Engagement? It’s In The Cards!
By Allan Schweyer, Chairman, Enterprise Engagement Alliance
Prepaid Gift Card usage by consumers and organizations in their incentive, reward and recognition programs has soared over the past decade. While gift certificates have been in use for generations, their colloquial image barely resembles the sophisticated gift card industry that thrives today.
In 2012, gift cards – often referred to as “prepaid” cards – became the most popular gift among consumers shopping for friends and relatives and the tool of choice for businesses hoping to motivate employees, customers and partners. Recent research conducted on behalf of the Incentive Research Foundation (IRF) – both through a review of past studies and from the results of two surveys – revealed several important findings:
- Prepaid cards are now the most frequently used reward in corporate incentive programs
- Prepaid cards are being used as incentives across the spectrum, from spot rewards to holiday bonuses and for merchandise, dining, travel and entertainment
- So-called “closed loop” cards (used at a single store or retailer) are still the most common type of prepaid card in incentive and reward programs, but they’re losing ground to open loop cards.
- All prepaid cards, but especially open loop cards, are near-cash substitutes. Open cards can be used virtually anywhere with the same ease as cash or personal debit cards. Even though cards of any kind can be redeemed online or exchanged on secondary markets for other cards or cash, card recipients demonstrate a strong preference for cards over cash
- Prepaid cards are among the most popular gifts for recipients (whether as gifts from friends and family or as rewards from employers and other organizations). As above, prepaid cards are much more popular among recipients than cash. A full 44% of the study’s respondents stated that prepaid cards are their favorite type of gift or reward. When offered a prepaid card or equivalent cash, five times as many respondents chose the prepaid card
- The majority of incentive planners believe prepaid cards can be more meaningful, personal and impactful than cash; almost half believe that, dollar for dollar, they are the most effective reward available. More than 75% believe that they’re among the most effective of all rewards – especially in driving loyalty.
These findings are important from an engagement perspective. If tangible rewards are to have a lasting impact on employee or customer engagement, they have to create memories and associations. The research reveals that cards, unlike cash, do appear to create connections and memories. More than two-thirds of respondents said they remember what they used their cards for, and almost one-third said they associate it with the giver.
As Bob Dawson, an incentive program planner interviewed for the research report said: “Branded gift cards are more memorable than cash when they’re aimed at what the recipient wants rather than needs. A gift card for a new golf club has to be spent on a golf club, so it’s guilt free. Cash can be spent on groceries, and probably will be.” Thus, gift cards, though almost entirely as fungible as cash, seem to create more impact as part of reward programs.
Still, there is some skepticism surrounding the growing use of prepaid cards as rewards and as gifts. And while it’s easy to understand why – gift cards are “easy,” impersonal, too much like cash, etc. – the evidence pointing to their effectiveness cannot be easily dismissed. Recipients can proudly show off prepaid cards, but more importantly perhaps, prepaid cards offer them a guilt-free opportunity to indulge. Organizations like cards because they can brand and personalize them. Incentive planners can use them in thoughtful, personalized reward programs. Unlike cash, prepaid cards can leave an emotional imprint when selected and presented carefully.
According to the IRF’s research and a growing body of both academic and applied research over the past decade, prepaid cards aren’t only the reward of preference among givers and recipients, they’re also among the best drivers of positive behaviors and outcomes. Though prepaid cards are ubiquitous and sometimes even annoying (our wallets and purses are already crammed with cards), they almost certainly have an appeal that goes beyond their cash equivalency.
Flexibility And Choice
Bottom line: Carefully selected cards can create the memories and associations that generate more ROI than their cash equivalent. At the same time, prepaid cards offer many of the benefits of cash in terms of flexibility and choice.
There may be no need for more explanation concerning the preference of prepaid cards over cash than to acknowledge that people respond to both rational and emotional drivers. The IRF’s research makes it clear that prepaid cards, along with cash, merchandise and travel, are now among the most important and essential ingredients of incentive, reward and recognition programs designed to engage employees, partners and customers.
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