by Alex Palmer | March 19, 2018
Most organizations use gift cards as tools for rewards and recognition. That was among the findings of a new report from the Incentive Research Foundation (IRF), which last week released "A Closer Look at Gift Cards," a survey of 300 industry professionals who run incentive or recognition programs for their companies. The survey looked at gift card budgets, sourcing choices, and purchase ratings, finding that in 2016, 69 percent of medium-sized businesses (with revenue between $100 million and $1 billion) purchased gift cards for rewards and 61 percent of large businesses (revenue over $1 billion) purchased them.

The approximate budgets were substantial, with mid-sized companies estimating they spent an average of $200,000 on gift cards for customers, $130,000 for sales, $100,000 for employees, and $290,000 for channel sales. Large organizations spent an average of $490,000 on customer gift cards, $440,000 for sales, $390,000 for employees, and $360,000 for channel sales.

Perhaps even better news for gift card merchants: A majority of companies in both categories expect their gift card budget to rise, with 52 percent of large organizations expecting to increase their gift card spending and 71 percent of medium organizations expecting the same. For both sizes of organizations, 17 percent expect to see their spending rise by 10 percent or more in the coming year. Just 2 percent of medium-sized organizations and 3 percent of large organizations plan to decrease their gift card spend.

But while it shows organizations clearly embrace gift card offerings, the survey also found that the incentive industry has its work cut out for it in raising awareness of its offerings. One-third of surveyed buyers had little to no awareness of the industry or what it can do for organizations and their reward and recognition programs. While gift card agencies from the incentive industry had the highest buyer satisfaction rating (followed by suppliers such as Blackhawk Network and Giftcard.com), agencies were also the least commonly used channels, cited by just 20 percent of mid-sized companies and 24 percent of large ones.

"While gift cards are the most omnipresent non-cash award in U.S. businesses, the research revealed that one-third of reward and recognition buyers have limited to no awareness that there is an entire industry of gift card suppliers and agencies designed to supply a variety of gift cards to incentive programs," said Melissa Van Dyke, president of IRF, in a statement. "'A Closer Look at Gift Cards' will be an important resource to raise awareness and convey the benefits of working with gift card industry professionals."

Respondents demonstrated they would likely gain value from assistance from agencies or suppliers, with organizations purchasing B2B gift cards for an average of 2.5 to three different audiences: employee (92 percent of medium businesses, 91 percent of large businesses), sales (82 percent and 80 percent, respectively), customer (56 percent and 53 percent, respectively), or channel (51 percent and 46 percent, respectively). 

The full results of "A Closer Look at Gift Cards" are available to download at the Incentive Research Foundation's website.