Feature Article - May/June 2018

Inside the IGCC

Gift Card Trends & The Incentive Gift Card Council

By Rick Dandes

Trends in E-Cards

Atten cites the growth in e-gifting as a major trend in the business, and Dennis Borst, a 27-year veteran in the gift card business, president of Patriot Marketing Group, and a charter member of the IGCC, concurs.

"E-cards changed the entire landscape, and anybody who cannot deliver a virtual card in a matter of hours directly into an e-mail box or a phone is behind the times," Borst said. "Because that is where the trend is."

When Borst started working with gift cards, delivery would be in seven to 10 days. Now, Borst said, "we are dropping them into e-mail boxes in a couple of hours. In this day and age, the way the world is, where everybody wants instant gratification, delivery time of a reward is important. That is the single biggest change in the gift card and reward business over the past five years."

Retailers and restaurants have figured out redemption from mobile wallets, and there is great adoption in that regard, Atten said. "As the workforce changes, the mobile payments technology continues to expand, and as incentive gift card providers we have to be able to provide that or we're going to lose share."

This is not to say that plastic is dead, Atten said. "It's still important and even more important in the incentive world because it is the brand ambassador and represents the reward for customer or employee behavior that your company is striving for."

Some major brands, particularly entertainment venues such as casinos, are finding creative ways to merge loyalty programs and gift cards. They host special events where members can earn a gift card to their favorite retail merchant by attending the casino event and swiping their loyalty card.

"As incentive and loyalty programs grow in size and sophistication," Atten said, "it becomes even more important to work with incentive and gift card providers who have the expertise and the best industry connections to all of the resources you'll need. This helps to optimize results and save money on program design and implementation."

"Security has become paramount," Atten noted. "The security required for handling millions of dollars of gift cards is important. IGCC members and their suppliers have great security controls and practices in place that you don't get when you buy your gift cards at the grocery store."

Instant is a major movement "we are experiencing in the gift card industry," said John Hornbogen, CPIM, IMA president, and vice president business development, RPG Card Services. "Consumers love to engage in loyalty programs. What consumers don't love to do is wait for their rewards. Digital e-gift cards provide a solution that allows you to deliver rewards in real time.

From a gift card supplier perspective, Sadek added, "we have seen a great deal of consolidation in the industry. Many of our clients are consolidating fulfillment of their physical and digital gift cards through companies that offer more specialized and automated solutions. I believe this provides our clients with increased efficiencies and the ability to focus on what they do best in the incentive and reward marketplace. In turn, it makes us become better suppliers, with a focus on our brands."

In a more competitive marketplace for employees, Sadek said, incentives are needed to help recruit and retain employees. Employers and employees are looking for instant gratification and the new digital delivery capabilities for gift cards fit this trend. "This includes user-friendly mobile gift cards that can be easily redeemed at our restaurants."

Gift card mainstay brands such as Amazon, Starbucks and fast-casual dining remain a trend, Tomlin said. However, a continued focus on wellness and experiences show travel, spa and fitness categories growing quickly. To meet the demand of this trend, incentive program buyers need both the everyday consumer gift card brands alongside the likes of Spafinder, Hotels.com and travel-related brands.

Demographics a Consideration

You can appeal to all generations in the workforce with careful selection of the gift card brands you choose to offer, Atten said. You might focus on more of the experiential with travel or dining for those who are highly mobile or have more time for leisure, while home improvement stores may be more appropriate for those who are the life stage where they are buying homes and starting families.

The beauty of a gift card program, he said, is that you can also find brands that transcend all generations. People of all ages like coffee and enjoy dining out or going to a movie.

Hornbogen agreed with Atten. "For sure, adapting is the key," he said. "Historically, consumers were always looking for bigger, better and faster. Today it is now bigger, better, faster and easier. People will always gravitate to do what is easiest."

An illustration of that, said Borst, "is that years ago, people would say, 'yeah, I was given a gift card and I was walking through a mall and saw something I wanted to buy, but the gift card was at home.' Well, if you drop the gift cards into their e-mail or smart phone it doesn't prohibit them from being used for an impulse buy. They have the gift card with them all the time because everybody travels with their phone."

This is true across all generations, Borst said. "The world has turned into 'I have to have it now' in every facet of life so why would it be any different in a reward situation?

"Here is where I've noticed a really big change," Borst continued. "Most of the credit card companies have loyalty and rewards programs. You charge something to the card, you earn points, the points accrue, you redeem points for rewards. In many cases, those rewards are gift cards. Those cards used to be plastic. But the evolution has taken place to where those credit card loyalty programs are buying virtual cards now. Because even their reward earners are demanding a quicker delivery of their reward. Sometimes these reward earners want to redeem while they are in a store."

"We have to be more technology-focused, Sadek insisted. "This current workforce is following the 'go mobile' trend of the general population. Landry's and our third-party gift card clients need to cater to the growth of these consumers. That means providing seamless and user-friendly mobile delivery and redemption. They want to be able to send their gift card from one mobile device to the other, check gift card balances on their device, and create fun delivery for their recipient."

Absolutely, Tomlin agreed. "Specific to travel, according to the '2018 Generations on the Move' study conducted by Expedia and The Center for Generational Kinetics, 65 percent of millennials are saving toward travel compared to 57 percent of other generations combined."

In total, Tomlin said, 74 percent of Americans prioritize experiences over products for things. Program managers need to ensure they have gift cards that meet the experience need, such as travel or dining out, as much as product-based, such as apparel and electronics.