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One Gift Card, Many Options
June 09, 2008
Gift card incentive rewards now feature multi-merchant models
By Maya Dollarhide
As the market for gift cards continues to rapidly expand, with sales estimated to reach the $100 billion mark this year, companies are continually searching for creative ways to enhance the cards. A decade ago, gift cards functioned in a single way—redeem a single-ticket item, much like old-school gift certificates. But today's cards go far beyond one-shot gifts. Now some companies are offering one card with many options, which some experts say is a better way to confer spot rewards.
"One card with several purses on it is a real trend right now," says Jean Lansberg, research specialist, First Data Corporation, a provider of payment solutions based in Greenwood Village, Colo. "People don't want to carry around five different gift cards they received as spot rewards in their wallets. They want one card that can be used in a variety of ways, even at a variety of merchants. For example, they could have a Starbucks/Apple card or a gas card attached to a McDonald's card. Right now, our company is piloting a couple of merchants to offer a card that can be redeemed at any of their stores."
Lansberg could not reveal the merchants involved in the pilot program, but the card will be a multi-purse that contains many shopping options. While co-branding on a card is not a new phenomenon, five or more companies sharing a single card has not really been seen before. Employees are able to build points and shop around for their rewards. In terms of physical branding on one card, how will multiple logos fit on one tiny sheath of plastic? "I guess we'll let them duke it out in terms of the branding," says Lansberg. "Seriously, though, the multiuse purse-card with several merchants attached to it is set to be a real game changer in the gift card industry."
It may have started with Starbucks. Lansberg praises the company's innovation in the gift card sector. "They really set the gold standard," she says. "For example, the Duetto Card [a combination in-store transaction card and Visa credit card] was extremely inventive when it came out [in 2004]. It was on a closed-loop purse, but could be used anywhere," says Lansberg. "Gift card programs are becoming extremely diverse and creative."
In March, Chockstone, a marketing and technology provider in Portland, Ore., released SingleSwipe, an identification program that will link merchant loyalty programs to a customer's existing credit or debit card. And Visa offers a special gift card/loyalty card that can be redeemed for medical, health and wellness services up to $2,500. "The Visa Healthcare gift card is easy to use and has been extremely popular," says Stefanie Duckworth, who works in the human resources department of Berger Health System, located in Circleville, Ohio. "People use it to pay co-fee payments, visit their dentist or use it to purchase prescriptions," says Duckworth.
The card is accepted at venues that have been categorized as a health and wellness merchant. "Employees who are not on our health plan were especially happy to earn this reward," says Duckworth.
More Bang for Your Buck
"You always want to add a little extra to your card," says Tom Simonian, president of Incentives Inc. in West Chicago, Ill. "You have to get creative. We work with a major financial [company] that offers an online point program, and we always ask the gift card suppliers to do a little something special for this audience. With [dual and multiuse] gift cards, you have the luxury of getting more bang for your buck," he says.
Watson Nichols, senior communications manager for Atlanta-based InComm, North America's largest provider of gift cards, wireless and other prepaid products, agrees that dual-purpose cards can be more fun than single-unit cards. In late April, First Data Corp. announced the acquisition of InComm.
"One of our most exciting items is our 'Win It Now' gift card. It has three logos of merchants on it, and then you scratch off a prize decal on the back of the card to reveal where you can use the card and how much you've won. One card, serving two purposes—it's a game and it's a gift card: People love them," says Nichols.
He adds that companies offering "Win It Now" cards as incentive spot rewards have witnessed amazing improvement in their employees' performance. "Companies have reported that these cards really inspire their employees to work hard, make more sales calls and close the deal," says Nichols. "It's interesting, because even though the employees might have, in the past, received a bigger cash amount than what they would win, it is playing the game that appeals to the employees."
According to Simonian, cards that function in many ways can create unique opportunities for incentives. "I know of one company that allowed employees to gain points using their cards that could be redeemed for company stock options, and another company that offered a gift card whose points could be redeemed for parking spaces," says Simonian.
Is It Really Catching On?
And while some experts praise the arrival of dual- or multiuse gift cards, others, like Timothy Rossi, spokesperson for Globoforce, are more wary. "More research needs to be conducted on the multipurpose cards before pushing forward full-steam. Many may think they are a 'cure-all' for recognition and incentive rewards. We have to be careful with the concept," he cautions. "If 'multipurpose' gift cards can be used to purchase everyday sundries such as milk, eggs or gas, then the intrinsic value of the recognition experience is lost."
Send comments to feedback@incentivemag.com.
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