In an increasingly competitive business environment, companies are looking for innovative ways to incentivize their employees and customers. One of the most popular incentive programs of choice is gift cards – with their convenience, flexibility, and potential for high returns. But which type of gift cards should you choose in order to maximize your incentive program in 2023? With the right selection of gift cards, you can ensure that your incentive program is successful and rewarding for both customers and employees.
Growing Popularity of Gift Card Incentives
Gift card incentives have become increasingly popular in recent years as a way to motivate, reward and recognize employees, customers, and partners. Gift cards allow businesses to give rewards that are flexible and tailored to the individual’s needs.
According to the United States Gift Card and Incentive Card Market Report 2023, the gift card industry in the country is predicted to grow by 7.0% annually, reaching US$ 198,373.6 million in 2023. From 2018 to 2022, the gift card market in the United States showed a CAGR of 6.0% in value terms. This industry is expected to maintain its growth trend, with a CAGR of 5.7% projected from 2023 to 2027.
Another study, by the Incentive Research Foundation, highlighting the latest trends in the incentive industry, confirms that gift cards are gaining popularity as a reward option.
Here’s a quick recap:
- More than two-thirds of companies with revenue over $100 million buy over $10,000 in rewards cards annually for sales, channel, employee, and customer programs. For companies with over $1 billion in revenue, this number is over 60%.
- Over 90% of firms purchasing gift cards are buying them for their employees. Over 80% are buying gift cards for their internal sales team, and more than 50% are purchasing cards for customers. About half are also buying gift cards for their channel partners.
- Across all programs, mid-size firms spend nearly $500,000 annually on gift cards, and the largest firms spend over $1 million.
- The average annual spending is also on the rise; The majority of mid-size firms and more than half of large firms indicated their 2017 spending on B2B gift cards increased year over year, with the majority increasing spend between 1–9%.
Are Gift Cards Incentives?
Absolutely, gift cards are essential incentives. In sales promotions, consumer rewards, or any incentive program, gift cards consistently rank top. Their blend of flexibility and universal appeal positions them as an ideal choice for diverse incentive strategies.
In the ever-competitive realm of marketing, businesses constantly seek strategies to capture attention and foster customer loyalty. Gift cards have proven to be potent tools in this endeavor. Whether it’s to entice potential customers to explore a new product line or to reward loyal patrons, gift cards strike the perfect balance between perceived value and cost-effectiveness. For instance, a brand might offer a gift card to customers who refer friends or spend a certain amount on their platform. This not only boosts sales but also builds a sense of community and brand allegiance.
The quest for genuine feedback and valuable data has led researchers to tap into the allure of gift cards. When trying to gather data, whether through surveys, focus groups, or other research methodologies, the challenge often lies in recruiting willing participants. By offering gift cards as incentives, researchers can effectively increase participation rates. The ease of electronically sending these cards makes the process seamless, and participants feel valued for their time and insights.
The foundation of any successful enterprise is its workforce. Recognizing and rewarding employees for their dedication and hard work is paramount. Gift cards, in this context, have become an invaluable tool for HR departments and team leaders. They serve as tokens of appreciation, motivating employees to reach new milestones or simply to express gratitude for consistent performance. The beauty of gift cards as employee incentives lies in their versatility. Whether celebrating a work anniversary, a job well done, or a target achieved, gift cards allow employees to choose a reward that resonates with them personally, making the gesture even more meaningful.
Types of Gift Cards
Open Loop Gift Card
An open-loop gift card is a type of prepaid card that is issued by a major payment processor such as Visa, MasterCard, or American Express. These gift cards can be used at any merchant that accepts that specific card network, just like a regular credit or debit card, providing the recipient with a broad array of options for use. This flexibility makes open-loop gift cards highly desirable as they allow the cardholder to purchase exactly what they want from a virtually unlimited selection of goods and services.
Closed Loop Gift Card
On the other hand, a closed-loop gift card is tied to one specific retailer or group of retailers. These types of gift cards can only be used to purchase goods or services from the issuing retailer or associated brands. Examples include Amazon, Starbucks, and Best Buy gift cards. While the range of possible purchases is more limited with a closed loop gift card, they can be a great choice if you know the recipient has a particular affinity for the issuing brand or if the brand itself has a wide variety of products.
Pros and Cons of Gift Card Incentives
- Not guesswork. With Toasty, you allow recipients to choose brands that align with their values. One Toasty Choice Card empowers them with a choice from hundreds of options, including charity gift cards.
Toasty Choice Card allows recipients to choose from hundreds of options.
Prepaid Visa, Amazon, Starbucks and more! Make your employees feel valued within minutes.
- Budget-friendly. Gift card incentives can be tailored to programs with different budgets. Whether you’re planning to spend a few hundred or a few hundred thousand dollars, gift card incentive programs have you covered. With Toasty, almost your entire budget goes directly to the rewards, not toward costly services or subscription fees.
- Easy access. Gift cards are sent via email. Recipients can easily access them either on their computers or mobile devices.
- Open loop cards such as Visa or Mastercard prepaid cards often come with fees. These fees may include activation fees, transaction fees, and inactivity fees. Conducting proper research prior to purchasing is recommended.
- Cardholders may experience a remaining balance on their card that is minimal and not viable for use.
- Cards may come across as impersonal or not carefully thought out. To prevent this, Toasty allows senders to add a personal touch by adding their company logos, selecting an appropriate design, and writing a personalized message to each recipient.
Top 5 Gift Card Incentives that Demonstrated Exceptional Performance in 2023
- Amazon: As the world’s largest online retailer, it’s no surprise that Amazon remains the most popular option. The convenience of being able to purchase anything from one website and have it delivered straight to your doorstep is a major selling point for many customers.
- Visa or Mastercard: If you want to give your employees or customers a more flexible option for redemption, then consider offering Visa or Mastercard gift cards as part of your incentive program. These cards offer great value and convenience because they can be used at almost any location that accepts Visa or Mastercard payments.
- Starbucks: Starbucks is another popular choice because its products—coffee, tea, and bakery items—are widely enjoyed by people of all ages. Starbucks’ loyalty program, My Starbucks Rewards, which allows customers to earn points with every purchase which can then be redeemed for free drinks and merchandise, has contributed to the increasing popularity of the brand.
- Target: With over 1,800 stores across the country, Target offers a wide range of products, including clothing, electronics, home goods, and groceries, making it a one-stop shop for many. Target also frequently offers deals and discounts, making it an attractive option.
- Doordash: Doordash offers a wide range of food options from various restaurants, making it a versatile gift card option that caters to different dietary needs and preferences. With the rise of remote work, many employees are working from home and may not have access to their usual lunch spots, making food delivery services more convenient.
Whether you’re looking to boost customer loyalty or provide a memorable experience for employees, digital gift card incentives have become hard to rival. Although physical gift cards still have their place, digital gift cards provide a much more convenient user experience. From single brand gift cards to prepaid gift cards, and even integrating through gift card API, Toasty streamlines the process of sending gift card incentives at scale
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