2010 Incentive Gift Card IQ
Budgets shrink, but use of large-denomination gift cards grows and deployment of travel cards surges
August 20, 2010
If there’s one main fact that jumps out of the results of Incentive’s 2010 Gift Card IQ report, it is that card programs had their budgets set in 2009, at the height of the economic crisis and the anti-incentive backlash. It is not surprising, then, that the number of programs with the biggest budgets — those with $250,000 to $499,999 and $500,000 and above in the coffers — fell substantially to less than half of 2009’s number.
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Overall, fully 38.4 percent of our respondents said their gift card budgets decreased this year versus 2009, as opposed to just 18.6 percent who saw their budgets increase.
The smallest incentive gift card programs, with budgets of under $1,000, more than doubled in number, however. And per-recipient spending increased in only the three largest budget categories: $200 to $499, $500 to $999, and $1,000 and up. In those, budgets doubled or nearly doubled.
Taken together, that suggests managers are using gift cards to recognize top performers who might be missing other, more substantial incentive awards because programs were canceled in the wake of the anti-incentive climate that dominated 2009.
The nature of how gift cards and gift certificates were distributed reinforces this line of reasoning: The number of incentive programs in which gift cards were given as an annual award increased nearly 50 percent, from 10.3 percent in 2009 to 14.9 in 2010. Frequent, on-the-spot awards — the kind that tend to use lower-value cards and certificates —decreased by nearly one-quarter.
Also of note, the inclusion of travel gift cards in incentive programs nearly doubled, suggesting that many companies replaced group travel programs with individual travel. For more on this trend, see our Annual Incentive Industry Roundtable
(Interestingly, the number of safety programs fell by half, while the number of wellness programs —“improve employee health/reduce insurance costs” — more than tripled.)
The Gift Card IQ survey was based on 531 responses by readers of Incentive who either purchase cards or make decisions about incentive programs that may include gift cards.
Of those, 62.1 percent said they are currently using gift cards. Two-thirds of those said they buy their gift cards from a retailer rather than from an incentive provider or the special markets channel.