When considering whether to instate a gift card or debit card rewards program to influence employee or channel partner behaviors, you might ask yourself, “Aren’t I already paying them for that?” Well, yes. But employees and channel partners can expect standard payouts from you for standard performances. Offering them something extra for above-and-beyond achievements can improve performances during crucial times, increase sales of high-margin products, or encourage sales reps to land more warranty registrations. The question is, who really benefits from debit card rewards? Are you simply throwing more money at participants, or is the return worth the investment?
Fortunately, there are studies we can turn to that can help us determine what the main selling points of debit card rewards are, and who really gets the most out of those selling points.
Reward program recipients prefer debit card rewards.
In an in-depth debit card rewards study by the Incentive Research Foundation (IRF), they found that almost half of the respondents said they preferred debit card rewards over other types of incentive rewards such as cash. This preference for gift and debit card rewards can be linked to the guilt many people feel when spending cash rewards on anything frivolous or unnecessary. “A gift card for a new golf club has to be spent on a golf club, so it’s guilt free,” says Bob Dawson, President of i-Myth. “The cash can be spent on groceries, and probably will be.”
Research by the IRF corroborates this phenomenon: “Various research studies have demonstrated that recipients of prepaid cards are more likely to classify them as discretionary or ‘fun’ spending than cash they receive as rewards.”
Obviously, reward recipients’ preference for gift and debit card rewards is a benefit to the recipient. It’s also a benefit to reward program operators, since preference for prepaid card rewards means greater participation in and effectiveness and ROI of the reward program. One point for the participant and one point for the program operator.
Debit card rewards encourage engagement and loyalty.
According to the IRF’s study cited above, “The majority of incentive planners believe prepaid cards can be more meaningful, personal and impactful than cash; almost half believe that, dollar for dollar, they are the most effective reward available. More than 75 percent believe that they are among the most effective of all rewards ― especially in driving loyalty and engagement.”
One of the ways reward program operators can benefit from prepaid card reward programs is by using branded card services. Cards bearing your company’s name or logo facilitate mindshare with participants, reinforcing positive association with your organization every time they use their card. This increase in engagement and company loyalty is a benefit for program operators.
Debit card reward programs are financially resilient.
After examining the trends in gift and debit card rewards usage over time, studies have reported that debit card rewards are more likely than other types of reward programs to stand up to tough economic conditions. An incentives study conducted during the recession in 2008, for example, found that 21% of respondents increased their use of debit card rewards, vs. only 9% who added merchandise rewards. The IRF recently reported that “the recovery was swifter in the gift card and merchandise side of the market compared to other sides of the market such as travel.”
This financial sturdiness can be seen as both a benefit to businesses running debit or prepaid card rewards and their participants. Businesses can continue to motivate employees or partners to help them through periods of slow revenue growth, while participants can still count on receiving rewards for exceptional performances and behaviors.
Are you still keeping tally of who’s benefitting? So far, the score is:
Debit card rewards are flexible.
Remember when we said that participants like debit card rewards because they can associate them with guilt-free, discretionary spending? Well, open debit cards are the only incentive reward that can claim both discretionary and practical spending capabilities as benefits. Participants can spend debit card rewards however they want. Those who prefer fun, recreational purchases can enjoy their new HDTVs, FitBits and restaurant outings, while those who prefer to put extra income toward responsibilities can use their debit card rewards for gas, bills and groceries. Gift cards to multi-departmental stores like Target or Wal-Mart can also be used either for recreation or necessities.
As we move out of the recession, more studies are finding that people prefer to take care of responsibilities first and pay for fun things later. According to the IRF, “the height of the recession showed Housewares and Apparel at the top of what was included in non-cash reward and recognition programs. Today, in a rebounding economy, we’re seeing a strong shift: Electronics and Open gift cards are now at the top of the list. Both of these can be seen as items of luxury as well as necessity.”
This ability of gift cards and debit cards to meet the new, necessity-conscious needs of consumers counts as a benefit for participants.
Gift and debit card rewards are more cost-effective for rewarding large groups.
With evidence that rewarding only top-performing individuals is a mistake, more companies want to reward as many partners or employees as possible, to increase productivity in their largest, mid-performing groups. In sales, for instances, boosting accomplishments in the mid-performing group by just 5% leads to 70% more revenue growth than increasing top-earning individuals’ performances by 5%.
“Organizations today want to reward more people, not just the high performers but also those that support them,” according to Mike Ryan, President Emeritus of The Performance Improvement Council. “Gift cards make it easier to spread the incentive budget across more recipients and they give recipients broader choice over their reward.”
Ryan’s claim is reinforced by an Incentive magazine survey, which found that program administrators cited broad audience appeal as one of debit card incentives’ primary benefits, along with ease of administration and flexibility. These qualities make gift and debit card reward programs an ideal, cost-effective option for rewarding large groups of participants and motivating the majority middle-performing group. Score one more for program operators and administrators.
So, what’s the final score?
Taking into consideration all five of the above gift and debit card rewards benefits, reward program operators come out slightly ahead. Being able to inspire loyalty and engagement in participants, as well as being able to reward larger groups of participants, are the qualities that tip debit card rewards in the operator’s favor. Benefits to reward program participants are nothing to sneeze at, however. Receiving a fun and flexible bonus for hard work ultimately motivates partners and employees to go the extra mile. In essence, when it comes to gift and debit card reward programs, everybody wins.
CEO of The Incentive Solutions Group of companies, consisting of:
- Incentive Solutions, Inc.
Direct Contact: 678-514-0203
Sales Hotline: 866-567-7432[/ezcol_2third_end]