Feature Article - May/June 2017

Call On the Experts

IGCC Offers Solutions, Resources on Gift Card Industry

By Deborah L. Vence

Popular Gift Cards

Gift cards that are considered to be the most popular depend on the use case and demographic of the recipient population.

Brands such as Chef'd, Blue Apron, SoulCycle, Spotify, Hotels.com and Airbnb are highly requested in peer-to-peer recognition programs. And cash-equivalent options like Visa and MasterCard prepaid cards continue to be a top choice in rebate programs.

"Multi-merchant or 'Super Certificates' (where the recipient selects the gift card they truly want) are top choices for programs where the incentive giver wants to skirt the potential embarrassment of selecting the 'wrong' card," Gale said. "Fitness-centric brands like Nike, Adidas, Under Armour and Whole Foods are the go-to incentives for corporate wellness programs."

Moreover, Atten said gas cards and other $10 and $15 cards are popular, as well as "inexpensive 'spot rewards,' while a high-end reward might be for a Neiman Marcus or Waldorf Astoria card."

In February the NGC released its annual B2B gift card report showing the most popular gift card reward options in U.S. loyalty, rewards, employee and incentive programs. Some key findings from the report include:

  • The big box category remains at the top of the list for the second year in a row. Twenty-eight percent of total volume in gift card programs is tied to one of eight big-box stores.
  • Eighty-five percent of the volume in gift card redemption is for plastic cards versus 15 percent for digital gift cards.
  • The top 10 physical gift cards chosen are: Walmart, Amazon, Target, Home Depot, iTunes, Kohl's, various gas cards, Starbucks, Applebee's and Lowe's.

Plastic gift card redemption doesn't appear to be going away anytime soon. While slowly rising in popularity each year, e-gift card redemption still accounts for less than 15 percent of B2B gift card volume compared to 85 percent for physical gift cards, according to NGC.

Meanwhile, the biggest gift card categories with the largest redemption increase from 2015 to 2016 are: travel (39 percent), sports and wellness (35 percent), and department stores (25 percent).

Some other findings include:

  • Gift card categories with the biggest volume losses from 2015 to 2016 comprise the following: entertainment (10 percent), gas (7 percent) and home improvement (3 percent).
  • Walmart is the most popular plastic gift card reward option.
  • iTunes is the most popular digital gift card reward option.
  • Open-loop prepaid reward cards from Visa, MasterCard and American Express accounted for 25 percent of B2B incentive volume.
  • Biggest category increase: Department stores rose two rankings.
  • Biggest category decrease: Home improvement dropped two rankings.

The statistics were generated by monitoring gift card purchases from thousands of corporate clients in the loyalty, rewards and incentive markets generating several hundred million dollars in B2B gift card volume in the United States.

Gift Card Benefits

Gift cards offer a range of specific and universal benefits. "Gift card purchases are more memorable," Gale said. "They create a lasting reminder of achievement."

Other benefits, she noted, include:

  • Viral value: Employees tell each other how they redeemed gift cards.
  • More discrete: It's polite to mention non-cash awards.
  • True gift perception: Gift cards are not viewed as part of compensation.
  • Universal benefits: Gift cards combine the benefits of merchandise with the benefits of cash.
  • Guilt-free spending: Recipients don't feel guilty treating themselves.
  • More likely to improve work performance: Studies show that cash doesn't improve work performance; gift cards do.
  • Family support: Because the participant's family is involved in selecting awards, they're more likely to support the participant's goals.
  • Pleasing loved ones: There is a strong motivation to earn an award for one's significant other or children.

Meanwhile, Borst said that the major advantages of gift cards are:

  • Freedom to choose the reward you want at the price you want. You are not tied to the brand and style in the rewards catalog.
  • Ease of program administration.
  • Expedience in delivering the reward to the program participant.
The Do's and Don'ts

When it comes to the do's and don'ts of gift card incentive programs, one of the most important do's is "security."

"The prepaid space has been targeted for the past few years," Gale said. "Players in the B2B space must safeguard against multiple types of fraud, including impersonation, account takeover, card sequencing and social engineering (phishing attacks).

"The bad actors are constantly finding new ways to try to break in," she added. "IGCC has joined the fight and is actively working to equip our members with best practices and tools. In March, we brought together a panel of technology and security experts from various sectors of our industry. This was quite a shift in approach as we've seen many panels and sessions about fraud in the gift card space that are led by business teams. Wow! What a difference."

Gale added: "When the technical folks start talking to each other, the conversation takes a giant leap forward. Webinar attendees left with a wealth of information about what systems and strategies are being utilized today, as well as the direction we are headed, in terms of machine learning to detect and prevent fraud from happening."