SMM Gift Supplement J/A 2012 : Page 2

gift cards The plastic they can use with pride It’s every trainer’s worst fear: a roomful of disinterested, “tell me something I don’t know” participants staring blankly at you, or worse yet, not even feigning interest. Jeff McRitchie, vice president of marketing at MyBinding.com, says he encountered this too often when his customer service and inside sales teams met for important monthly training sessions. “It reached the point where some of them were nearly asleep,” he says. Because the information being provided directly impacts future sales revenue, this was not a problem he could allow to linger. What’s more, embarrassment was added to insult in McRitchie’s case because some of MyBinding’s suppliers were occasionally invited to introduce new product lines at these monthly meetings and witnessed the disinterest ﬁrsthand. McRitchie decided extra motivation was in order and introduced impromptu quizzes into the mix. Now, participants who provide the best answers are rewarded on the spot with gift cards. Correct answers to his questions are worth $10 or $20 Starbucks gift cards. He also uses the meetings to publicly recognize non-sales customer service reps that have used their training to improve client interaction. These recipients receive gift cards for as much as $50 to local restaurants. McRitchie says he also arms the visiting suppliers with gift cards and allows them to come up with their own method of handing them out during new product training sessions. Of course, McRitchie understands the most effective way to keep employees engaged during training is to provide pertinent information that directly impacts their job performance. But even when that’s accomplished, it can be a challenge to hold people’s attention throughout regular training sessions. The gift cards add extra excitement to the meetings and help reinforce key points. “It has really improved their focus,” McRitchie says. He also appreciates the opportunity to recognize non-sales team members in front of his internal sales team because it reinforces their importance to the overall effort. Growth in gift card use The effectiveness of gift cards as employee incentives is not surprising. As the popularity of prepaid cards has soared over the past decade as gifts for birthdays and holidays, they also have been used increasingly by companies as incentives and rewards for employees, channel partners and customers. According to a 2011 report by the Incentive Research Foundation (IRF), gift certiﬁcates and debit cards are the most frequently used category of non-cash rewards for both sales and non-sales employees. In the IRF’s “Incentive Industry Trends Report 2011,” 17 percent of respondents indicated a greater use of prepaid cards in their programs. Also last year, Scott Jeffrey of Monmouth University reported that gift cards were used signiﬁcantly more than cash, travel or merchandise for employee and partner rewards among the 170 participants in the survey “Many incentive program managers are selecting prepaid gift cards as awards, presumably due to ease of use and the believed preferences of employees,” Jeffrey states. One beneﬁt of gift cards is their higher perceived value, especially when the reward falls in that gift card sweet spot of $10 to $75. When you’re trying to motivate employees with incentives in that price range, gift cards have a lot more impact than cash, says McRitchie. 2 JUL/AUG 2012 SALES AND MARKETING .COM

Gift Cards

The plastic they can use with pride It’s every trainer’s worst fear: a roomful of disinterested, “tell me something I don’t know” participants staring blankly at you, or worse yet, not even feigning interest. Jeff McRitchie, vice president of marketing at MyBinding.com, says he encountered this too often when his customer service and inside sales teams met for important monthly training sessions. “It reached the point where some of them were nearly asleep,” he says. Because the information being provided directly impacts future sales revenue, this was not a problem he could allow to linger. What’s more, embarrassment was added to insult in McRitchie’s case because some of MyBinding’s suppliers were occasionally invited to introduce new product lines at these monthly meetings and witnessed the disinterest firsthand. McRitchie decided extra motivation was in order and introduced impromptu quizzes into the mix. Now, participants who provide the best answers are rewarded on the spot with gift cards. Correct answers to his questions are worth $10 or $20 Starbucks gift cards. He also uses the meetings to publicly recognize non-sales customer service reps that have used their training to improve client interaction. These recipients receive gift cards for as much as $50 to local restaurants. McRitchie says he also arms the visiting suppliers with gift cards and allows them to come up with their own method of handing them out during new product training sessions. Of course, McRitchie understands the most effective way to keep employees engaged during training is to provide pertinent information that directly Impacts their job performance. But even when that’s accomplished, it can be a challenge to hold people’s attention throughout regular training sessions. The gift cards add extra excitement to the meetings and help reinforce key points. “It has really improved their focus,” McRitchie says. He also appreciates the opportunity to recognize non-sales team members in front of his internal sales team because it reinforces their importance to the overall effort. Growth in gift card use The effectiveness of gift cards as employee incentives is not surprising. As the popularity of prepaid cards has soared over the past decade as gifts for birthdays and holidays, they also have been used increasingly by companies as incentives and rewards for employees, channel partners and customers. According to a 2011 report by the Incentive Research Foundation (IRF), gift certificates and debit cards are the most frequently used category of non-cash rewards for both sales and non-sales employees. In the IRF’s “Incentive Industry Trends Report 2011,” 17 percent of respondents indicated a greater use of prepaid cards in their programs. Also last year, Scott Jeffrey of Monmouth University reported that gift cards were used significantly more than cash, travel or merchandise for employee and partner rewards among the 170 participants in the survey “Many incentive program managers are selecting prepaid gift cards as awards, presumably due to ease of use and the believed preferences of employees,” Jeffrey states. One benefit of gift cards is their higher perceived value, especially when the reward falls in that gift card sweet spot of $10 to $75. When you’re trying to motivate employees with incentives in that price range, gift cards have a lot more impact than cash, says McRitchie. But he also believes enough in the motivational muscle of gift cards to use them when larger incentives are appropriate. Besides its in-house telemarketing sales team, MyBinding. Com, resellers of binding machines and related office supplies, has a team of field sales reps that call on businesses in person and typically make larger sales. These customers are government entities, architects, law firms and other businesses that frequently print (and need to bind) long reports. Some binding machines the company sells cost several thousand dollars. Occasionally, MyBinding.com gets exclusive rights to sell a new, high-end binding machine before competitors have access to it in exchange for a guarantee to sell a minimum number of the machines. McRitchie says he often puts a “bounty” on that model in the form of a $50 or $100 gift card for each sale and he watches the sales team hustle after sales. “It’s all about whether that incentive is going to drive the action you want,” he says. “We had a monthlong offer to get a gift card with every sale once and boy, did they sell that machine! One person got $900 in gift cards,” he says. Remember to measure ROI Ben Dolan, vice president of marketing at Partner Professional Staffing, says gift cards as recognition items have become a popular part of the corporate culture at the Cincinnati-based recruitment firm, which specializes in placing professionals in the health care, information technology and finance industries. The company has enjoyed tremendous growth, even during the skittish economy of the past few years. At a weekly meeting of the in-house Sales staff of 30 to 35 reps, anyone who has reached certain goals gets to draw from a grab bag of assorted gift cards. The cards for area restaurants and retailers range in value from $10 to $100. “It’s something people get excited about and laugh about. It’s really built up camaraderie,” Dolan says. “If we ever stopped it would disappoint people.” The privately held company spends upwards of $14,000 annually on gift cards, he says. “It’s a real commitment in terms of the partners putting money into these rewards.” As with any good incentive program, Partner PS, as it is commonly called, makes sure the return on investment exceeds the cost of the rewards. Dolan records what gift cards are pulled and by what employees. He notes the division the employee works in and what goal was reached that qualified that employee to pull from the grab bag. The company also uses gift cards in its promotions. At a recent trade show, anyone who visited the Partner PS booth could enter their name in a drawing for a $1,000 Best Buy gift card. Why gift cards trump cash as a motivator While it’s true that managers and HR professionals like recognizing stellar performance with gift cards because they are easy to administer, they would be shooting themselves in the foot if the gift cards weren’t desired by the employees they recognize. Not to worry. A 2011 study by the Incentive Research Foundation in which 170 participants responded showed that, given the choice between cash and prepaid gift cards, prepaid cards are preferred by a ratio of almost 7 to 1. In fact, almost half of the respondents consider prepaid gift cards to be the best incentive of all. “We found that reward recipients are more likely to mentally classify prepaid cards as guilt-free spending versus cash,” explains IRF President Melissa Van Dyke. “They’re more likely to add the value of that prepaid gift card to their monthly budget, rather than simply replace it, as they do with cash.” Nearly half of the reward and recognition program planners surveyed say that, dollar for dollar, prepaid cards are the most effective reward available, and more than 75 percent believe they are among the most effective of all rewards – especially in driving loyalty and engagement. Smart incentive gift card shoppers steer clear of retail outlets The proven motivational power of gift cards is a key reason managers use them in reward and recognition programs, but the advantages don’t end there. Customization and ease of administration is important, too. Providing you utilize a business-to-business prepaid provider (versus grabbing a handful at your local retailer) you get client support, fulfillment, budget control, cardholder support and more. Many of those suppliers are members of the Incentive Gift Card Council, a strategic industry group created to provide an awareness of gift cards as a viable option for use in incentive programs. (Find out more about the IGCC at UseGiftCertificates.org.) Card faces can be customized with your company’s logo or program theme. This in-wallet billboard fosters loyalty by reminding recipients of how they earned their reward. The fact that you can give cards with a set value or one that can be loaded as goals are achieved aligns with diverse program structures. There’s another feature that makes prepaid cards from select IGCC members truly unique: the ability to decide where the card can be spent. It’s called restricted authorization network (RAN), and it has benefits for both you and your participants. According to Matt Harris, IRF chairman and vice president of marketing at InteliSpend Prepaid Solutions, “The price is usually better for you because the participating merchants offset some of the cost. You also get to strategically build the list of merchants where your card can or can’t be spent so that the experience aligns with your objectives.” The menu of spend options provides your participants that guilt-free experience since they aren’t faced with the dilemma of paying the cell phone bill or purchasing that new golf club. “When you consider that over 65 percent of recipients say they remember what they purchased and that many attribute that positive memory to the person or company that gave them the card, it’s easy to see how the organization receives a significant benefit as well,” says Betty Weinkle, vice president of corporate wellness at SpaFinder, Inc., and a past president of IGCC. The next time you’re pondering the right incentive for your diverse participant group, you don’t have to look beyond these pages. Keep this directory of IGCC members handy and ring them up. You’re sure to find just the right prepaid incentive to get the results you want because you’re giving them the incentive they’ve clearly said they want (and will do what they need to do to earn it). For more on this important study, go to http://theirf.org/Prepaid-Gift-Cards-in-Incentive- Reward-and-Recognition.6087263.html. Effective reward programs are a phone call away Gift cards are an effective workplace motivator, as well as a way to thank loyal customers. Smart managers don’t purchase gift cards at retail, however. By using certified incentive gift card suppliers, you can receive quantity discounts and learn more about how to get the most return on your investment. The Incentive Gift Card Council (IGCC) is a strategic industry group within the Incentive Marketing Association (IMA). Member companies are the elite among retail, catalog and performance improvement agencies, offering cards/certificates, that can be redeemed for merchandise, travel, food, accommodations and services. This directory is a service to Sales and Marketing Management readers who use — or are interested in using — gift cards as employee or customer incentives. For more information about the IGCC, visit www.usegiftcertificates.org. Right tool, wrong time One manager’s lesson in overusing an effective incentive One attribute of gift cards that Jeff McRitchie of MyBinding.com appreciates is also a potential pitfall, he warns. They are impactful rewards at such an affordable price point that the temptation, at least for McRitchie, is to sprinkle them a little too generously among his sales team. “If you’re not careful, you can end up paying people for doing things they should be doing anyway,” he says. McRitchie explains that he was so impressed by the results of gift cards used as motivators in team meetings and as “bounties” to sell targeted office equipment that he jumped at other opportunities to motivate actions. He introduced a program that rewarded reps who made a certain number of customer demonstrations per month with gift cards, but halted the program soon after it was launched. “They already had a quota of demos and this didn’t provide the change in behavior we had hoped for,” he says. There’s something to be said for setting an expectation and demanding it. Like anything in business (and in life), you’re going to have more success with some endeavors than others. There’s no shame in not getting the results you expected every time, McRitchie says. In that respect, some incentive programs become self-policing. “You have to step back and assess whether it really changed behavior. You try to figure out what really motivates people, but if they aren’t motivated, they won’t change their behavior. Why use gift cards? The growth in prepaid card use, from obscurity to prominence in little more than a decade, begs the question: why? According to 2011 consumer research conducted by First Data Corp., “When asked why they choose to purchase gift cards rather than a gift, 83 percent of respondents said that gift cards make gift-giving easy, and more than half said they save shopping time. Almost three-fourths of consumers liked the ease of mailing gift cards to recipients who live far away.” Although this information pertains to prepaid cards purchased by consumers for friends and relatives, it is also relevant to the corporate use of prepaid cards in incentive plans. For organizations that aim to leave lasting impressions on employees, customers, partners and others, prepaid cards offer the opportunity for branding and, depending on how they are used, personalization. In these respects at least, they offer better potential return on investment than cash as rewards. In the IRF survey directed at incentive program planners, the largest reason given for using prepaid cards was that they are easier to administer than most other rewards (37 percent). Many respondents also believe that people like receiving prepaid cards more than most other types of rewards (32 percent) and that prepaid cards are more flexible than most other types of rewards (20 percent). 11 percent felt they were more customizable and personal than most other reward types. Savings and efficiency increase use of electronic delivery The plastic gift card is more popular than ever, but e-gift cards are establishing a large footprint as well. There is good reason for businesses to embrace electronic delivery for incentive gift cards or customer loyalty programs, beginning with significant cost savings and the ease with which they can be personalized. And talk about instant gratification! A recipient can turn right around and cash in online. In a survey of 1,012 customers, CashStar, an e-gift card provider that partners with more than 250 wellknown brands, discovered these key points about customer preference: . A Popular Choice : More than 98 million Americans (42 percent) have given or received an e-gift card. .Personalization is a must : Consumers expect personalization with their e-gifts. More than 98 million indicated they would leave a retailer’s website and shop somewhere else if they could not personalize the e-gift cards. This serves B2B gift card users well. Personalization reinforces to the recipient who is delivering the card and why they are getting it. .Make it Convenient : Consumers want the e-gift card purchasing process to be easy. A full 55 percent said they were likely to abandon the order if there were too many screens or forms to complete. The same convenience translates to the B2B world. .Mobile trumps social : Despite recent buzz around social gifting more Americans (32 percent) find it important to have an optimized mobile experience than to be able to send an e-gift via social (20 percent). E-gift cards connect with gamification trend Because of their electronic delivery capability— instantaneous—e-gift cards are ideal for incentive programs or customer loyalty endeavors that involve gamification. In January 2011, the first conference on gamification (the use of gaming techniques to solve problems and engage audiences) was held in San Francisco. Although the general theories and applications surrounding gaming approaches are not new, it is a relatively new concept to the world of incentive design. But not for long. Gartner group predicts that by 2015, half of all managed innovation processes will include game mechanics, and that by 2014, 70 percent of all Global 2000 organizations will have at least one “gamified application” in place. Game mechanics are the proverbial “three-legged stool” of technology trends (supported by mobile and social). The essence of gamification includes many constructs already used in incentive programs such as achievement levels, leaders’ boards, progress bars, rewards, etc. Additional techniques include everything from installing virtual currencies, to direct challenges between users, to embedded casual games. A recent IRF poll found that one in five incentive planners is either currently taking advantage of game mechanics on their incentive sites, or plan to do so within the next year. Planners involved in incentive travel and meetings should also know these principles apply to events as well. Tackling the card-as-cash dilemma Incentive planners encourage the use of prepaid cards for memorable merchandise and experiences, which is impossible with cash. Thus, the closer a prepaid card is to being completely “open” (that is, it can be used virtually anywhere in lieu of cash), the more it becomes a cash substitute. Many argue that giving an open prepaid card is really not much different than giving its equivalent value in cash. Indeed, as far as the IRS is concerned, open prepaid cards amount to cash wages and are subject to tracking, reporting, and tax withholding when issued to employees. The response to the IRF survey suggests that many organizations use cards as substitutes for cash (43 percent). However, a much larger number, 57 percent, either believe that cards are more thoughtful and personal (33 percent) or are “a carefully selected reward matched to the recipient’s interests and tastes” (24 percent). In many ways, however, it doesn’t matter whether one receives an open, closed or restricted card. Recipients who are unsatisfied with a closed card that limits them to a particular retailer, for example, can visit websites like plasticjungle.com, cardhub.com, giftcardrescue.com, cardcash.com, eBay and many others to exchange or sell their cards, often at 90 percent or more of their face value. So what are the implications for incentive planners? Perhaps open cards should be used in any circumstance where there is doubt concerning the interests of the recipient. Planners might track usage of prepaid card exchange sites and understand which of their gifted cards are being exchanged and for what. It might also be possible to collect useful data from the larger exchange sites. Future research might work with exchange sites to determine which cards and card types are most frequently sold or exchanged, which are most requested and which sell at the greatest discounts, for example. Gift cards work whether you know a lot or a little about the recipient Companies count on Lisa Jennings to add pizzazz to their corporate events, and Jennings says she relies on gift cards to help her deliver. Jennings is the Chief Experience Officer of Wildly Different a(wildlydifferent.com), an Orlandobased provider of unique team building exercises. Jennings and her staff travel around the country—and sometimes out of the country—to create, well, wildly different endeavors for clients. One Wildly Different specialty is the corporate-size, teambuilding scavenger hunt staged at off-site events. Jennings sends Teams around a venue or even around a city in search of clues and prizes, including gift cards. In this situation, gift cards work great because you’re not Certain of the recipient, Jennings points out. She also uses gift cards as an effective thank-you for a client. For example, if Wildly Different worked closely over several weeks with an executive assistant at a client company to prepare a scavenger hunt or other activity, Jennings will fish for some details on that person’s interests and send him or her a gift card as an expression of gratitude for helping out. Jennings says she also incorporates gift cards into trade show promotions that she puts together for clients. In terms of a reward or recognition item that’s both valued and versatile, gift cards are almost unmatched, she says. They don’t cost a lot and you can reward on the spot It comes as no surprise that prepaid cards are most commonly issued as spot rewards. The value of prepaid cards is typically low— between $25 and $100 in most cases and slightly lower for customers and higher for sales employees. They are also used most frequently for employees, making them ideal for spot rewards.

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