Prepaid Usage & Perceptions
The following report pulls research from a wide array of sources on the usage and perceptions of prepaid
cards verses other incentive mechanisms like checks, merchandise and single-merchant gift cards.
Research Review from The Incentive Performance Center:
Overall usage: The Incentive Federation Study of Merchandise and Travel Incentive Users found that prepaid cards have become the number one award for sales incentives.
Target audiences: The Incentive Federation Study also found that 78% of respondents offer incentives for salespeople, 57% for resellers, 77% for consumers, and 67% for employees.
Need for motivation: A Workforce 2000 study shows that in the 21st century, as the workforce ages, organizations will need extra stimuli to encourage productivity, flexibility, and the willingness to change and learn.
Research by Bain & Co. found that major companies lose, and have to replace, half their customers in five years, half their employees in four years, and half their investors in less than one year.
An article in the Fall 2000 issue of Marketing Management indicated that the degree of loyalty your customers have toward you typically mirrors the level of commitment and loyalty you have developed among your employees. The same study showed an average lag of six months between customer satisfaction and future financial performance in the hotel industry.
Results of motivation: Andersen Consulting’s survey of 500 executives revealed that programs to retain and reward sales, marketing, and customer service employees can give a $40 million lift to a $1 billion business’ bottom line. The biggest payback—$13 million—came from efforts to motivate and reward employees. Programs to draw and retain talent added $10 million.
Incentives, Motivation, and Workplace Performance,” a 2002 study of incentive programs by the International Society of Performance Improvement, found that properly structured programs aimed at individuals improved performance 25%; those aimed at teams showed 45% improvement. An overwhelming majority of workers—92%—said they achieved their goals because of incentives.
How they’re used: According to the Incentive 2002 Gift Certificates FACTS Report, incentive planners use prepaid incentives to fulfill the following: Increase or Maintain Sales: 19% Recognize Performance: 18% Build Employee Loyalty/Trust: 15% Start or Maintain Relationships: 13% Build Customer Loyalty/Trust: 12% Improve Customer Service: 9% Foster Teamwork: 9% Create new markets: 6%
Consumer Card Attitudes: A 2003 survey of 1,200 adults by ValueLink, a Denver-based gift card provider, showed that women are slightly more likely to buy gift cards than men; however, it found that men spend more per card: $58, versus $45 for women. Very young adults and older adults were less informed and less likely to buy the cards than those in the 25-to-54 age group, which accounted for 70% of purchases. Internet users are much more knowledgeable about gift cards (87% were aware of them) than non-Web users (67% were aware). Awareness and use of gift cards were relatively low among Hispanic consumers. However, they are more interested in reloadable cards than non-Hispanics, according to the study.
Card Ubiquity: A 2002 study by Taylor Nelson Sofres Intersearch shows that 37% of U.S. consumers have purchased or received a gift card in the past 12 months. The average value of purchased cards was $50, up from $44 the previous year. And 12% of respondents said they had purchased electronic cards for their own use in the past year. Of those who have purchased or received prepaid cards, 61% said they usually spent more than the initial value of the card.
The following chart compares prepaid cards and gift certificates with other incentive options:
Card Acceptance Among Users: According to Visa’s 2006 Consumer Rebate Card Report, when given the option, and for most rebates, the majority of consumers would prefer to receive a Visa rebate card rather than a rebate check or merchant rebate card. Of the three forms of rebate, a single-merchant gift card is clearly the least preferred according to the report:
Recommendations on Choosing a Vendor: Here are the questions to ask when seeking a card/gift certificate provider.
Redemption options: How can cards or certificates be redeemed: online, by phone, by mail, in person? If redeemable only at a specific merchant, how close are retail locations to where recipients live? When do the certificates or value loaded in the card expire? Is the amount that recipients don’t spend refundable? Is there an administrative charge levied even if the recipient doesn’t redeem the certificate or card?
Branding and customization: Does the vendor offer branding with the company name and/or logo? Can the recipient’s name be imprinted?
Communications: Can the vendor provide a personalized letter on my company’s stationery? Is there a Web site manage their transactions and receive relevant corporate communications? Does the vendor provide reports or a Web site on which participants can see how many dollars or points they’ve accrued and redeemed?
Reporting on redemption: How often can the program sponsor view data on activation and redemption? How often is data updated? Remember, gift certificates and gift cards can offer the unusual ability to track how people redeemed their awards, giving useful insight into the preferences of your target audience.
Individual fulfillment vs. bulk: Can the certificate or card be sent to each individual recipient, or are they sent in bulk to the person placing the order so he or she can disburse them?
Research Review from The Incentive Performance Center:
Overall usage: The Incentive Federation Study of Merchandise and Travel Incentive Users found that prepaid cards have become the number one award for sales incentives.
Target audiences: The Incentive Federation Study also found that 78% of respondents offer incentives for salespeople, 57% for resellers, 77% for consumers, and 67% for employees.
Need for motivation: A Workforce 2000 study shows that in the 21st century, as the workforce ages, organizations will need extra stimuli to encourage productivity, flexibility, and the willingness to change and learn.
Research by Bain & Co. found that major companies lose, and have to replace, half their customers in five years, half their employees in four years, and half their investors in less than one year.
An article in the Fall 2000 issue of Marketing Management indicated that the degree of loyalty your customers have toward you typically mirrors the level of commitment and loyalty you have developed among your employees. The same study showed an average lag of six months between customer satisfaction and future financial performance in the hotel industry.
Results of motivation: Andersen Consulting’s survey of 500 executives revealed that programs to retain and reward sales, marketing, and customer service employees can give a $40 million lift to a $1 billion business’ bottom line. The biggest payback—$13 million—came from efforts to motivate and reward employees. Programs to draw and retain talent added $10 million.
Incentives, Motivation, and Workplace Performance,” a 2002 study of incentive programs by the International Society of Performance Improvement, found that properly structured programs aimed at individuals improved performance 25%; those aimed at teams showed 45% improvement. An overwhelming majority of workers—92%—said they achieved their goals because of incentives.
How they’re used: According to the Incentive 2002 Gift Certificates FACTS Report, incentive planners use prepaid incentives to fulfill the following: Increase or Maintain Sales: 19% Recognize Performance: 18% Build Employee Loyalty/Trust: 15% Start or Maintain Relationships: 13% Build Customer Loyalty/Trust: 12% Improve Customer Service: 9% Foster Teamwork: 9% Create new markets: 6%
Consumer Card Attitudes: A 2003 survey of 1,200 adults by ValueLink, a Denver-based gift card provider, showed that women are slightly more likely to buy gift cards than men; however, it found that men spend more per card: $58, versus $45 for women. Very young adults and older adults were less informed and less likely to buy the cards than those in the 25-to-54 age group, which accounted for 70% of purchases. Internet users are much more knowledgeable about gift cards (87% were aware of them) than non-Web users (67% were aware). Awareness and use of gift cards were relatively low among Hispanic consumers. However, they are more interested in reloadable cards than non-Hispanics, according to the study.
Card Ubiquity: A 2002 study by Taylor Nelson Sofres Intersearch shows that 37% of U.S. consumers have purchased or received a gift card in the past 12 months. The average value of purchased cards was $50, up from $44 the previous year. And 12% of respondents said they had purchased electronic cards for their own use in the past year. Of those who have purchased or received prepaid cards, 61% said they usually spent more than the initial value of the card.
The following chart compares prepaid cards and gift certificates with other incentive options:
| Merchandise and/or travel | Cards/GCs | Cash | |
| Perceived value | Variable. Can be higher or lower than actual cost. If time is available at retail, the recipient can determine approximate cost | Not variable if denomination is in dollars. Slightly variable if points-based, because recipients may be able to approximate the dollar equivalent. | Not variable |
| Branding | Available but can be costly. Often not aviable on single items. | Available and relatively inexpensive. | Not variable |
| Time frame of recall | Long to medium. Recipient will remember accomplishment and reward each time they look at or use merchandise or recall a trip. | Long. Recipients recall accomplishments as they consider and choose reward. Once received, memory is reinforced. | Short. Once spent, recipient is unlikely to remember giver or occasion for award. |
| Versility | Low. Generally cannot be converted or exchanged for other goods and services. | Medium. Can be converted to services or merchandise within issuer's selection. | High. Redeemable for and service or merchandise. |
Card Acceptance Among Users: According to Visa’s 2006 Consumer Rebate Card Report, when given the option, and for most rebates, the majority of consumers would prefer to receive a Visa rebate card rather than a rebate check or merchant rebate card. Of the three forms of rebate, a single-merchant gift card is clearly the least preferred according to the report:
Recommendations on Choosing a Vendor: Here are the questions to ask when seeking a card/gift certificate provider.
Redemption options: How can cards or certificates be redeemed: online, by phone, by mail, in person? If redeemable only at a specific merchant, how close are retail locations to where recipients live? When do the certificates or value loaded in the card expire? Is the amount that recipients don’t spend refundable? Is there an administrative charge levied even if the recipient doesn’t redeem the certificate or card?
Branding and customization: Does the vendor offer branding with the company name and/or logo? Can the recipient’s name be imprinted?
Communications: Can the vendor provide a personalized letter on my company’s stationery? Is there a Web site manage their transactions and receive relevant corporate communications? Does the vendor provide reports or a Web site on which participants can see how many dollars or points they’ve accrued and redeemed?
Reporting on redemption: How often can the program sponsor view data on activation and redemption? How often is data updated? Remember, gift certificates and gift cards can offer the unusual ability to track how people redeemed their awards, giving useful insight into the preferences of your target audience.
Individual fulfillment vs. bulk: Can the certificate or card be sent to each individual recipient, or are they sent in bulk to the person placing the order so he or she can disburse them?
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