Companies that include gift cards in their incentive programs are realizing remarkable results and finding new technological solutions that help manage their programs and decrease capital costs. We’ve spoken to companies who are seeing an ever-increasing percentage of their consumer reward points going to gift cards, and recently have seen a huge increase in the demand for digital product. There are many reasons why gift cards are a popular and effective motivator.
Gift cards are well-understood. Still the No. 1 gifted product in the U.S., gift cards are a convenient way to get access to a wide variety of products and experiences. Participants in incentive programs can choose from the brands available, and then can go to the merchant’s site to redeem for whatever they want. Issues with choosing product like choosing the right size, color or style are eliminated with gift cards. And fulfilling complex experiences such as airline, hotel, movie tickets, etc. are made simple and quick.
Digital gift cards are gaining popularity. Digital gift cards are great for self-use, which tends to be the purpose of an incentive end-user receiving a reward. Allowing a digital gift card option adds immediacy to the reward that is highly desirable to customers. Historically, digital gift cards have been difficult to redeem, especially in restaurant locations. As merchants continue to adapt and catch up to technology, these issues are being addressed. Mobile wallet and digital gift card redemption in brick-and-mortar retailers and restaurants are at an all-time high, and continues to grow. At the same time, the investment in redeeming digital cards is inspiring merchants to also invest in their own digital offering, which further drives consumer acceptance and ease of use.
New technology partners are replacing self-management. Incentive firms used to have to source, manage and purchase bulk physical gift cards upfront in order to maximize discounts and meet demand. This tied up a large amount of capital, not to mention space in secure areas. Orders for new cards were frequent, and kept the supply team very busy. This resulted in less variety in incentive programs as trying out new brands was risky, costly and time intensive. This process also reduced redemption options to the inventory on hand and added weeks to the end user receiving a reward, which is just plain frustrating (imagine redeeming a $2,000 award and receiving 100 $20 physical gift cards three weeks later).
New digital aggregators, companies who integrate and build delivery technology for digital gift cards, are on the rise. These companies negotiate a rate based on their overall volume, then pass discounts to their clients. They then offer those gift cards to incentive clients “on tap,” that allows the incentive house to only pay for what they use. By utilizing a technology provider, incentive firms get access to a library of brands while outsourcing the technical components of delivery, activation, merchant relations and payment. Recently, new competition has driven margins for clients up and operating costs lower, making utilizing
a technology provider easier than ever before.
Merchants are investing in their gift card programs. It can be confusing why merchants spend so much time and energy promoting their gift card products. However, most merchants have realized that by pre-selling reserved funds, they can drive product sales, incremental visits and “lift,” the amount above the gift card that is spent in the store. Merchants have a better understanding than ever that these benefits are a way to increase their market share. Due to the complex and highly competitive retail atmosphere and the increased confidence in online shopping, brick-and-mortar merchants are more willing than ever to provide promotional discounts and work creatively with their buyers to drive their gift card sales. This provides new opportunity to those incentive houses that utilize gift cards to drive advertising revenue and offer more promotional deals to end users. Once again, end users are the big beneficiaries.
Gift card technology allows new consumer value. Delivering gift cards digitally allows a whole new level of consumer experiences. While advanced experiences are not typical yet, innovative brands and technology partners are starting to push the limits with animation, enhanced gift card products and unique offerings. Creating these experiences is complex and brand-specific, so integrating with a technology partner who is driving positive consumer benefits is beneficial.
Companies shopping for incentives and participants in those programs expect gift cards. Due to gift cards’ consumer popularity, one of the criteria for finding a new incentive company is whether they offer gift cards, how many brands are offered, and how they are delivered. Incentive companies historically offering just physical products are starting to realize that having a gift card offering is essential to being competitive in this progressively digital market.
Gift cards provide the flexibility and versatility of cash, yet studies have shown they are remembered longer than cash awards. Staying power is one of the primary benefits of non-cash rewards, and gift cards deliver that effectively. Through their choice of gift card, program sponsors also can ensure that recipients use the card for a memorable reward rather than an everyday expense. They provide for guilt-free spending and the opportunity for recipients to include family members or others in the experience.
Click HERE to download the Incentive Gift Cards Directory.
