, and it was just OK. Recipients got them in a mailbox weeks after earning them.

Today, the rewarding and redemption of gift cards as incentives for jobs well done and loyalty much appreciated is more than just OK. Gift cards, the top choice as an incentive reward for many businesses, can now be sent to winners as links via e-mail or to a smartphone to be opened and scanned or entered into a website's pay portal.

The most popular got even more popular.

"The game changer is the ability to deliver a virtual gift card either to an e-mail box or downloaded into a smartphone," said Dennis Borst, the president and COO of Patriot Marketing Group, who has been in the industry since the paper days. "It has changed the industry dramatically. Now we can deliver a gift card into an e-mail box or a smartphone in 30 minutes or less. Sometimes the activation of the card and the processor takes longer than getting the card out to the recipient.

"You can order it while you're at the mall, and it'll be in your phone in time for you to use it while you're there."

Gift Cards by the Numbers

The Incentive Gift Card Council (IGCC), a strategic industry group that is part of the Incentive Marketing Association, is gearing up to send out another survey in the vein of its 2014 B2B Gift Card Market Study, according to Betsi Bowman, president of the IGCC. The 2014 version, produced in conjunction with the Incentive Research Foundation, got input from 1,123 respondents, 222 of who were responsible for managing a gift card rewards program.

Its main findings included:

  • Approximately half of U.S. businesses used gift cards to reward or recognize employees, partners and customers.
  • The most common application for gift cards was employee recognition programs, followed by sales and customer recognition programs. Channel partner programs were least common.
  • The average gift card award was highest for sales programs—about $150—while the lowest was for customer programs, about $50.
  • Open loop cards were used more than closed loop. Restricted cards were used the least, and were more likely to be used by large businesses.
  • Dining was by far the most popular merchant category for closed loop cards, followed by department stores.
  • A business might use many sources for gift cards. Purchases from a local retailer were the most common for all company sizes. However, large companies were more likely to also buy from the corporate sales group of a retail brand or from a gift card reseller.
  • Of those ordering online from a retail corporate sales group or a reseller, 86 percent are highly satisfied with the online ordering experience.