Gift voucher rewards

Gift cards are an increasingly popular solution for employee rewards, but do they drive loyalty?


More than 50% of the £5bn gift card, voucher and stored solutions market is B2B, and much of that goes on employee rewards. It’s a popular choice with employees too: a recent survey by Argos for Business found that 39.5% of workers would prefer to receive a retail voucher from their employer so they could choose a gift for themselves. But do gift cards work as a driver for loyalty, and who stands to benefit?

Brian Dunne, managing director of SVM Europe, explains why gift cards work so well as an employee reward: “The Incentive Research Foundation identifies separability as a quality of non-cash incentives such as gift cards. While a cash bonus received as part of the pay cheque tends to be mentally combined with the rest of the employee’s salary, a gift card is separate from other forms of income, so it’s seen as a treat.”

In addition, gift cards offer benefits that set them apart from other non-cash incentives. Dunne continues: “A gift card allows the recipient to decide what type of item they want to buy – whether that’s a television or an item of clothing – in the knowledge that when they go to the store they’ll be able to look at the options and choose the one that’s right for them.”

Dunne says they are also seeing an increase in venues, such as hotels and restaurants, available through gift cards, enabling people to share their reward with loved ones. This helps to spread the positivity towards the employer who gave them the gift.

“As a driver for loyalty, gift cards have the right level of keeping things separate while giving control to the employee, enabling a sense of achievement and a good feeling about their employer,” adds Dunne.

Brand benefit
In order to achieve that level of engagement from a reward, employers need to identify which brands their employees prefer. In doing so, they can tap into a dynamic that drives loyalty to their own brand as the giver of a meaningful reward, and to the brand that supplies the gift.

Andrew Johnson, director general of the UK Gift Card and Voucher Association, says: “Gift cards provide an easy and convenient way to reward with the gift of a retail experience. If you’re a company issuing gift cards and vouchers and you’re looking at your B2B strategy, employee rewards is the best place to start. From an HR manager’s perspective, gift cards are a very effective reward mechanic because they have the basic advantage of giving people choice and enabling organisations to leverage brands. The brand – or range of brands – you’re gifting is the real crux of the reward.”

Colin Hodgson of Edenred, which provides a range of employee reward solutions including its Compliments multi-store gift card, says: “Non-cash rewards create a memorable experience which is associated with your brand when the reward is received, chosen and redeemed. The fact that gift cards are secure, can be loaded quickly and used through a range of affiliates all underpins the brand experience for the recipient.”

At Argos, their gift card reward scheme is seeing big benefits for all stakeholders. The retailer works with  a number of different companies to provide gift cards and vouchers as part of its additional employee benefit schemes. Danny Clenaghan, managing director of Argos for Business,  says that because the rewards are separate from the regular salary, they have become an extension of the services that the company is able to negotiate on behalf of the employee. “When there’s an affinity and a demographic correlation between our customer base and the employee base, we provide our own gift cards, as well as our Collection Code product-specific voucher service, for use in those schemes,” explains Clenaghan. “Everybody is familiar with the Argos brand, and the size and scope of the gifts available make it an ideal source of employee rewards. This brings advantages for the employer who can give the right gift, the employee, who has 35,000 items to choose from, and for the Argos brand.”

Many happy returns
The increasing sophistication of gift cards adds new dimensions to the loyalty reward, which can enrich the recipient’s experience of the reward as well as their positive association with the giver and the brand.

Dunne comments: “We’re seeing a move towards digital capabilities, with the ability to deliver an electronic code or reload a gift card. From an SVM point of view, we reload a lot more gift cards, and this works especially well with an employee loyalty reward scheme. You hope that employees will be there for a long time and you’re rewarding that loyalty, so it makes sense for them to choose to keep a card for their favourite store and have that reloaded.”

Some companies are choosing to make a range of retail brands available on an employee portal so users can make their own selection. Ajay Sethi, senior manager, retail and corporate at PrePay Solutions, says: “People like that concept because they feel they’re getting value and they’ll continue to top up the card. Once a reloadable gift card is in the hands of an employee, it becomes a tool for them to access discounts throughout the year through regular top-ups and regular spends. As well as working as a loyalty reward from the employer, it’s a good driver of retail loyalty.”

Hodgson adds: “Issuing a branded prepaid card which can be reloaded serves as a permanent reminder or connection to the incentive. What’s more an entire programme – from the programme website to the card and communications – is a very powerful way of reinforcing and differentiating your brand identity.”

Gift cards have the potential to tap into a unique dynamic between the recipient, their affiliation with their employer’s brand and their retail choices. Targeted in the right way, they can work as a powerful reward and a driver for loyalty, for employers and retailers alike.