Achieving the plastic fantastic

Demand for pre-loaded gift cards has been booming over the past five years. In 2012 the B2B sector accounted for 52% of the total market, outpacing the consumer sector for the second year running, and the trend is likely to continue for the next two to three years, forecasts Andrew Johnson, director-general of the UK Gift Card & Voucher Association.

A number of factors have helped fuel strong growth. In the retail space – unlike paper vouchers with an inherent value, which have to be kept in the till – cards are activated at the time of purchase, so can be put on display; card design has increased consumer appeal; and in the reward and benefits space, the ability to reload, remotely top up, and for partners to hold blanks makes them more efficient.

Give choice
The simple truth is that choice motivates. Far from being seen as an impersonal reward, the popularity of gift cards stems entirely from the flexibility and choice they offer to both gifters and consumers. The giver is able to gift both the reward and the choice of present itself, while recipients might choose to share with family and friends when spending, or take advantage of sales.

From the employers’ perspective, a pre-loaded card, which offers a choice of products and/or brands, allows gifters to avoid giving a gift that has been chosen with someone in mind, yet doesn’t quite hit the spot.

“With the best will in the world, it is an employer-to-employee gift. While a specific gift would always be appreciated, it just might not be quite right. So although a card isn’t in itself a personal gift, it is a very acceptable choice because of the flexibility it offers,” says John Dove, House of Fraser for Business.

According to Dove, two factors have been key to the strong growth the House of Fraser card has enjoyed in both the retail and B2B markets in recent years: “One: There is the feeling that I could buy you a gift, but with a gift card you could choose one for yourself, and two: businesses usually want to associate themselves with well-known, premium brands.

“But there are always two sides – the giver and receiver – and there is more of a wow factor around certain brands. Within House of Fraser there are many brands and that translates to ease of use, choice and accessibility within a premium brand, thus receiving a House of Fraser card is perceived as a genuine treat – ‘something for me’.”

Tracy Finn, head of Harrods Corporate Service, agrees: “A pre-loaded card represents an indulgence and an added luxury. It can be an experience in itself to redeem the card in a store like Harrods.”

Match value to brand
But what about the load amount? Too little and you risk offending the recipient, too much and you could create an unsustainable precedent.

Dove adds: “There’s always tension between your budget and what you would like to do and there’s also a balance to hit when making people feel motivated. £50 might not seem much in the context of someone hitting a sales target, but £50 within the context of House of Fraser is a nice reward.”

One potential pitfall is mismatching the chosen brand to the value on the card, says Dove. “If I were given £10 for House of Fraser I might feel I couldn’t do much with that, but £10 to spend at Boots, for example, I could.”

Ultimately, he says, budget will often dictate brand.

As SVM Europe’s Angela Webster believes, gift cards offer the giver flexibility as they can choose the load amount. Having a choice of brands is again important when considering value. “The amount given often reflects the reason the reward is being given, so can range from a small thank you to something large like a long service reward.  In the case of a small thank you, something like a relatively small value on a gift card for a cinema or coffee shop would enable the recipient to have an experience being much more powerful than say a box of chocolates or a £5 note.  On the opposite scale, a higher value reward can be used against a holiday gift card or leisure experience, the key being flexibility for the situation.”

The secret to successful gifting without breaking the bank is picking a brand that’s recognised, where people can buy something outright whatever the amount on the card, and making people feel valued for a relatively low-cost reward. “With a Costa card you can gift £5 and achieve all of that and offer a scheme that is sustainable without worrying about overstretching the budget,” says Ben Cook, loyalty manager at Costa for Business.

Gifting can be a bit of a headache, he admits. “People are working longer, so there is a wider age demographic; there’s both the work and time involved in finding the right gift; and it can be tricky to find something with the feelgood factor where the recipient feels valued and still gets the element of choice.”

However, he believes most employers successfully avoid the main hurdles involved with gifting. “There is a danger you might gift too high an amount but I haven’t seen any evidence of that. Employers are very sensitive to their employees and to the marketplace, so they don’t tend to gift too little and do give enough that the receiver can buy something outright.”

Gift a little extra
Picking a card that can be used alongside a loyalty card scheme doubles its appeal, says Cook, and the fact that there are currently 3 million Costa loyalty cards in use, up from 1.7 million when the Costa gift card was first launched in November 2011, appears to bear that out.

“People are accustomed to having loyalty cards in their wallet as one of their choices of payment. If you add a loyalty card alongside a gift card it becomes a double whammy as a benefit since people then feel valued both as an employee and as a consumer,” Cook adds.

PizzaExpress for Business has also experienced double-digit, year-on-year growth in demand for its cards, and the company is experimenting with new initiatives as a result.

“Because everyone enjoys getting something for free, we pioneered £20 limited edition cards for the Christmas rewards market where the user received a complimentary helping of dough balls. It was the number one casual delivery gift value card at Christmas,” says product manager Richard Mills. “That proves if you can add value on to the gift card it becomes even more appealing both as a gift and for people to use.”

In the reward and recognition and employee benefits marketplaces the company is currently looking at masking the value of the gift card by offering experience cards – for example a two-course meal for two with a drink, or a team night out.

“Experience cards are ideal for small or medium-sized companies for two reasons. A gift has an inherently higher value if you don’t know what someone has paid for it,” Mills explains. “But it also offers better value to employers. If you give a £20 card the user might just go in and spend £17 on a meal and the rest goes to breakage.”

Choose wisely
According to Mills, crucial to getting gifting right are: making sure your scheme can be fulfilled efficiently and in a timeframe to suit the end user; working with a reliable card processor so your scheme actually works, selecting a scheme that integrates with your website; and the design of the card itself, so it communicates clearly what it can be used for.

But while the gift card business may be burgeoning, not all high-street retailers are faring so well, so choosing multi-retail cards is one way of ensuring a scheme remains functional and attractive during tough times.

“There’s some negativity around gift vouchers and cards of late as retailers enter administration, but employers can combat this by using multi-retail cards, which provide even greater choice without the risk,” counsels Colin Hodgson of Edenred.

Make it memorable
Gift cards were first introduced to the UK mainstream by PrePay Solutions through a partnership with Debenhams in 2002, and retail and e-commerce expert Anjay Sethi has two key pieces of advice to offer gifters.

“Gift cards are usually offered as full face value – discounts take the edge off a benefit,” he cautions. “Companies that use the gift cards tend to take them across the whole spectrum: fashion, ticketing, travel, food, luxury items and household goods. Range and depth of offer are both important to allow businesses to offer rewards that are meaningful, generous and memorable.”

Tough times and tight household budgets mean giving gift cards that put previously routinely enjoyed treats, like a meal out or a trip to the cinema, back into the realms of possibility are always going to go down well.

But the beauty of the pre-loaded gift card is that it allows employers to give their staff flexibility of choice between short or longer-term enjoyment for an enduring reward, explains Martin Alden of Wickes for Business.

“A gift or reward that enables someone to invest in and improve their home helps them to remember the gesture, their employer and how they earned the reward.

“It’s not only a long-lasting reminder of the company, but it also makes a powerful statement about them. It positions the business as one that is considerate towards an employee’s life at home, outside of work, and actively helps them devote time to it. The ultimate personal gift.”

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