Are Gift Cards the wrong choice for Corporate awards?

Gift cards have been gaining in popularity, for personal use but also for use in employee reward and recognition programs. Studies continue to show that tangible merchandise is a far better motivator, that delivers greater long-term results. Why then do some companies choose gift cards to reward their employees or customers?

According to a recent survey, the top 3 reasons that companies use gift cards as a reward in employee or customer incentive programs are 1) ease of administration, 2) broad audience appeal and 3) flexible redemption options.

Retailers love to sell gift cards because they keep any unredeemed dollars - and the unredeemed dollars are significant: over $3 billion in gift cards go unused each year. Rules for gift cards may vary; in the last 10 years, new regulations protect some gift card recipients. Still, some cards may have expiration dates, and some may charge fees for inactivity.

Critics of gift cards maintain that:

• Gift cards do not convey that much thought went into the selection of the reward
• Gift cards are often used for necessities (gas, groceries, etc.) and do not constitute a memorable reward
• Bankruptcies among retailers are increasing, leaving gift card holders with no value.
• Because gift cards necessarily have a cash value, there is no chance for the reward to be perceived as a higher value (a benefit of merchandise & travel rewards)
• Gift cards are so much “like cash” that psychologically they often get confused with or thought of as compensation
• Oftentimes cards are redeemed long after they are received and frequently by a family member instead of the recipient, offering no connection back to the company that issued the award.
• Recipients that may share the receipt of a tangible reward with friends and neighbors are less likely to talk about a gift card they received. This is known as “trophy value” and is an extra benefit to both the sponsoring company and the reward recipient.

What’s Better than Gift Cards?

Merchandise is the better choice for properly structured employee incentive, reward and recognition programs.

In addition to being more memorable and providing trophy value, merchandise rewards are proven motivators – especially brand name merchandise. Partnering with an Incentive Professional to help design an effective incentive, rewards and recognition program is a first step. An experienced professional can also guide you to a mix of brand name merchandise rewards that will appeal to your specific program audience. Merchandise offers the opportunity to choose reward brands that share the same attributes as your company and can reinforce marketing messages. Technology allows for enterprise-wide programs that can be fully administered online, including reward selection and fulfillment.

To get started on your effective incentive, reward or recognition program, contact us today!