Many of my clients say their employees would like to see gift cards in their reward selection. But are gift cards truly rewarding? Countless studies regarding cash and non-cash rewards show non-cash rewards get the greatest results. Gift cards are considered equivalent to cash because of the face value and are much less effective than rewarding with tangible, merchandise-based awards.
Many organizations look at gift cards as the ultimate flexible reward – a participant can choose what they want from a local retailer. But if you look closer at what this person is using their gift card for, it might surprise you. Many of those who select gift cards are using them for household items such as groceries, diapers, etc. Are these “disposable” items really a memorable award?
A tangible expression of thanks can be an excellent way to encourage increased performance, promote company values, and boost retention. Here is some data that supports why tangible rewards are more powerful:
- Tangible Rewards are Visible – Tangible rewards have trophy value; share your success with co-workers, friends, etc.
- Gift Cards are Spent on Necessity – Participants who receive a gift card typically use it for everyday items and rarely on a special purchase, event, or experience.
- Don’t Remember? – After 30 days of receiving a cash reward or gift cards, a participant will not recall what it was used for.
- Increased Loyalty – Tangible rewards reinforce association with the sponsor company and increase loyalty.
A study conducted by the Incentive Research Foundation shows that tangible incentives increase work performance by an average of 22%. When looking at cash or gift card-based programs, tangible award programs outperform those by an average ratio of 3:1.
When is comes to actual rewards, respondents to an Incentive Federation survey indicated merchandise and travel incentives are more compelling than cash. Merchandise transcends its roll as a reward and becomes a trophy to be “displayed.” How this item was earned is shared with co-workers, family members, and friends. You definitely earned your bragging rights!
Take a look at your organization’s reward mix. Are you using the “right” rewards? And of course, remember to recognize those who go above and beyond!
Posted by Recognize Right 