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21st Century Gift Cards

The latest changes on the Canadian gift card scene, from expiration dates to usage rules

By Angela Kryhul

Gift cards may be slim little slips of plastic, but they’re doing a lot of the heavy lifting when it comes to corporate gift ideas, incentive programs and rewards.

There is some irony in the fact that corporate gift cards are designed to reward success at work, yet recipients are expected to spend them in very personal ways. This year, restaurants, retailers and other gift card providers are working hard to get that balance just right: it’s all about choice, value and personalization.

The sluggish economy seems to be influencing how corporate gift cards are given and redeemed. Corporate clients want gift cards that are practical, provide great value and that recipients really want to use, says Derek Greenberg, director of corporate development at Cara Operations Ltd.

Cara has noticed a slight change in the amounts that gift card recipients are spending above a card’s value. While the industry rule of thumb is that users spend up to 40% more than a card’s face value, that amount has slipped a few points recently likely due to belt tightening, suggests Greenberg. “People still spend more [than a card’s value], but it’s not as much.”

Andrew Noonan, manager, corporate gift cards for HBC, says that fewer corporate clients have ordered gift cards over the past 12 months, but the ones that have are ordering cards in slightly higher denominations.

Still, HBC sees an opportunity for a premium-positioned gift card. This year, the company will play on the positive publicity it received as an official sponsor of the 2010 Olympics by introducing a “higher-end” card that depicts the Hudson Bay blanket heritage.

Cara research shows people are saving gift cards to use for special occasions like family birthdays, and many people are trying out restaurants they haven’t visited before. That’s important because it shows Cara is on the right track in positioning its corporate gift card as an “experience” to reward hardworking employees and their families.

Another hot trend is personalization. Co-branded gift cards are like mini billboards because companies can add their logos and a personal message such as “Thanks for your dedication,” for employee service. Depending on the supplier, a full-colour customization generally starts at about $2.50 per card.

JAN Kelley Marketing in Burlington, Ont., uses co-branded cards from restaurateur Service Inspired Restaurants Corp. in employee incentive programs and as prizes for client events, such as golf tournaments, says Ken Nicholson, vice-president and CFO.

“I think it’s important to have people ‘living’ your brand,” Nicholson explains. “If you’re using a gift card for promotion, you need to showcase your brand.”

Face Value
If corporate gift cards had a magic number, it would be $50. That’s the average face value companies are ordering in bulk from suppliers, although denominations of $25, $100 and $200 are also popular.

Corporate gifting can be tricky because many larger companies are very strict about the value of gifts that employees may receive. JAN Kelley Marketing likes to keep gift card values at about $50, says vice-president Ken Nicholson, because the last thing you want is for a client to feel compromised if they’re offered a high-value gift card.

Amex Gift Card
A year after launching its consumer gift card in Canada, American Express plans to develop the B-to-B channel just in time for the holiday gifting season.

The American Express Gift Card, introduced in November 2009 and currently available only in Shoppers Drug Mart stores, has been so successful with Canadian consumers that the company intends to develop a program for corporate users, says Stephen Grivakes, general manager, global prepaid, American Express Canada.

1. “Within the B-to-B space we’re seeing a demand for solutions,” Grivakes says.
2. The AMEX gift card comes in denominations of $50, $100 and $200. And while these cards are already being purchased as corporate gift ideas, AMEX is considering offering co-branding, Grivakes says.
3. The AMEX gift card offers flexibility because it can be used anywhere that the American Express credit card is accepted. And while there is an upfront purchase charge ranging from $4.95 to $6.95 per card, users do not pay any after-purchase fees such as monthly servicing, customer service or card replacement fees.

Expiry Dates
• Gift card expiry dates have become less of an issue ever since Ontario outlawed the practice in 2007.
• Because expiry date rules differ from province to province, national retailers like HBC have simply eliminated expirations altogether, no matter where one of its cards is issued or redeemed.
• American Express designed its new gift card so that the funds never expire. Says AMEX Canada’s Stephen Grivakes. “If you leave your card in your drawer for 20 years, those funds are still good.”

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