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Recognizing the Need to Inspire
As the everyday-spend card craze subsides,
a return to inspirational gift cards is gaining
Incentive Magazine - October 2010
By William Ng
Last year, when Incentive polled leading incentive houses,
gift card suppliers, and recognition providers on their top
merchant gift card movers and shakers, the outcomes were
consistently national chains such as Best Buy, Home Depot,
and Macy's. National casual dining proprietors Applebee's,
Darden Restaurants (Olive Garden), Brinker International
(Chili's), and OSI Restaurant Partners (Outback) also proved
to be top commodities.
This year, they once again dominated, solidifying their
position as perennial favorites with employers and their
employees because of the wide demographic net they cast. The
top gift card lists revealed by National Gift Card,
Globoforce, Rymax Marketing, Maritz Loyalty and Motivation,
Hinda Incentives, and others didn't change much, if at all.
But just beneath that top tier of gift cards, market shifts
are occurring.
By many accounts, the heavy focus on so-called practical and
everyday-spend cards, such as gas and grocery cards, is
abating, and card denominations are trending upward. The
heavy range in per-recipient budgets is still $25-$100, but
suppliers report greater activity in the triple-digit dollar
levels. It has been a robust year for travel gift cards,
which employers are finding to be effective reward
solutions.
Industry players have noticed a return to more inspirational
types of gift card rewards. When the economy went downhill,
people needed things and employers were doing anything they
could to help them, says Jessica Brown, Rymax Marketing's
director of special projects. She says spending cards have
leveled off, and programs are back to focusing on what
employees want versus what they need.
Even at National Gift Card, whose largest business is
quick-service dining gift cards (Starbucks Coffee, Burger
King, Subway), President Adam Van Witzenburg says
there has been a pick-up in cards for high-end restaurants
such as Ruth's Chris Steak House. Last year, we saw a
lot of need items the Safeways of the world, Van
Witzenburg notes, adding, Bloomingdale's is starting to
come around again, and we're not getting as many requests
for $5 and $10 cards.
I think people are ready for a change after a couple of
years of gas cards, Colleen Kyllonen, gift card manager for
Carlson Marketing, put it more directly. Still, she says
incentive managers, especially of point-based programs, are
keeping practical-type, low-denomination cards to allow
participants to burn of miscellaneous and leftover points
in their accounts.
Yet Kathleen Lombardo, an account executive at Stoner
Bunting Gift Card Group, is seeing growth in both practical
and luxury-type gift cards. We know that consumers are
interested in value and practicality and also using
incentives to treat themselves, she says.
Another industry house, Hinda Incentives, provides open-loop
prepaid debit cards that are good anywhere, as well as gas
cards, simply because their customers demand them. We
understand we need to be a single resource for our clients,
notes Stacey Wilson, director of operations.
Critics of everyday-spend cards, like Derek Irvine, chief
marketing officer and head of strategy consulting at
Globoforce, and Mary Luckey, director of incentive rewards
at Maritz Loyalty and Motivation, are encouraged by the
renewed emphasis on experiential awards.
At the end of the day, by giving grocery cards, it
essentially becomes compensation, says Irvine. Recognition
is not about compensation. We're trying to appeal to
employees' need for esteem and encourage them to [reward
themselves] with something special. Irvine says at
Globoforce, corporate clients are still employing a mix of
gift cards for electronics, the home, and department-store
shopping, like last year. But he notes that since the
recession, which has beaten employee morale down, there are
lots of companies looking at recognition programs for the
first time€and gift cards as their tool.
While Maritz's top cards list is nearly identical to last
year's, the company has been working with clients on
creating multi-merchant reward cards also known as selective
merchant and selective spend cards€which are usually based
on shopping themes and restricted to stores chosen by the
employer.
Luckey argues that everyday-spend cards essentially amount
to cash, and people don't really reward themselves with
those. She notes, You are still going to see Macy's and
Kohl's, but we push clients to share workforce demographics.
If there is a large female workforce, we create a style card
that's good at 10 fashion retailers like Sephora, Macy's,
and Bloomingdale's where you can't spend it on gasoline. It
pushes employees to reward themselves and retains
inspirational value.
Travel Cards Are Breakout Stars
Nearly every supplier that spoke to Incentive remarks that
travel gift cards are gaining in the special-channel market.
Keith Fenhaus, president of Hallmark Business Connections,
which is focused on employee recognition and wellness
programs, says, Personal travel is a category that continues
to move, and clients are moving gift cards toward it.
Meanwhile, Van Witzenburg of National Gift Card notes
his company is increasingly active in travel gift cards:
We're getting asked a lot more about Marriott, Hyatt, and
American Airlines gift cards. Lombardo at Stoner Bunting
cites Omni Hotels and BedandBreakfast.com as having a strong
presence in its travel card volume.
Maritz's Luckey and Globoforce's Irvine chalk up growth to
the negative sentiment toward incentives in 2009. A lot of
group incentive travel was canceled because of all the
press, and employers began doing individual trips, Luckey
notes. In points programs, she says participants were using
their points for travel gift cards to take personal trips.
There has been more and more individual travel because in a
recession, nobody wants to be seen taking an entire team
somewhere on taxpayer money, Irvine notes, but employers
still have goals to achieve. Globoforce offers individual
travel solutions from Travelocity.com and Salem, MA-based
incentive travel specialist Journeymasters.
But Joyce Engberg, director of fulfillment for Carlson
Marketing, says aside from the perception sensitivity,
companies have found travel gift cards to be a new way to
inject freshness and luxury into points programs. They also
provide a less costly alternative to group travel. We've
seen a rise in travel cards in the last 3 to 4 months, she
notes.
Overall, though, many incentive suppliers notice companies
are recognizing the importance of practicing gift-card
giving in the post-recession era of the American workforce.
After companies did their downsizing, they realized that
they need to take care of their best employees, who are
doing more. Their budgets are now beginning to open back
up, says Hallmark's Fenhaus.
Irvine adds, Every employer is dealing with the reality of
the modern workforce, where there is less loyalty."
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