BI Says Gift Cards Are Not Gifts
By William Ng
August 2, 2011
The paper, entitled "Gift Cards Are Not Gifts," draws on several academic studies to restart an old incentive industry argument: whether gift cards--and particularly cash-value debit cards--are more like merchandise awards which has trophy value, or like cash, which does not.
Authored by Tim Houlihan, vice president of reward systems at BI, the paper goes on to argue that because they convey specific dollar values, gift cards influence recipients the same way that cash and cash-equivalents do. Houlihan is a 25-year veteran of the industry.
Citing information from several academic research sources, Houlihan writes that gift card and debit card recipients in corporate incentive and recognition programs consistently spent their awards on basic needs and utilitarian goods as opposed to luxury merchandise items. Such tangible, non-monetary items as a big-screen HDTV, he argues, provide the most memorable reward experiences. Houlihan also cites research by Chicago’s Booth School of Business that states that lower income incentive and recognition program participants tended to supplement their gift cards, overspending the value of the cards with their own money, on purchases.
“To use a gift card to spend on what we would normally spend on, there are no ‘special dinners out on the company’ to link the experience to the reward,” Houlihan writes, in reference to using a gift card for a evening out with loved ones or friends. “If the experience is not seen as a reward, it will not be linked back to the sponsor/employer.”
He goes on to write, “The things that make a reward a reward, rather than just additional income, are lost on the recipients. The program sponsor fails to benefit from [its] investment.”
The BI white paper can be downloaded at www.biworldwide.com
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