Incentive - January 2009 - (Page 64)

GIFT CARDS The Prepaid Reward Spectrum Sorting out the good and bad features of three main types of prepaid cards By Catherine McDonald ongratulations! You’ve made the wise decision to utilize prepaid rewards, or gift cards, for your incentive program. A little insight into the various prepaid reward options can help you choose the best card to maximize your incentive dollars. There are three basic types of prepaid rewards. At one side is a prepaid reward that can be used virtually anywhere credit cards are accepted, and on the other is a reward that can be redeemed at a single merchant. Toward the center of the spectrum is an emerging category known as selective-spend rewards. These prepaid cards allow recipients to choose from a preselected grouping of merchants. It’s important to understand each prepaid option and its corresponding value so you can contrast their features and determine which makes the most sense for your unique incentive program. C Advantages and Disadvantages First is the universal prepaid rewards option. Also known as an “open-loop” card, this type can be used almost anywhere. On the one hand, this removes nearly all the guesswork in an incentive program—planners need not worry about selecting enticing reward options, since recipients can use the cards virtually anywhere, and thus have the ultimate choice. On the other hand, recipients can take this card that is meant to recognize and reward positive behavior and use it for life’s necessities such as groceries, paper towels or tax payments. While such purchases are needed, Catherine McDonald is the corporate marketing manager of American Express Incentive Services (AEIS), which offers business-to-business reward solutions for corporate incentive and consumer promotions programs 64 | Incentive | January 2009 | incentivemag.com Illustration: Chad Crowe they are hardly memorable or motivating. Adding a gift motif or congratulatory message is a common technique to make clear the gift card is intended as a reward. In the middle of the spectrum are multimerchant or “selective-spend” options. This fast-growing category encompasses themed cards (such as mall, dining or gas) as well as cards specifically designed for audiences by program planners. For instance, the DirectSpend card from American Express Incentive Services can be limited to a type of category, like travel—the card could be used for airfare, hotels and luggage, but not a new television or the electric bill—or even to merchants in a specific locale. Proponents of selective-spend cards believe that planning that considers personal tastes can help ensure a rewarding experience for the recipient. Also, the reward earner must exercise more conscious choice, and that can make shopping more “experiential.” In fact, research in management and organizational behavior by Scott Jeffrey, Ph.D., of the University of Waterloo in Ontario, Canada, indicates that recipients are more likely to visualize and anticipate the forthcoming reward and create a positive association between that reward and the behavior that initiated it. Finally, the right side of the spectrum houses the single-merchant card, good only at a select retailer. Similar to universal cards, these options remove guesswork and additional planning for both program planners and recipients. Although one can argue that single merchants reduce choice, these cards are still viewed as meaningful incentive solutions. Many of these cards are issued by retailers with a wide selection of merchandise within their category, ranging from national electronics retailers to department stores to casual dining chains. It’s clear that one size doesn’t fit all with prepaid, and it’s actually this variety that makes them so popular. http://www.incentivemag.com

Table of Contents Feed for the Digital Edition of Incentive - January 2009

Incentive - January 2009 Contents Editor's Note: Rewards Must Be Sustainable Headlines Cover Story: Responsibility's New Role Incentive Interview: Patrick Lencioni Family Rewards: Who They're Working For Primer: Working Design Leap of Faith: Religion in the Workplace Cook Up Engagement: Kitchen Teambuilding My Turn: Procurement Possibilities Motivation@Work: Hard Times Recognition Legal Ease: The Tax Facts on Corporate Gifts Travel News: Where to Go and What to Do The Bahamas: Islands in the Sun Field Reports: Four European Destinations Golf: Around the World in 18 Holes Potentials Here and Now Watches and Clocks: Strike the Pose Golf Merchandise: Awards with a Solid Swing Computers: Digital Delights Retailers Band Together for Gift Card Market Gift Cards: The Prepaid Reward Spectrum Advertiser Index On the Web www.Incentivemag.com

Incentive - January 2009

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