The Brave New World of Gift Cards

How innovative strategies are increasing the value of the popular plastic present

By Charlene Brooke

It wasn’t that long ago that gift card incentives suffered a bad rap. Expiry dates hung over them like a dark cloud and “breakage,” the industry term for unredeemed gift cards, was an ongoing problem for everyone. Fortunately, things have improved greatly—employees are enjoying unparalleled choice and control, expiry dates are a thing of the past (on retail cards anyway) and employers are continuing to enjoy their convenience and cost savings. Here are three innovations that have contributed to this turn-of-events.

Zero waste
The company: GiftBit (Victoria, BC)
How they work:
Employees are sent a notification that they have been given a card, along with a “claim before” date. They then receive the card and can redeem it at the retailer at their leisure. Employers only pay for gift cards once the employee claims them. Funds from unclaimed gift cards are returned to the company account and can then be cashed out or rolled into a future incentive campaign.

In their words: “Our goal is to improve the employer-employee relationship,” says CEO Leif Baradoy. “Every dollar spent on incentive gift cards is actually used to reward the employees. No longer are rewards—and their tax burden—foisted on them.”

Success comes down to choice
The company: Samba Rewards (Toronto)
How they work: Employees can redeem Samba Rewards cards for merchandise, experiential rewards or gift cards. Samba Rewards cards can be accumulated over time and designated any way an employee wishes. A $100 gift card, for example, can be redeemed for a $25 Starbucks card, a $50 card for The Keg, and a $25 Chapters card.

In their words: Douglas Garcia, vice-president of business development, says, “We constantly hear that consumers aren’t afraid to comparison shop. They will browse merchandise but ultimately choose gift cards as they offer the most bang for their bucks.”

Focus on the experience
The company: Givex (Toronto)
How they work: Givex works with businesses to manage the entire gift card process. Among their range of cards are non-denominational SKU cards that employees can redeem for a specific product or service at a retailer. Employers can choose from various price points, such as two nights at a luxury hotel or one night and a spa service.

In their words: Director of marketing, Bryan Wang, says, “By removing the price of the reward you allow employees to focus on the tangible experience. They see the reward for what it is—an indulgent treat rather than a replacement for cash.”

6 Tips for Planners:
Craft your message: How you communicate your incentive program can impact redemption rates. According to Leif Baradoy, a gift card that’s accompanied by a short impersonal message is more likely to go unclaimed compared to one that captures the reason why it’s being given.

How much? A $25 gift card at Starbucks may do equally well as $30 at Amazon. Draw on the insights of your gift card provider who knows which retailers and denominations get the best results.

Option to donate: While few employees will actually donate their gift card, they want the option nonetheless.

Cover the taxes: Gift cards are a taxable benefit. Consider paying the tax so that a $100 card gives the employee $100 in value. After all, gift cards already offer employers considerable savings over merchandise and travel. In many cases, you’ll still save money in the end.

Metrics: Ask your gift card provider if they provide aggregate results so that you can track the success of your incentive campaign.

Aim high: High redemption levels mean employees feel duly rewarded and your incentive program is working. Everybody wins.

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