A recent study found that 45% of companies reward employees with gift cards, giving a bump to the growing gift card market.
The Incentive Gift Card Council (IGCC) studied a group of more than 1,100 businesspeople in the United States to get an idea of company behavior around gift card trends. The study revealed that larger companies use gift cards as a reward more often than smaller ones: companies with more than $100 million in annual revenue use them 56% of the time when giving out employee incentives and rewards.
Different uses for gift cards, different values too
Companies use gift cards in several different ways. Two-thirds (67%) use it as an employee incentive – a way of encouraging workers to meet certain goals. Thirty-eight percent of the time they are used as sales incentives and 30% of companies use them as customer rewards.
Study findings showed that the higher value gift cards were for used as employee incentives, at $149. Channel incentive gift cards had an average value of $84, employee awards carried an average value of $70, and customer rewards gift cards were valued at an average of $56.
Open loop versus closed loop cards
Gift cards that are issued by banks or credit card companies rather than by specific stores are known as open loop gift cards. These cards can be used anywhere that accepts credit cards as a form of payment. Closed loop gift cards are only redeemable at a particular location, or online at the specific retailer’s site.
The most popular type of gift card for companies to use is the open loop gift card. Just over half of businesses purchase open loop cards, and large corporations are the biggest buyers.
Researchers asked subjects which closed loop gift cards were their favorites, putting them into ten categories. Food and beverage cards came out on top, followed by department stores, online retailers, music and movies, gas, electronics, sporting goods, clothing, travel, and jewelry.
The IGCC is a branch of the Incentive Marketing Association (IMA) and works to educate the marketplace about the advantages of gift cards and rewards. Research was conducted by the Incentive Research Foundation and Aspect Market Intelligence.