It all started with paper gift certificates. These certificates were given to employees, customers, and partners for meeting goals, recognition on a job well-done, or just as a simple thank you. Gift certificates were often mailed and could take weeks to reach their recipients.
Along comes plastic
In late 1994, the first plastic gift card was created. Blockbuster Entertainment created gift cards that had no value until activated. There is some debate as to who was next, but it was believed to either be Mobil Oil Company or Neiman Marcus. Mobil introduced a plastic card that could be used for gas fill-ups and phone calls. Using the same technology that was available with prepaid phone cards, a customer’s balance information was obtained within a magnetic strip. While Neiman Marcus had created a card, they did not market them properly in stores: placing the gift cards out of site behind the cashiers.
Other retailers to follow suit:
- 1996: JC Penney shook things up by offering designs on their cards
- 1997: Kmart partnered with AT&T to create a store card that could also be used as a calling card
- 2001: Starbucks introduced reloadable cards
Plastic was clearly an upgrade on the traditional paper certificates. More convenient and not as easy as paper to replicate, plastic helped reduce fraud and loss. In some instances, to this day, recipients still have to wait weeks to get their plastic gift card reward.
Gift cards have evolved into a top choice for incentive & rewards programs. E-gift cards (sometimes referred to as digital gift cards or eCerts) have been a complete game changer in the incentive world. Using barcodes and QR codes, e-gift cards can be printed and scanned or even redeemed straight from the recipient's mobile device. With the ability to now send an employee, customer, or program member a gift card to an email address or smartphone within 30 minutes or less, rewards are more instant and gratifying.
Gift cards as rewards and incentives
While the speed of delivery is the most recent gift card breakthrough, this is not the only reason gift cards are so popular for recognition, rewards, or incentives. Gift cards are a flexible, customizable option, that allows the recipient to purchase something for themselves that they may not have if they received a different reward, such as cash.
In 2014, The Incentive Gift Card Council (IGCC), a strategic industry group that is part of the Incentive Marketing Association, surveyed over 1,000 people - 222 of which manage gift card programs and here is what they discovered:
- Approximately 50% of U.S. businesses used gift cards to reward or recognize employees, partners, and customers
- The most common application for gift cards was employee recognition programs, followed by sales and customer recognition programs
- Dining was by far the most popular merchant category, followed by department stores
- Large companies were more likely to also buy from the corporate sales group of a retail brand or from a gift card reseller. (B2B gift card management companies, like our team at GiftCard Partners, handle these types of sales for retailers)
- Of those ordering online from a retail corporate sales group or a reseller, 86% are highly satisfied with the online ordering experience
The evolution of gift cards is fascinating, to say the least. The IGCC is gearing up to conduct this survey again this year, so keep an eye out for more on how the industry has grown in the last 2 years!
You may also be interested in The Evolving B2B Gift Card Channel white paper, which takes the evolution of gift cards and their use as incentives a step further.