The Art of Effective Gift Giving

In the corporate world, it’s rarely practical for management-to-employee gift-giving to be quite that tailored. However, new technology underlying gift cards – which have become an extremely popular form of gift-giving – make it possible to come surprisingly close.

First, some numbers: The overall market for gift cards is projected to grow to nearly $88 billion in 2008, with the fastest growth occurring in corporate purchases for employees and customers. By 2008, corporate purchases are slated to rise 72% from the 2005 figure, growing from $9 billion to $15.5 billion.

There are several reasons for the explosive growth in gift cards usage as rewards within incentive programs, and many are rooted in the fundamental rationale for incentive programs. That rationale, from the point of view of the employer, says “for doing the work I hired you to do, you get money – a paycheck. For doing the work I hired you to do extraordinarily well, you get something beyond just a paycheck.”

And, it is always about producing business results for the employer. The sine qua non in any incentive-based undertaking is getting employees to perform at peak levels –to the ultimate financial benefit of their employer. Decades of experience strongly suggest that so-called “trophy value” – that reward component that plays to an employee’s ego and allows him or her to say, in effect, “Hey, look what I did!” – matters greatly and is necessary for producing the desired effect. So, the reward’s trophy value– the public and visible symbolism of it – is what produces results for the employer.

Why not use cash as that reward, in the form of a bonus, or a bigger paycheck? Well, you can’t really show a bigger paycheck off. You can point to the new stereo system in your living room and, in effect, say, “I got that because I did something special, and, therefore, I am something special.” But that doesn’t work with a bag of groceries, a box of diapers, or a crumpled $50 bill. From a reward standpoint, cash becomes an almost utilitarian option for motivation.

Gift cards, are a remarkably elegant solution for delivering both trophy value, and the incentive qualities that are most important to program participants: choice, value, and immediacy. Increasingly, employers are turning to gift cards for these benefits as well as their basic convenience- they want a variety of rewards to choose from, and the retail environment gives them that. They want rewards to be meaningful, relevant and appropriately priced; and they also want them to be readily accessible.

“The incredible growth of gift cards as incentive solutions is direct testimony to their utility and value,” said Darryl Hutson, CEO of American Express Incentives Services (AEIS). And, as the technology underlying prepaid cards becomes more sophisticated, the cards can be used to support a variety of company business and marketing goals. Today’s technology allows companies to specify where the card can be used. That means they can go well beyond so-called “universal” cards, which allow the value to be expended anywhere, and which, therefore, feel to the participant almost like a cash reward.
That’s a huge plus, because it enables the employer to do some things that other reward media can’t really match. As an example, a sponsoring company can include only its locations or services and/or those of strategic partners as places where the card can be spent. Or it can specifically exclude its competition leaving intact the rest of the retail, travel, dining, and entertainment universe.

But perhaps the most important thing it can do – particularly when it comes to holiday-related employer-to-employee gift-giving – is allow the employer to take on some of the characteristics of our gift giving “artist.” It allows employers to customize gift choices to reflect what they know aligns with the individual interests and expectations of employees. This nuance makes the gift more personal, more meaningful, and, most importantly, more motivational.

Thus, a program participant who is a travel lover might get a card that that is good for travel – airfare, hotel, etc. – but also good for travel-related accessories, like luggage. An employee who has an interest in gourmet eating might get a card that’s good for multiple fine restaurants. And so on. What you are, in effect, saying to an employee with a card like this: “We could give you an open card, usable anywhere for anything, including groceries or light bulbs, but we see you as more special than that. Plus, we know you love golf. So we’re rewarding you with special access to high-end golf equipment and golf travel packages, by way of this card.”

AEIS offers a variety of card products utilizing DirectSpendSM, a patented process that enables clients to bring this technology to life by strategically directing cardholder spend to a merchant or a group of them. “It’s all about choice,” said Hutson. “Everyone is motivated by something different. Instead of a ‘one size fits all’ approach to gifting, why not take advantage of the innovation and convenience that allow employees to choose the reward they love most?”

That way, the gift is better able to do what it’s intended to do – motivate the employee to greater levels of loyalty, more intense feelings of affinity with the employer, and higher levels of productivity and performance. Adding to all of that is the fact that the cards can be customized with the sponsoring company’s logo, the participant’s name, and even the incentive program theme. These elements make the card itself more trophy-like, and remind the participant, every time he or she uses it, where it came from and why they got it. It is, both for the employee and the employer, a gift that keeps on giving.