by Deanna Ting | November 18, 2013
A recent consumer survey of more than 1,400 people demonstrates the exceedingly broad appeal of prepaid card rewards for building consumer loyalty. Across the board, respondents said they preferred prepaid gift cards as rewards for a purchase.

“Consumers go gaga for the built-in spending flexibility of prepaid cards,” said Theresa Wabler, global director of marketing for Parago. “But this appeal extends to marketers as well. As our findings demonstrate, prepaid cards equal cash in consumers’ minds. So, a retailer can effectively market the prepaid card reward as cash.” 

The September survey, which was conducted by incentives and engagement company Parago, consisted of a 23-question online survey that was sent out to consumers between the ages 18 to 60 across all industries, and also looked at consumer preferences in relation to six different shopping scenarios/categories. 

When asked how they preferred to be rewarded for a purchase, in general, respondents overwhelmingly chose prepaid gift cards in denominations of $25 (45 percent); $50 (51 percent); and $100 (56 percent). The second-most preferred reward across the same denominations was an Amazon Gift Code: $25 (38 percent); $50 (32 percent); and $100 (27 percent).

The survey also examined the power of certain rewards in motivating a consumer to make a specific purchase. In one scenario, for example, respondents were asked to choose whether they would purchase a new set of tires from different retailers, each one offering a different type of reward but charging the same amount for the purchase. The majority of respondents from each income category (ranging from $19,999 to $200,000) all said that having a $50 Visa, MasterCard, or Discover prepaid card as a reward would make them more likely to purchase from one retailer over another. Across all income categories, of which there were five, more than half of all participants said that a prepaid card was their reward of choice. Other possible rewards included a $60 gift card to the tire retailer; a free year of oil changes after rebate valued at $120; and $300 in discounts and coupons for future auto-related services.

Parago analysts believe that consumers preferred the $50 prepaid card over the $300 in discounts because or differences in perception. “Consumers view prepaid cards as cash in hand,” explained Wabler. “The $300 in discounts and coupons is not as “real,” because its value depends on other variables, like the regular price of the services the discounts apply to. If I save $300 on services at one shop that would have cost me $300 less at another auto shop, then the value of the discounts is really $0. So you have a reward that’s a definite $50 versus one that might turn out to be $0. Add our slow economic recovery into the mix, and the question is almost a no-brainer.”

Parago’s Wabler also noted that prepaid cards, unlike rewards paid via check or PayPal, “proved a tangible, branded benefit.” “For many retailers, this branding drives between 30 to 60 percent spend back to their stories — that’s more money spent with the same retailer, without an attached offer, and without additional expense,” she said. “However, many prepaid marketers choose to attach coupons and other offers to the card delivery vehicle, driving even more additional spending, and further enhancing the brand experience.” 

The study also found that two out of three respondents preferred physical gift cards over digital cards. Additionally, two times more car buyers prefer a $200 prepaid card over a $250 instant discount; one of out of two consumers will pick a cable, Internet, or utility provider that offers a prepaid card reward; and a prepaid card reward is four times more appealing to a potential hotel guest than a 50-percent discount for the third night’s stay.