The “ouch” in “voucher”…

Posted by RickPulito under Human Resources
From http://ideationz.wordpress.com 4796 days ago
Made Hot by: HomeBusinessMedia on April 7, 2011 9:04 pm

Never one to shy away from controversy, the author takes on the peddlers who resell gift cards for use in employee recognition, sales force incentive, and customer rewards programs.
Bottom line: Gift cards are a poor value, compounded by the industry practice of using "vouchers" that require the recipient to go online, enter a code, complete a volley of information, and then select from a large list of eligible retailer cards.
Problem is that many people simply don't take the effort to redeem the voucher, which is the basis for how resellers make money (and your best employees, sales people and customers go effectively unrewarded).
Curious how this works? Read on...

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Comments

Written by RickPulito
4761 days ago

Great points, well stated... Thank you for taking the time to share your thoughts on the topic of retail gift cards. I cannot imagine a less personal, more costly way to show appreciation to someone. People say they "love" gift cards...What they really mean is that they love being recognized... The gift cards are too often not even used. Retailers "love" them most, for that very reason (!)

Thanks again!

Rick

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Written by RickPulito
4767 days ago

Another way to look at this: Would you ever willingly pay $25 for a certificate that may or may not be redeemed for a $20 retail gift card that may or may not ever be used? Believe it or not, there are companies that generate millions of dollars of sales doing exactly that.

How do they pull that off? They simply promote a claim that "gift cards are everyone's #1 choice for a reward or a gift".

It never ceases to amaze me how many bad decisions are made by simply wanting to give people "what they want" instead of what makes sense...

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Written by ShawnHessinger
4791 days ago

Hi Rick and Ronika,

OK. I knew I wouldn't be able to stay out of this discussion for any length of time and here I am. I think the judgment of gift cards as basically a bad idea MUST come with some caveats. First, I have worked in corporations in which gift cards and or coupons or other money-off cards were regularly handed out as rewards. This bugged me for one simple reason. In most cases, companies would hand out cards for retailers neither I nor any other employee ever frequented and often because corporate had some business relationship with them. This approach, of course, (giving someone a card they don't want for a product they don't need from a retailer they never frequent) is NOT a reward and WON'T be seen as one. On the other hand, I often encourage people to give me gift cards for my favorite cafe/my favorite bookstore/my favorite music downloads for a couple of simple reasons. As a reward, this is value that, were it given to me as cash, I would always be tempted to spend on something more practical. But also, the cards mentioned above are for items I personally will never stop needing. I will never loose interest in reading another book, stop drinking coffee at my favorite cafe or stop being interested in downloading new music. (I'm thinking that a gift certificate for my favorite supermarket would have a similar effect or be even better because theoretically it might even save me money.) I have NEVER forgotten to redeem a gift card of this kind and, on the contrary, they are often spent quite rapidly. I understand this may not be the case with everyone. However, I think if companies began to look at the idea of giving out gift cards as a way of creating value to really reward employees (I can tell you I would feel rewarded if I received such an incentive) they would see a dramatic shift in the way these incentives are perceived. Honestly, reselling of gift cards isn't a business I've ever been in but I don't think I would feel particularly predatory about it so long as I knew that purchasers/employees were getting real value in the bargain.

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Written by ronika
4791 days ago

Hi Shawn,

I see your point about getting a gift card for a favourite indulgence that you might not buy if you had cash. I also agree that it can make for a great corporate incentive. My major problem with them, I guess, is that they are often used as gift currency. You are obligated to give a gift (Christmas, birthdays) so rather than putting some thought into it, it is easier to give a gift card. This, to me, sort of defeats the purpose of giving a gift in the first place. In reality, of course, there are occasions when gifts are obligatory and I suppose it's better than a bad sweater or pack of tube socks.

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Written by ronika
4791 days ago

I've never liked gift certificates for exactly the reasons that you indicated (the breakage factor) and for the lack of thought and imagination that goes into giving them. I would much rather get a 50 dollar bill that I can spend anywhere than being forced to spend it at a specific place.

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