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Employee Reward and Recognition Programs:
The Significance of Incentive Prepaid Cards
Presented By:
This manual was created for online viewing. State specific information in this manual is used for illustration and is an example only.
mail: P.O. Box 509 Eau Claire, WI 54702-0509 • telephone: 866-352-9539 • fax: 715-802-1131email: [email protected] • website: www.lorman.com • seminar id: 403630
Cindy MielkeGC Incentives
Gabriel ResendezDarden Restaurants, Inc
Hollis ThorntonVelocity B2B
Martha WeaverRaise Marketplace
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Employee Reward and Recognition Programs:
The Significance of Incentive Prepaid Cards
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mail: P.O. Box 509 Eau Claire, WI 54702-0509 • telephone: 866-352-9539 • fax: 715-802-1131email: [email protected] • website: www.lorman.com • seminar id: 403630
Prepared By:Cindy MielkeGC Incentives
Gabriel ResendezDarden Restaurants, Inc
Hollis ThorntonVelocity B2B
Martha WeaverRaise Marketplace
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Employee Reward & Recognition Programs:
The Significance of Incentive Prepaid Cards
www.incentivemarketing.org
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Today’s webinar is sponsored by the Incentive Gift Card Council, a Strategic Industry Group of the Incentive Marketing Association.
The Incentive Gift Card Council delivers education, resources, and networking opportunities to its members and promotes awareness of the benefits of cards as incentives to the business community.
The Incentive Marketing Association brings providers of incentive merchandise and services together to promote high standards of professionalism in the incentive and recognition field and create greater awareness of incentives.
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Your Presenters TodayModeratorMartha Weaver – Director of Merchant Relations ‐ Raise Marketplace
Member, IMA and IGCC
Cindy Mielke, CPIM – VP Marketing & Sales Operations ‐ GC IncentivesMember, IMA, IGCC and IESP
Gabriel Resendez – Manager of Commerce Programs & Partnerships ‐ Darden RestaurantsMember, IMA and IGCC
Hollis Thornton – Senior Account Executive ‐ Velocity B2B ServicesMember, IMA and IGCC
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Goal of this webinar:
Help you gain a better understanding of different types of prepaid cards and how each type can be used in employee program for the best incentive and reward experience.
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Audience Poll
True/False
Each of the below are different names for the same thing:
1. Open loop prepaid cards
2. Restricted use prepaid cards
3. Closed loop or merchant gift cards
4. Gift card voucher
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4
There are many options
when it comes to
gift cards/prepaid cards. First, let’s define the different types and how they work.
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Digital or eGift Cards
Physical Gift Cards
Branded or Co‐branded Gift Cards
Branded Currency
Expiration Dates and/or Fees
Characteristics of Prepaid Cards
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5
Prepaid cards, usually issued under a major credit card, redeemable anywhere that credit cards are accepted.
Ex. Visa prepaid cards
Open‐loop Prepaid Cards
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eGift Physical Logo/ branding
Expiration Dates and/or
Fees
These fall in between open‐ and closed‐loop cards and can be used at a limited number of merchants
Ex. A wellness reward gift card good for healthy restaurants and grocers
Restricted use prepaid cards
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eGift Physical Logo/ branding
Branded Currency
Expiration Dates and/or
Fees
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Gift cards accepted by one merchant only
Ex. A specific chain (Starbucks, Darden) or an online retailer (iTunes)
Closed‐loop or merchant gift cards
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eGift Physical Logo/ branding
Branded Currency
Expiration Date and/or
Fees
Card, tokens or codes given to recipients allowing them to select what type of gift card they want
Ex. A voucher good for a $50 gift card from one of 100 brands
Gift card voucher
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eGift Physical Logo/ branding
Branded Currency
Expiration Dates and/or
Fees
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77% 78%
22% 21%
58%
1%
70%74%
24%
19%
49%
1%
Open‐loop cards Closed‐loop cards Restricted cards Gift card voucher Egift cards I don't know
$100 Million to $999 Million $1 Billion or More
Types of Gift Cards Purchased
Open and closed‐loop cards are by far the most prevalent, with three‐
quarters of firms using each.
E‐Gift cards are gaining significant traction in the market with half of the largest firms and 58% of mid‐
size firms utilizing them.
Restricted cards and vouchers have strong showing considering the niche nature of these vehicles.
Size of Companies Who Purchased Gift Cards
Incentive Gift Card Council, IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review (IGCC/IRF, 2017). 12
Audience Poll
Gift cards/prepaid cards are considered non‐cash rewards.
True/False
Cash rewards are not intrinsically more motivating than non‐cash rewards.
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Gift cards vs cash: Why gift cards are more preferred and effective
Some Key Findings in a Recent study by the Incentive Research Foundation (IRF):
1. At an unconscious level (System 1 thinking), people are overwhelmingly drawn to non‐cash rewards over cash
2. Cash is not intrinsically more motivating than other types of non‐cash rewards
3. When rewards made salient and multiple non‐cash reward options are made available, a significant majority of people will choose a non‐cash reward over an equivalent cash reward
Incentive Research Foundation, Conscious and Unconscious Reward Preference & Choice: A Biometric Experiment (Incentive Research Foundation, November 28, 2017).
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Why Recipients Like Gift Cards
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Gift cards empower the recipient with the option to choose what item(s) motivates them. This gives the reward more power to influence behaviors desired.
Freedom to shop where and when they choose
Make reward money go farther with merchant loyalty programs and coupons
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• A 2017 study from the Incentive Gift Card Council (IGCC) and the Incentive Research Foundation (IRF) classified businesses in one of two size categories for this study:
16Incentive Gift Card Council, IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review (IGCC/IRF, 2017).
U.S. Businesses spend $24 billion annually on gift cards for reward and recognition.
Mid‐Sized CompaniesAnnual revenue between $100 million to $1 billion
Large CompaniesAnnual revenue of more
than $1 billion
A majority of U.S. businesses choose gift cards as a reward tool for a number of key audience groups
61%
17Incentive Gift Card Council, IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review (IGCC/IRF, 2017).
of large companies buy gift cards for an average of 2.4 different reward/recognition audiences
of mid‐size companies buy gift cards for an average of 2.8 different reward/recognition audiences68%
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Key Audience Groups Defined
• Sales – rewards and incentives for sales performance or indirect sales force
• Channel – distributer spiffs and incentives
• Employee – Rewards and loyalty programs for employees (years of service, wellness, spot awards, recognition)
• Customer – customer loyalty programs
• Corporate gifts – show appreciation of thank clients/prospective clients or partners
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U.S. business investment in gift card/prepaid card rewards is both significant and growing
$450,000
On average, mid‐size firms are spending
per year on gift cards across all program
$1 Million
The largest firms are spending over
52%of mid‐size and
of large companies say their B2B gift card spend
is increasing
71%
Incentive Gift Card Council, IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review (IGCC/IRF, 2017). 19
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Gift cards are the most prevalent reward type in all programs except customer loyalty.
A 2016 study shows 84% of U.S. businesses use some type of non‐cash reward program
Intellective Group For The Incentive Federation Incorporated, Incentive Marketplace Estimate Research Study (St. Louis, MO: Intellective Group, 2016).20
Customer Programs = Customer Loyalty
Firms that use award points as the primary reward vehicle offer a wide array of redemption options in their programs.
Gift cards are the most prevalent across all audiences, followed by merchandise and experiential rewards.
95
46
56
41
27
83
53 52
35
29
92
50
65
37
27
81
4547
29
22
0
10
20
30
40
50
60
70
80
90
100
Gift cards Experiential rewards(concert tickets, spa
services, ect.)
Merchandise Individual travel Logo'd items
Sales Channel Employee Customer Loyalty
Intellective Group For The Incentive Federation Incorporated, Incentive Marketplace Estimate Research Study (St. Louis, MO: Intellective Group, 2016). 21
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Gift cards/prepaid cards offer the greatest value as rewards to both the employee and the recipient
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These calculations are intended for the general benefit of employers to assist with administration of employee incentive programs. The presentation has been provided for informational purposes only. It is not intended to provide, does not constitute, and should not be relied upon for tax, legal or accounting advice. The results of these calculations may vary based on the specific tax and non‐tax characteristics of individual employers, their employee incentive programs and their relationship with suppliers. You should consult a tax professional to determine the tax implications of your employee incentive program and if such program will create a tax liability for employees or may affect the deductibility of the award.
Breaking it down…
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1 This calculator assumes a 20% mark up
2 An average sales tax rate of 9.6% is assumed
3 This calculation assumes 5% of the retail value as the average fee
4 Shipping cost is calculated as a percentage of subtotal after markup – average shipping per reward is 11%
5 Your income gross up percentage includes employee’s Federal and state income tax rates and employee’s portion of FICA – a gross up of 30% is assumed.
These calculations are intended for the general benefit of employers to assist with administration of employee incentive programs. The presentation has been provided for informational purposes only. It is not intended to provide, does not constitute, and should not be relied upon for tax, legal or accounting advice. The results of these calculations may vary based on the specific tax and non‐tax characteristics of individual employers, their employee incentive programs and their relationship with suppliers. You should consult a tax professional to determine the tax implications of your employee incentive program and if such program will create a tax liability for employees or may affect the deductibility of the award.
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92
69
41
58
87
56
70
56
82
33
84
46
18
46
69
26
45
37
45
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0 10 20 30 40 50 60 70 80 90 100
Dining/Coffee
Entertainment
Travel
Gas
Department Stores
Clothing/Apparel
Electronics
Sporting Goods
Exclusively Online Retailers
Accessories & Jewelry
2014 2017
All categories have increased since 2014 but Online Retailers (eg., Amazon) has increased the most followed by Clothing and Electronics.
$100M+ Revenue
Incentive Gift Card Council, IGCC PowerPoint slides (IGCC, October 22,2017).
Within closed‐loop prepaid/gift card options, this shows changes from 2014 compared to late 2017 in merchant types purchased by companies with revenues of $100M+
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The Incentive Marketing Association (IMA)
The IMA is an organization of providers of incentive and recognition merchandise and services.
• Business improves when employees and customers are recognized, rewarded and engaged through effectively structured programs with defined goals and proven returns.
• IMA is comprised of companies who are leaders in the $90 billion incentive industry.
• IMA is the umbrella organization for suppliers in the incentive marketplace. Founded in 1998, IMA’s membership consists of over 500 individuals and groups engaged in providing goods and services for incentive buyers and suppliers.
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IMA Strategic Industry Groups
Incentive Marketing Association members have the opportunity to join one or more Strategic Industry Groups (SIGs). Each SIG represents companies that share similar products and/or services.
Incentive & Engagement Solution Providers (IESP)
Incentive Gift Card Council (IGCC)
Incentive Manufacturers & Representatives Alliance (IMRA)
Incentive Travel Council (ITC)
IMA Europe Council (IMA‐Europe)
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The IMA is an organization of providers of incentive and recognition merchandise and services
Individual Gift Card Brands/Aggregators
Gift Card Solution ProvidersFull Service Providers
Engagement Platform Providers
Program Consulting
Program Design
Custom Technology for Program Management Tracking/Reporting
Rewards Catalog
Travel (Individual & Group)
Wide assortment of physical and digital gift card rewards
Direct ordering for singular or multiple brands
Integrations
Gift Card Choice
Communication Services
Branding & Gift Card Reward Catalog
Reward Management Tools
SAAS Technology for Program Management Tracking/Reporting
Social Recognition
Rewards Catalog
Promotional Marketing Agencies
Promotional Marketing/ Branded Merchandise
Emerging Gift Card Use
Rewards Catalogs
Company Stores
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Market Players: Incentives & Recognition
Full Service Providers Gift Card Solution Providers
Engagement Platform ProvidersIndividual Gift Card Brand/Aggregators
Promotional Marketing Agencies
High Fees
Custom Technology
Consulting
Points Convert to Travel
Merchandise
Gift Card Rewards
Mid to High Fees Per User
Technology
Points Convert to Merchandise
Some Gift Card Rewards
Low Fees
Limited Technology Tools
Logo’d Merchandise & Gift Card Rewards
Low to Mid Fees
Technology
Integration
Reward Management Tools
Gift Card Rewards
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Audience Poll
If you are purchasing open‐loop and/or closed‐loop prepaid/gift cards today, where are purchasing them from? (select more than one if applicable):
Full Service Provider
Engagement Platform Provider
Gift Card Solution Provider
Gift Card Aggregator
Promotional Marketing Agency
Retail Store
Other __________
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Key Benefits to Using an Industry Brand, Supplier or Partner
• Recipient customer service
• Reporting for program management and financial insight
• Bulk order fulfillment (e‐gift/digital and physical)
• Easy access to brand approvals if needed• Knowledge of programs you are running – expertise
• Volume discounts for large programs, where applicable
• Other services like gift card vouchers or certificates, online shopping portals, points systems and more (communication)
• Peace of mind that you are working with controls to better manage program
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U.S. businesses have firmly developed opinions on the types of partners from whom they purchase prepaid/gift cards but all rate
as key attributes they look for in a partner.
Choice
Ease
Service
31Incentive Gift Card Council, IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review (IGCC/IRF, 2017).
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1. Define the different types of prepaid cards – open loop, restricted, closed loop and gift card voucher
2. Identify the best sources for employee reward and recognition prepaid card and program support – industry professional resources (IGCC and IMA) who can help with everything from standard gift card fulfillment up to fully integrated solutions
3. Demonstrate savings and show why gift cards are preferred and effective award choices for recipients and your company – non‐cash rewards are more motivating and gift cards save money/provide greater value over merchandise awards
4. Understand the types of programs where prepaid cards are most effective to improve performance – sales, channel, employee, customer loyalty and corporate gifts
5. Know which types of gift cards are popular in general – online retailers, department stores, dining/coffee and more
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Congratulations! You gained valuable insight on prepaid card/gift card purchases today to save your company time and money.
Resources
1. Incentive Marketing Association, www.incentivemarketing.org
2. Incentive Gift Card Council, www.usegiftcards.org
3. Intellective Group For The Incentive Federation Incorporated. Incentive Marketplace Estimate Research Study. St. Louis, MO: Intellective Group, 2016.
4. Incentive Gift Card Council. IGCC/IRF 2017 B2B Gift Card Buyer Study Initial Findings Review. IGCC/IRF, 2017.
5. Incentive Research Foundation. Conscious and Unconscious Reward Preference & Choice: A Biometric Experiment. Incentive Research Foundation, November 28, 2017.
6. Incentive Gift Card Council. IGCC PowerPoint slides. Incentive Gift Card Council Member Meeting, October 22, 2017.
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Contact Us For More Information
Martha Weaver – Director of Merchant Relations ‐ Raise [email protected]
Cindy Mielke, CPIM – VP Marketing & Sales Operations ‐ GC [email protected]
Gabriel Resendez – Manager of Commerce Programs & Partnerships ‐ Darden [email protected]
Hollis Thornton – Senior Account Executive ‐ Velocity B2B [email protected]
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Thank You!
Q & A
www.incentivemarketing.org35
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Notes
