Catalog Providers Hate Gift Cards because Your Employees Love Them!

I know, this sounds counter intuitive, the companies that build recognition programs based upon catalogs of their pre-selected merchandise items do appear to hate gift cards, and they hate them precisely because they are truly loved by your employees!

Recent blog postings – some of which went to really low levels of name calling – proved just how much these catalog companies truly HATE gift cards and how low they are willing to go to fight for their corner. But it’s a Love/Hate tug of war here, with different parties on both sides. Let’s take a look at who sits on each side.

The LOVE gift cards side:
• HR Leaders & Recognition Program Managers, why? Well, because…
o Employees truly love them!
o They really, really do work internationally – low costs and NO hassle for HR.

The HATE gift cards side:
• The catalog merchandise companies.

Let’s look at the Lovers first in more detail and, unlike the catalog company bloggers, let’s actually quote some research drawn from the incentive and recognition industry, and not the unrelated, inappropriate consumer research they like to quote.

A LOVE FACT: Year after year, HR Managers/ Recognition Program Managers state their strong preference for gift cards. In the latest Incentive magazine research (yes that’s our industry) 64% say gift cards are MORE effective than merchandise. That figure has grown up and up each year for the past several years.

A LOVE FACT: Employees vote with their feet and prefer gift cards over merchandise catalogs in enormous numbers. The figures are staggering actually – introduce even just 10 gift cards into a catalog filled with thousands of merchandise items and within weeks, 90% to 99% of employees will select the gift cards! How do we know this? Well, Stanford University studied and wrote an MBA case study about the history of different employee recognition programs at one of Fortune’s Most Admired companies – Intuit. Full disclosure here: Intuit is a client of ours now, but only AFTER they witnessed this incredible landslide vote from employees calling for gift cards in their previous supplier’s program. We recently ran our own research on this topic too, and found in a live case study of 12,000 employees, 99% chose a gift card over pre-selected merchandise catalog items.

I am going to jump into the reasons behind this resounding preference for gift cards among HR leaders and employees alike over the coming weeks – believe me there are plenty of reasons why this love affair is true and is real. All of these reasons are rooted solely in the realities of employee behavior, international trade, and different shopping cultures worldwide. Watch this blog for more.

But before I close – let’s just touch one of the hate facts.

A HATE FACT: I do agree with my fellow bloggers on one point, profit models certainly play a role here. They have theirs and we have ours. They of course hate gift cards, because they attack their business model and the extraordinary mark-ups on their merchandise items. It’s painful for them I know, just like the sellers of music tapes and cassettes must have hated CD makers who in turn must have hated Apple and its iTunes model. It’s an earthquake! Industry change is painful, but at the end of day I firmly believe the consumer (in our case, your employees) deserve to win and WILL win.

More in the coming weeks...