Feature Article - May/June 2018

Inside the IGCC

Gift Card Trends & The Incentive Gift Card Council

By Rick Dandes

New developments in how businesses are employing gift cards as key elements in their consumer and employee incentive and reward programs have made the information provided by the Incentive Gift Card Council an indispensable resource for many organizations around the world.

The IGCC offers three major benefits, explained council President Jim Atten, who is also vice president of sales, North America, Shell Gift Card/IPG Card Services. "Education," he began. "We bring together experts who share information on the incentive gift card industry that is relevant to members' businesses. In fact, it's really relevant to everybody's business. It's great to have a lot of smart minds come together to say, 'How do I use this information to move my business forward?'"

Second is networking. Atten said the biggest business benefit of the networking events IGCC hosts is that you get to talk to your peers in an unstructured format. You can share success stories, pain points and resources.

Promotion is another benefit, Atten said. "The IGCC invests in great research in collaboration with the Incentive Research Foundation (IRF) and we share the research with our members to help them in their businesses. We're also in the development phase of a corporate outreach plan, in alignment with the IMA's strategic plan. We want to take our industry knowledge about the business benefits of incentive programs and the role of gift cards out to the customers who use our products and services. We want to help grow the incentive industry pie from $90 billion into something larger."

The IGCC, added Todd Tomlin, global head gift cards, Hotels.com., is the only trade organization in the United States that focuses solely on promoting gift cards as a viable mechanism for use in employee, loyalty and customer engagement incentive programs, along with the technology platforms, distributors and consulting agencies that support this B2B distribution channel for gift cards.

"The IGCC has been an important resource to me in my gift card sales role," explained Len Sadek, CPIM (Certified Professional of Incentive Management), director, gift card sales and marketing, Landry's Inc. "My membership provides a community of peers to share ideas with, discuss current trends in the industry, and advise on issues and opportunities I am seeing."

The IGCC member meetings, Sadek said, are a great opportunity to network with current and potential clients. "It has helped us secure incremental sales from reward-recognition providers, incentive houses and fulfillment companies. If we are looking for a new service provider for a specific area of our business, I can find those companies there as well."

The industry research updates are invaluable to the gift card business, Sadek continued. "They help us spot trends, provide information I can share with our management team, and it helps in our business planning. The IGCC is also a great resource for new people entering the business. I will be bringing one of our new team members to the next IGCC meeting."

Continuing Growth

The gift card industry has come a long way since those early days in the 1990s, when Blockbuster and Nieman Marcus began offering the first gift cards as incentives. The most recent survey, in 2017, by the Incentive Research Foundation resulted in these findings about the business, and help explain the surge in gift card growth:

  • A majority of U.S. businesses now choose gift cards as a reward tool for a number of key groups, such as sales, channel, employees and customers: 61 percent of large companies buy gift cards for an average of 2.4 different reward/recognition audiences; 69 percent of mid-size companies buy gift cards for an average of 2.8 different reward and recognition audiences.
  • Business investment in gift card rewards is growing: On average, the mid-size firms in the study spent $450,000 per year on gift cards across all programs, the largest firms are spending more than $1 million; 71 percent of mid-size and 52 percent of large companies say their B2B gift card spend is increasing.

When gift cards are included in incentive program catalogs, said Ira Ozer, CEO, president of Engagement Partners, Chappaqua, N.Y., "the majority of participants redeem for them, often 75 percent or more depending on the type of program, audience demographic, gift card brands and denominations offered."

They do so for several reasons, Ozer said, including:

  • Value: They understand the dollar value of them and what they can buy.
  • Choice: They know that they have thousands if not millions of choices.
  • Simplicity: They can redeem it now and then use it later whenever they want, and they don't have to browse through a catalog of merchandise and research the items available.

For program sponsors, the primary downside is that incentive industry research indicates that performance improvement best occurs when participants focus on tangible award they aspire to achieve, vs. cash or cash-denominated gift cards, Ozer said. "For incentive companies, the downside is that there is very little profit on gift cards and no value-added service provided by curating a special catalog for the participant audience. And neither benefits by the breakage of unspent gift cards.