Incentive Is in the Cards

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Incentive Is in the Cards

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Handing out gift cards can add excitement and reinforce key points.

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By Paul Nolan

It’s every trainer’s worst fear: a roomful of disinterested, “tell me something I don’t know” participants staring blankly at you, or worse yet, not even feigning interest.

Jeff McRitchie, vice president of Marketing at MyBinding.com, says he encountered this all too often when his customer service and inside sales teams met for important monthly training sessions.

“It reached the point where some of them were nearly asleep,” he says.

Because the information being provided directly affects future sales revenue, this was not a problem he could allow to linger. What’s more, embarrassment was added to insult in McRitchie’s case because some of MyBinding’s suppliers occasionally were invited to introduce new product lines at these monthly meetings and witnessed the disinterest firsthand.

McRitchie decided extra motivation was in order and introduced impromptu quizzes into the mix. Now, participants who provide the best answers are rewarded on the spot with gift cards. Correct answers to his questions reap $10 or $20 Starbucks gift cards. He also uses the meetings to publicly recognize non-sales customer service reps who have used their training to improve client interaction. These recipients receive gift cards for as much as $50 to local restaurants.

McRitchie says he also arms the visiting suppliers with gift cards and allows them to come up with their own methods of handing them out during new product training sessions.

Of course, McRitchie understands the most effective way to keep employees engaged during training is to provide pertinent information that directly affects their job performance. But even when that’s accomplished, it can be a challenge to hold people’s attention throughout regular training sessions.

The gift cards add extra excitement to the meetings and help reinforce key points. “It has improved their focus,” McRitchie says. He also appreciates the opportunity to recognize non-sales team members in front of his internal sales team because it reinforces their importance to the overall effort.

Growth in Gift Card Use

The effectiveness of gift cards as employee incentives is not surprising. As the popularity of prepaid cards has soared over the last decade as gifts for birthdays and holidays, they also have been used increasingly by companies as incentives and rewards for employees, channel partners, and customers. According to a 2011 report by the Incentive Research Foundation (IRF), gift certificates and debit cards are the most frequently used category of non-cash rewards for both sales and non-sales employees.

In the IRF’s “Incentive Industry Trends Report 2011,” 17 percent of respondents indicated a greater use of prepaid cards in their programs. Also last year, Scott Jeffrey of Monmouth University reported that gift cards were used significantly more than cash, travel, or merchandise for employee and partner rewards among the 170 participants in the survey. “Many incentive program managers are selecting prepaid gift cards as awards, presumably due to ease of use and the believed preferences of employees,” Jeffrey says.

The IRF study found that given the choice between cash and prepaid gift cards, prepaid cards are preferred by a ratio of almost 7 to 1. In fact, almost half of the respondents consider prepaid gift cards to be the best incentive of all. For more on this study, visit http://theirf.org/Prepaid-Gift-Cards-in-Incentive-Reward-and-Recognition.6087263.html.

One benefit of gift cards is their higher perceived value, especially when the reward falls in that gift card sweet spot of $10 to $75. When you’re trying to motivate employees with incentives in that price range, gift cards have a lot more impact than cash, says McRitchie.

But he also believes enough in the motivational muscle of gift cards to use them when larger incentives are appropriate. Besides its in-house telemarketing sales team, MyBinding.com, a reseller of binding machines and related office supplies, has a team of field sales reps who call on businesses in person and typically make larger sales. These customers are government entities, architects, law firms, and other businesses that frequently print (and need to bind) long reports. Some binding machines the company sells cost several thousand dollars.

Occasionally, MyBinding.com gets exclusive rights to sell a new, high-end binding machine before competitors have access to it in exchange for a guarantee to sell a minimum number of the machines. McRitchie says he often puts a “bounty” on that model in the form of a $50 or $100 gift card for each sale, and he watches the sales team hustle after sales.

“It’s all about whether that incentive is going drive the action you want,” he says. “We had a month-long offer to get a gift card with every sale once and, boy, did they sell that machine! One person earned $900 in gift cards,” he says.

Remember to Measure ROI

Ben Dolan, vice president of Marketing at Partner Professional Staffing, says gift cards as recognition items have become a popular part of the corporate culture at the Cincinnati-based recruitment firm, which specializes in placing professionals in the health-care, information technology, and finance industries. The company has enjoyed tremendous growth, even during the skittish economy of the last few years. At a weekly meeting of the in-house sales staff of 30 to 35 reps, anyone who has reached certain goals gets to draw from a grab bag of assorted gift cards. The cards for area restaurants and retailers range in value from $10 to $100.

“It’s something people get excited about and laugh about. It’s really built up camaraderie,” Dolan says. “If we ever stopped, it would disappoint people.”

The privately held company spends upward of $14,000 annually on gift cards, he says. “It’s a real commitment in terms of the partners putting money into these rewards.”

As with any good incentive program, Partner PS, as it is commonly called, makes sure the return on investment exceeds the cost of the rewards. Dolan records what gift cards are pulled and by what employees. He notes the division the employee works in and what goal was reached that qualified that employee to pull from the grab bag.

The company also uses gift cards in its promotions. At a recent trade show, anyone who visited the Partner PS booth could enter his or her name in a drawing for a $1,000 Best Buy gift card.

Prepaid Provider vs. Retail Outlet

The proven motivational power of gift cards is a key reason managers use them in reward and recognition programs, but the advantages don’t end there. Customization and ease of administration is important, too.

Providing you utilize a business-to-business prepaid provider (versus grabbing a handful at your local retailer), you get client support, fulfillment, budget control, cardholder support, and more. Many of those suppliers are members of the Incentive Gift Card Council (IGCC), a strategic industry group created to provide an awareness of gift cards as a viable option for use in incentive programs. (Find out more about the IGCC at UseGiftCertificates.org.)

Card faces can be customized with your company’s logo or program theme. This in-wallet billboard fosters loyalty by reminding recipients of how they earned their reward. The fact that you can give cards with a set value or one that can be loaded as goals are achieved aligns with diverse program structures.

Prepaid cards from select IGCC members also offer the ability to decide where the card can be spent. It’s called a restricted authorization network (RAN). According to Matt Harris, IRF chairman and vice president of Marketing at InteliSpend Prepaid Solutions, “The price is usually better for you because the participating merchants offset some of the cost. You also get to strategically build the list of merchants where your card can or can’t be spent, so the experience aligns with your objectives.”

Adds Betty Weinkle, vice president of Corporate Wellness at SpaFinder, Inc., and a past president of IGCC, “When you consider that more than 65 percent of recipients say they remember what they purchased and that many attribute that positive memory to the company that gave them the card, it’s easy to see how the organization receives a significant benefit, as well.”