by Leo Jakobson | September 25, 2013
Every year, Incentive gathers a group of experienced professionals from every sector of motivation, recognition, travel, and rewards to talk about the state of the industry. On June 20, 12 participants gathered at the Ocean Reef Club in Key Largo, FL, for some sun, sand, and serious conversation. Topics this year ranged from government regulation and return on investment to gamification and the return of luxury. 

What follows is a detailed look at their discussion regarding gift cards. 

INCENTIVE: How is the gift card market doing?

IAN O’BRIEN, president and CEO, I’m going to throw a couple of things out. First, what’s happening in e-cards. As everybody knows, they’re moving to digital and it’s happening at an accelerating pace. Digital gift cards are becoming pervasive. The big roadblock is in-store redemption — you have digital gift cards out there but they can only be used on the website. That’s not necessarily an appealing incentive. So, it’s driving a lot of these bricks-and-mortar retailers to fix the in-store redemption portion of their digital gift cards. Ultimately gift cards aren’t going to be pieces of plastic. It’s going to be something where you just get a code somewhere and you go do your thing.

The other interesting thing about gift cards is the fact that they’re becoming smaller, and becoming the micro rewards. People will get $5, $10, and $25 rewards that are viable micro incentives, that are about rewarding behavior. If you combine the fact that Millennials are kind of driving this digital Internet age, whatever shape or form it ultimately takes, gift cards are at the center of that.

MIKE MAY, president, Spear One, and trustee for the Incentive Research Foundation (IRF): Do you feel like that’s really an incentive? My take is that a $5 or $10 gift card just feels like a discount coupon. You don’t get enough of the regular purchase to feel like there’s an association with the award.

O’BRIEN: I think it depends. One of our customers is Taco Bell, and we offer a $10 incentive to employees. When a customer comes in and buys five tacos, they just ask them to bring a friend in next time. In that market, $10 means a lot.

MIKE DOMINGUEZ, senior vice president, corporate hotel sales, MGM Resorts International; chair, Meeting Professionals International (MPI); executive committee member, U.S. Travel Association: I think it’s more about recognition than an incentive, if you can separate the two. I do something like what you’re talking about. We have an events group and when they get a seven of seven [rating] back from a customer, I send them a thank-you note and a Starbucks card for $10. And to somebody making $40,000 who goes to Starbucks two or three times a week, it’s impactful. More than anything, they thank me for recognizing them. And without that opportunity, I wouldn’t be recognizing them until the end of the year. Sometimes they’ve told me it’s that little shot in the arm they need because they’ve just been hammered while doing a program. 

MAY: I get your point about rewards like Starbucks where, for $10 they can get something. You reminded me, we’re doing the exactly same thing internally. But there’s a card with a written message that comes with it. What you see is the card later, pinned to their cubicle. It’s the words of recognition with the award that have a lot of caché.

O’BRIEN: The other element of it is about earning those micro rewards and saving them. So then it kind of goes back to, you know, $10 doesn’t mean much, but I accumulate them and then it really creates value. We provide all the mechanisms to earn these micro rewards and roll them up and what we see is that a lot is people do save their rewards up. But then they’ll save up and they’ll have $500 of accumulated value. Then they’ll go out and use gift cards as a way to distribute that reward out to their social community. So, I earned $500, but I’m only going to get a $100 Macy’s gift card, and that’s where I’m going to go. But I’m going to go give my husband a $100 Golf Smith card, and my son $50 at Game Stop. That’s what I view as the ongoing cool part of gift cards in the incentives space, because it creates that ability to connect to someone’s local, personal, social world. 

PAUL GORDON, vice president of sales, Rymax Marketing Services: That’s one reason why the gift card is so much more powerful than cash. It is because [recipients] say, ‘This is great. I’ll give this to so-and-so to thank them.’ 

RANDALL: The IRF did and, when we talked to the program participants who are receiving the gift cards, they chose a card over cash by seven-to-one. That’s something in an industry that always battles the cash versus non-cash perception [that most participants desire cash, but that it is not as effective a motivator as non-cash awards]. 

DOMINGUEZ: We also heard from our employees that if you give them cash it usually goes for something that’s a household need. To pay a bill, grocery bill and the card let’s them pay for something or do something that they normally wouldn’t just spent the cash to do. 

RANDALL: In terms of the goods and services that the gift cards are redeemed for, 65 percent were for restaurants and entertainment, 54 percent retail and online [merchants], 37 percent for electronics, and then 34 percent for travel. Gas was only 29 percent. 

GORDON: We do a fair amount of gift cards. I think they’re a great barometer in terms of the economy and the recipients. For the last several years we saw a lot more use of restaurant cards, and we saw a huge upswing in gas cards. 

ANNMARIE MOLINELLI: What made our people tick was the Amazon gift card that we offered. [We had] an iPad bundle, and they didn’t want that. They said if they wanted to order it they could buy it themselves or use their Amazon cards. We also had travel vouchers. I would say 75 to 80 percent of our team that participated in the program went for the Amazon card. 

INCENTIVE: What are you seeing in terms of individual incentive travel?

MOLINELLI: We offered it through our program. They did like it. They liked the Amazon cards better. But those who used it absolutely loved it. They went and then they spread the word. They took pictures. They sent them back to us. It was pretty amazing. It’s the next best thing next to a top producer trip, [but] without the peer-to-peer recognition. It gives them ability to go some place where they really want to go utilizing the gift card. We had a travel agent on the other end help them plan the trip out and it was great.

RANDALL: Did you ask them to send the photos back? Was that part of the program?

MOLINELLI: They just did it.

KIRSTEEN SCOTT, business and events manager, VisitEngland: And they chose where they went. So they’re actually in control of where they go rather than where the top level told them

MAY: We’ve seen some really good interest in, perhaps not in travel gift cards, but in individual travel packages. They’ve created more demand for that high-end travel experience where we’re creating a unique trip of a lifetime for somebody. That’s been very popular. I think it really turns the card into a VIP travel experience, where it’s almost concierge-level service that they can receive.