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Gift Cards Hit the Spot
October 08, 2007
Giving spontaneous gift cards can mean a lot
By Maya Dollarhide
The traditional holiday bonus check may be a popular way to motivate employees, but what about the other 364 days in the year? Many companies are using spot rewards in the form of gift cards—little tokens of appreciation for a job well done—and they're handing them out no matter what the season.
"I started my job two years ago, and I have received many gift cards, from $50 gas cards to Starbucks and iTunes cards," says Kim McCrossen, a senior associate for the PR firm PAN Communications, in Boston. "Using gift cards as rewards has really reenergized the staff and has definitely had a positive effect on morale."
PAN's spot reward gift cards have also had a positive effect on some commuters' wallets. "When gas prices began to climb during the summer of 2006, we awarded employee service with cards that could be redeemed at gas stations," says Cathy Rogers, the human resources director for PAN. "Because many of the employees commute by car, the cards were an instant hit," she says.
The statement "big things come in small packages" may sound clichéd, but in the gift card arena, it rings true. The gift card business is booming. According to a Mercator Advisory Group Report, corporate purchases of gift cards for employees are set to increase from a $9 billion industry to a $15.5 billion industry by 2008.
"Using gift cards as spot rewards is effective because of the flexibility and power the cards bring. The gift card is a good fit for a spot reward because it's small but has a great impact," says Talbott Roche, senior vice president of Blackhawk Network, a leading third-party prepaid card distributor, based in Pleasanton, Calif.
According to Blackhawk, clients have seen a tremendous return on their investments. "It's a unique reward in the sense that it's a gift that gives doubly. First, the recipient is surprised on the spot, and then later when they go to redeem their cards, they get to experience the delight of being recognized for being a good employee, once again," says Roche.
Aside from its gift card malls in 60,000 storefronts, Blackhawk also works with corporations to develop incentive programs that are designed to generate excitement in the workplace.
"We work with companies—big and small—who are looking for new programs that they haven't seen before on the market," says Roche. "People are looking for alternatives beyond retail merchandise, too."
This past July, Blackhawk partnered with Major League Baseball Advanced Media, LLP, to create gift cards that provide tickets to baseball games, concession items and team merchandise. "This [gift card] could be very relevant for someone who is passionate about sports," says Roche. "We really try to offer things beyond the traditional retail experience, as good as those are, like cards to use at Disney or Great America theme parks or the sports event cards."
Besides larger item gift cards, a smaller spot reward can be as sweet as a pumpkin spice latte or cappuccino. Starbucks, one of the most popular choices for a spot reward, sells cards directly to companies in denominations from $5 to $500, and offers co-branding options so that cards can be personalized with a company logo or message, a win-win situation for everyone—companies, the retailer and the employee—all of whom are branded on the card.
A new entrant to the incentive gift card market is Pinebrook, N.J.–based manufacturer's rep firm Rymax Marketing Services, which has just unveiled a new gift card division, carrying cards from retailers like Bloomingdale's and Pottery Barn, as well as its own card, redeemable for merchandise the firm carries on a special Web site.
For managers who prefer to let employees select their own reward, there are prepaid gift cards, such as a Visa USA or the American Express card. Corporations can buy cards in bulk in various amounts up to $1,000 or more.
"The cards are reloadable so, for instance, if an employee gets a reward every time he or she sells a car, the company could buy one card, and then the employee could use it again and again by having the company reload the card," says Steve Diamond, the vice president of prepaid products for Visa USA, based in San Francisco. "We work with Fortune 500 companies that use our card and smaller outfits on the other end of the spectrum. These cards can be made to fit all kinds of budgets, and we can help with co-branding, as well."
Dick Gaeta, president of Premier Incentives, an incentive firm based in Marblehead, Mass., says that prepaid cards have a special and positive impact for both the company giving the card and the employee receiving it.
"American Express and other prepaid cards are great because you can brand them with the company and the employees' names on the preloaded gift card," says Gaeta, "so every time they use the card, they subliminally are reminded of their company and their hard work that earned them a card. It has all the instant gratification of cash but it provides something tangible and different than just having money tacked onto your paycheck.
Dr. Todd Dewitt from Texas A&M University is the author of the upcoming book Leadership Redefined. Dewitt's work centers on interpersonal office issues, and his experience shows that spot rewards are superior incentives for a variety of reasons, but mainly because the award usually comes from a direct supervisor as opposed to a bonus that comes from the "company" or the CEO.
"These types of incentives are usually not given by the 'company' or by a distant executive, these rewards are given by the person with the greatest influence on the employee's morale and productivity—their direct supervisor," says Dewitt.
Spot rewards foster productivity and good will between both parties, and the high volume of companies purchasing gift cards illustrates their value, even though the package is tiny. "Gift cards from the best retailers are not little at all," says Roche. "They might fit into your pocket, but the power behind them is huge." g
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