Guest Column - September/October 2018

Setting the Record Straight

A Brief History of the Gift Card Evolution in the Incentive Rewards Market

By Dennis Borst

In a recent article I read a statement crediting Neiman Marcus and Blockbuster as being the first "gift certificates" in the B2B Incentive Channel. With all due respect, and I realize no harm was meant, but this was inaccurate.

The first gift certificate to launch in the incentive channel was JCPenney around 1980. Sears followed closely, soon to be joined by Lillian Vernon, Service Merchandise, Spiegel and Eddie Bauer. It was these early entrants who blazed the trail for other retailers and eateries to enter our space in the late '80s through the mid-'90s.

The second wave of gift certificate players that made an impact were Foot Locker, TJ Maxx, Marriott, Hyatt, Red Lobster/Olive Garden, Macys, Blockbuster and Sharper Image. The pioneers attached to these early-entry retailers were Rick Blabolil, (Marketing Innovators) for JCPenney, Tom Gilbert, (Consolidated Group, now with Royal Performance Group) for Sears, Mary Manor and Lauren Haus at TJ Maxx, Rich Killian at Olive Garden/Red Lobster (Now with RK Incentives), Steve Maselko at Marriott, Scott Walker at Hyatt, Ross Sawai at Blockbuster, Mike Ruege (The Incentive Group) for Spiegel and Eddie Bauer, Andrea Lightman at Lillian Vernon, Cary Kuykendall at Service Merchandise, Roger Bensinger at Sharper Image, Diane Freeland at Macys (East) and me, who brought Foot Locker into the marketplace, rounding out the group. Another original player was Dayton-Hudson Department Stores. Today, you know this company as … Target. (I apologize if I forgot someone.)

I'm thinking these names and companies probably may not resonate with those currently charged with marketing their brand of gift card, or should I say "branded currency." But they should. Every baseball player knows who Babe Ruth, Mickey Mantle, Willie Mays and Hank Aaron are, and I'm suggesting the Incentive Gift Card Council (IGCC) should remember its pioneering "Hall of Famers," too. I feel it's important we know and understand our roots. I have come to realize that the products people in the Incentive Manufacturers & Representatives Alliance (IMRA) have a much better sense of their history and respect for the pioneers in their channel than we do in the gift card channel.

It is imperative that our history be told and the record set straight as to whom current IGCC members should thank for what is the state and acceptance of gift cards in the incentive market today.

You need to know that gift certificate "people" were not well received or respected by the traditional incentive companies, travel and brand name premium products reps. To some extent this still holds true today. It was a tough road for the early gift certificate pioneers. We had to fight for every inch of ground we acquired. None of the existing associations would accept us as members, forcing us to create our own group, originally named The Association of Gift Certificate Suppliers. This inaugural group was made up exclusively of gift certificate retail suppliers and did not include any of the incentive houses or gift certificate aggregators we know of today. Then the Incentive Marketing Association (IMA) made the scene, and when the gift card people joined we were known as the Gift Certificate Council. Later, with technological advances (paper to plastic), the name of the group named changed to IGCC.

Back in the day, "gift certificates" were printed on paper stock with little or no security features whatsoever. At that time, laser printers weren't available commercially so we didn't have counterfeiting issues to deal with. It wasn't until the mid-'90s that we had plastic gift cards. And it was the late '90s by the time magnetic strips appeared on the plastic cards.

Another interesting fact was that once we jumped into the consumer loyalty / promotional market, it was common for a single gift card brand to drive an entire program. For years I did the AT&T True Rewards program with Foot Locker as the sole reward. But with more and more gift card options coming into the market, choice became the mantra, and thus we were also beginning to grow in popularity due to "choice" and expedience in delivery. We were delivering plastic cards in a seven- to 10-day window, while products were still taking four to six weeks for delivery.

The newly accepted gift card as a corporate reward did create a few problems, though. One being that every retailer thought their gift card would do well in our market. That just wasn't the case. The key to a gift card's success in this market comes down to a few key attributes:

  • Wide demographic appeal
  • An aspirational brand
  • Expedient delivery to reward recipients
  • Ease of redemption options (gift card formats, plastic and e-card; retail and online redemptions; no restrictions on redemptions)

Many of the gift cards that jumped into the market trying to catch lightning in a bottle didn't meet these criteria and thus failed. Only over time did the preference for gift cards grow to be where we are today: a highly preferred reward in both employee- and consumer-based programs. Steady performers beyond the online mega-giants and big box stores are specialty retailers, restaurants, personal services and entertainment. A major reason for this growth in gift card preference, beyond the broad choice, is the expedience of delivery. Once the e-card was created in the early to mid-2000's, retailers could cut their delivery time from days to hours. This is an "I want it now" society and virtual cards satisfy that need. No other reward options can come close to the immediate delivery capability of an e-card.

But in an effort to get on track again and away from the so many positives gift cards provide as reward options, let's journey back to the pioneers who made what is being realized today possible. It is imperative that our history be told and the record set straight as to whom current IGCC members should thank for what is the state and acceptance of gift cards in the incentive market today. And let's not forget the naysayers in the travel and merchandise sector, who I'd like to think, can now look back and credit the "gift card people" for helping to grow the size of the incentive pie to the enormous market it enjoys today.

I hope you'll find this article to prove helpful in understanding the legacy of the gift card evolution in our business.

A special mention and thanks to a select few who helped me with this endeavor to ensure the facts were accurate: Deb Merkin, Gift Card Partners; Rich Killian, RK Incentives; and Brant Dolan, Quality Incentives.

Dennis Borst has more than 30 years in the media, promotions and incentives world. He has extensive experience with driving customer behavior, increasing employee performance and establishing brand identities. Dennis has worked with General Motors, Ford, Buffalo Wild Wings, Lexus, and Foot Locker, to name a few of his experiences. Since 1995, he has managed the B2B gift card program for Foot Locker and Champs Sports.