07/06/2017

Gift cards are on the rise

How can you incentivise and reward employees in a way that is personalised and offers them freedom of choice? A few complimentary words, or a congratulatory email, are good ways for managers to thank an employee for a job well done. But what more could they offer? For companies of all sizes, the answer is increasingly ‘a gift’ and, more precisely, ‘a gift card.’ Provided as a spontaneous reward, or as part of an incentive scheme to promote employee engagement and motivation, they offer a range of advantages. Cards can be personalised to suit the employee, and offer a degree of choice that makes them certain to be well-received. They’re also an ideal way to bridge the age gaps and interests in today’s multi-generational workforce.

Gift card spending on the rise
Such is their popularity with 75% of organisations in the UK using gift cards to incentivise and reward their staff. Demand was also reflected in a separate study which revealed that gift cards were the preferred form of reward at 67.7% - well ahead of electronic (34%) and drink related gifts (22%). The number of companies that gave out gift cards in 2016, rose by 37% to the previous year, and although widely used by larger companies, the appeal of gift cards also extends to SME’s. In a Sodexo study, SME leaders revealed that they planned to significantly increase spending on rewards that would improve employees’ work-life balance over a two-year period. There was a 15% increase in those planning to reward employee performance with bonuses, couhers and gift cards; and a 17% rise in those intending to bring in schemes to increase employee purchasing power.

Business benefits for all
The flexibility of gift cards makes them ideal for all sizes of budgets. While research shows that larger companies can afford more lavish rewards, with the proportion of those handing out gifts worth more than $1,000, rising from 1.3% of the total to 6.2% from 2015-16, nearly 70% of gifts cost less than $100. Along with large organisations, SMEs are also reaping the benefits of the gift card phenomenon. Sodexo’s study found that 88% of SME leaders in seven countries noted an improvement in the general atmosphere at work after rewarding performance through bonuses and gift cards. In addition, 71% of respondents said that their company’s revenue had increased and 72% noted a drop in absenteeism.

So, what’s the secret to a successful incentive?
Put simply, it needs to tick three boxes – buy-in by employees, an element of surprise and a wide choice of gifts. For an incentive programme, buy-in is best achieved when management clearly explains the overall objective to employees - and then involves them in setting the targets or KPIs that will lead to rewards. Once the scheme is up and running, collecting employee feedback will also boost its effectiveness. By creating a feedback loop, the programme will always stay relevant to people’s lifestyles and aspirations.

When it comes to selecting gift cards and rewards, the element of surprise is particularly valuable – because surprises live longer in the employee’s memory. In fact, an emerging market segment is known as ‘surprise and delight’ rewards, whose popularity is backed by scientific evidence. The so-called pleasure centers in the human brain react more strongly when the pleasures are unexpected, according to researchers in the United States.

Finally, the choice of gift card has also become a particularly hot topic, given the demographics of today’s workforce. Key to the success of any scheme is the ability to offer a selection of gift cards that is broad enough to incentivise and reward employees of all ages and backgrounds. 

Bridging the generation gap
Indeed, with Millennials working alongside Baby Boomers, what kind of gift card appeals to both 20-year-olds and 63-year-olds? Growing in popularity amongst Millennials are e-gift cards, which are easy to use and can offer almost unlimited choice. By contrast, studies indicate that older generations prefer the more personalised choice of a card attached to a particular retailer.

Aside from generational differences, a combination of Sodexo’s know-how and survey results has identified very distinct employee profiles in a typical workforce. The range of profiles underlines the need for variety gift solutions, in order to offer meaningful rewards.  

It’s a generation game: Find out how to create an engaging reward strategy that appeals to multi-generational workforce >

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