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PRODUCTS AND IDEAS THAT INSPIRE PERFORMANCE

Premium Incentive Products Magazine - Products and Ideas That Inspire Performance
Call On the Experts
IGCC Offers Solutions, Resources on Gift Card Industry

When people want to know more about a gift card provider, are looking for networking opportunities or need business resources, the Incentive Gift Card Council (IGCC) is a top choice for information.

"IGCC is the only trade association focused exclusively on providing awareness of gift cards as a viable option for use in premium and incentive programs," said Lindsay Gale, IGCC president and senior manager, partnerships, Tango Card Inc. "As a strategic industry group within the Incentive Marketing Association (IMA), IGCC members benefit from a wealth of resources and opportunities across the entire industry, from gift cards to travel to merchandise to solution providers."

The Minneapolis-based organization provides incentive industry insights, education and networking opportunities for gift card brands and their distribution, agency and vendor partners.

"IGCC members truly are the industry experts," added Ashley Harris, IGCC board director, senior director of strategic partnerships, National Gift Card Corporation (NGC), a Crystal Lake, Ill.-based marketer and supplier of gift cards for use in loyalty, incentive and rewards programs.

"When someone is looking for a gift card provider or merchant, you want someone who really knows the industry and can bring an array of knowledge and resources to the table," she said. "Our members pay attention to emerging issues, such as fraud and security, and are better prepared to provide solutions with this in mind. We're also on top of emerging trends, so we can help people look at where gift cards are going and provide solutions with an inherent longer-term benefit."

Dennis Borst, president and COO, Patriot Marketing Group, added, "The IGCC gives its members a forum to share common information, ward off potential fraudulent buyers, and create a singular stance in the incentive engagement world."

The Importance of the IGCC

"We (IGCC) are the heart and soul of the incentive gift card world," said Jim Atten, IGCC executive vice president, and vice president of sales, North America, RPG Card Services.

"We provide IGCC members the same benefit within gift cards that the IMA provides to all members. We collaborate across channels. We share resources, ideas and knowledge to improve the offerings," he said.

Thus, networking with IGCC members helps the organization to augment its product offerings.

"For example," Harris said, "one of our merchant partners had only e-cards, while at the same time, my customer that wanted this merchant only offered physical cards. Because of my IGCC connections, I was able to provide a solution for the customer."

IGCC membership brings together the leading players from all segments in order to learn about new use cases, build a supportive network, join forces in the battle against fraud and prepare for the future. Member segments include card providers, processors, technology partners, marketing agencies, distribution partners, card printers and more.

"During IGCC member meetings, we invite members and industry leaders to share success stories about a new use case or technology they've recently deployed at their organization," Gale said. "Together, we learn from their experience and discuss which metrics are most valuable to rate the success of the strategy. For example, at our meeting during the 2016 IMA Summit, we learned about referral marketing from an industry expert (Chris Duskin, vice president of marketing, Extole)."

Gift cards and promotional codes play a critical role in motivating referrals, thereby facilitating the acquisition of better customers.

"Did you know that customers referred to a good or service by a friend or family members have a 25 percent higher chance of converting their free trial to a paid subscription? …Or three times more likely to become an advocate themselves? … Have a 15 percent higher Net Promoter Score? …And a 15 percent larger average order value?" Gale added. "Now those are real-life stats our members can use to sell more gift cards. And, all were heard first-hand at one of our member meetings."

Program Planning

Another responsibility of the IGCC is to provide timely, relevant education and research for members to use in guiding program planning.

"Our benchmarking studies help us keep our finger on the pulse of critical topics such as services offered, marketing strategies, sales channels, card formats and product selection," Gale said.

The effectiveness of using prepaid cards to achieve a desired business result, such as driving loyalty and engagement, stems largely from the power of choice.

"This year we're partnering with the Gift Card Network to update our gift card benchmarking study. By joining forces, we maximize the potential to capture meaningful data that will result in actionable takeaways," she said. "The results from the 2017 benchmarking study were released at the new Flourish conference in April."

Flourish: The Growth of Branded Currency conference will focus on branded currency and target a range of retailers, from those with a national presence to smaller Midwest retailers and their technology service providers.

In 2012, 2014 and 2017, the IGCC partnered with the Incentive Research Foundation (IRF) and the Intellective Group to sponsor research to understand the buying dynamics within the B2B gift card marketplace. These studies help members understand shifts in incentive budgets and buying preferences over time.

"Our goal is to help our clients increase recipient engagement," Atten said. "Because we have the research and higher understanding of demographics and trends we're able to match those up with the right brands to create the increased engagement."

With so many emerging options, particularly in the digital area, it's important to know what's working and what's not.

"At an IGCC program I learned about a merchant's struggles and concerns with implementing digital. I was then able to advise my customer that used this merchant to slow their plans for conversion to digital while the merchant worked through their issues," Harris said. "It's that kind of insight that helps IGCC members provide the best advice and service."

Gale added that IGCC networking opportunities are the perfect blend of fun and function. In fact, according to a recent member survey, networking is the No. 1 reason that members join.

"IGCC-hosted receptions are a perfect place to meet a new business partner or cultivate an existing relationship. In this industry, everyone works together—we even see competitors discussing the future of the industry at our events," she said.

"And nothing can compare to good old-fashioned collaboration," she added. "The IGCC hosts three member meetings annually where there are opportunities to share success stories and discuss the hottest trends in roundtable discussions."

The Latest Trends

Research has shown that gift cards are the most frequently used reward in corporate incentive programs.

"The effectiveness of using prepaid cards to achieve a desired business result, such as driving loyalty and engagement, stems largely from the power of choice. Gift cards empower the recipient with the right to choose the item that most motivates them," Gale said.

The popularity of gift cards continues to grow, most notably in digital formats. And, this is happening across all types of gift card channels, even outside of B2B.

"Benchmarking surveys conducted in summer 2016 and spring 2017 allowed us to compare the percentage of sales from e-gift versus plastic in the following channels: third party, online and B2B channels. The percentage of e-gift sales grew across all channels: 5 percent in third party, 22 percent in online and 7 percent in B2B," Gale explained.

"Most recently, a new manifestation of prepaid cards is making big waves. Branded currency is popping up everywhere as well, and so is the headline topic of an all-new gift card conference called Flourish. Branded currency represents a shift in the philosophy of gift cards. They are no longer merely a gifting instrument. They are a doorway for retaining loyal customers, reaching new demographics, promoting uplift and return visits," Gale said.

Meanwhile, technology can facilitate company-wide use of gift cards in ways that weren't possible before.

"Our company works with a marketing agency whose client has over 1,000 stores across the country," Atten said. "Recognizing that communication from leaders is an important element of employee engagement, the company wanted to provide a simultaneous pizza lunch at all 1,000-plus facilities.

"This would allow the employees to enjoy their pizza while listening to a virtual presentation from the CEO," he said. "We were able to provide digital Pizza Hut cards to all 1,000-plus facilities so they could easily order their pizza for the company luncheon."

Borst added that the proliferation of e-card use across the board in incentive and promotional programs continues its upward trend.

"Five years ago plastic gift cards ruled the industry. Today, e-cards account for two-thirds of all of our gift card sales," he said. "With the growth in e-card sales comes the added advantage of delivering a reward to a program participant in hours rather than days or weeks."

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."

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

The IGCC, she added, will continue seeking these opportunities to raise the security IQ of members and equip them with the most recent strategies.

Another "do" is fulfillment excellence. Each gift card sent in a B2B program is earned. The recipient has done something to qualify.

"Perhaps they referred a good or service to a friend. Maybe they completed a walking challenge for their company. Or they could have taken a test drive at an auto dealership," Gale said. "If the reward doesn't arrive, doesn't work or doesn't meet their expectations, the whole experience is ruined. Every reward must 'work' every time."

Similarly, Harris said that fulfillment and presentation are an important part of the reward and recognition experience.

"The crumpled envelope or the delayed delivery leaves a bad taste in your mouth," she said.

"We had a customer whose provider was not meeting their fulfillment requirements. We were able to quickly and seamlessly switch the fulfillment to our company and we received very positive feedback when the fulfillment experience improved," she added.

Branded experience is another "do." "Make sure that the reward partners that you work with enable a branded fulfillment experience," Gale noted.

"When your company's brand is associated with the good experience of receiving and enjoying a gift card, the recipient will be more likely to remember the action that they took and talk about it positively with their friends and family," she said.

As for the don'ts, "Don't get comfortable," Gale said. "Keep asking clients, partners and recipients, 'What can we do better?' Offer a way for participants to provide feedback on the card selection and redemption flow. And respond to it! 'Set it and forget it' mentalities just won't cut it in modern reward programs. One simple way to keep participants engaged is to bring in new cards or add special offers from time to time."

In addition, "Don't stop looking for innovation," Harris suggested. "Your competitor could soon be 10 paces ahead of you. Always be thinking, 'What are you going to be doing to stay ahead of your competitors?'"

Plus, she added, "Don't stop monitoring either. Always know if your employee demographic is changing so you can continually fine-tune your rewards and recognition programs to maximize appeal and engagement."

Borst noted that the biggest "don't" is to remove your personal preferences from the reward options and only select a mix of gift card rewards that fit the demographic of your program's audience.

"When creating your reward mix, remember that less is more," he said.



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