Rising popularity of corporate gift vouchers

Author: Nick Golding

The height of the economic downturn forced many employers to take a long hard look at their employee benefit spend - and the more prudent decided to focus on short-term perks. Nick Golding looks at the continuing rise of a classic instant-gratification benefit, the voucher.

Companies wanting to motivate their staff without breaking the bank love the idea of the gift voucher, which allows them to reward staff by giving them credit to spend with various retailers and service providers.

Raegan Matthews, incentive manager at House of Fraser, where corporate voucher sales rose by 13.5% between 2008 and 2009, explains: "I think the recession has had a positive impact on the [gift voucher] market. Companies have had to retain their staff and maintain levels of motivation through a difficult time, and the gift card and vouchers offer a great way to help with that."

Growth was consistent throughout the industry, and while other benefits suffered along with the economy, the UK Gift Card and Voucher Association (UKGCVA) recorded a corporate sales increase of nearly 10% year on year.

Move from paper vouchers to electronic cards

Economic conditions are not the only factor reshaping today's corporate gift industry - technology is also playing a role in changing the face of the benefit, with the traditional paper-based voucher being steadily replaced by the electronic card. Under the electronic card system, gift money is loaded onto the cards via a computer system each time staff are rewarded.

But the trophy value of the paper voucher and the fact that electronic systems are not advanced enough in the corporate market to cope with high demand have kept the paper-based voucher ahead of its rival - for now, says Andrew Johnson, director general at the UKGCVA.

He admits: "Corporates haven't taken to electronic cards quite as quickly as the general public because of the number of systems needed to allow the cards to be loaded effectively. It's easier for employers to offer employees a voucher at the moment because there is still a bit of work to be done here to improve the system."

Vouchers on offer

Store Vouchers Discounts
Argos £1, £5, £10, £20, £25
  • £1,000 to £9,999 - 4% off orders
  • £10,000 to £29,999 - 5% off orders
  • £30,000 to £49,999 - 6% off orders
  • £50,000 to £99,999 - 7% off orders
  • £100,000+ - discounts negotiable
Asda £1, £5, £10, £25
  • £1,000 to £9,999 - 2.5% off orders
  • £10,000+ - 5% off orders
Debenhams £1, £5, £10, £25
  • £1,000 to £9,999 - 4% off orders
  • £10,000 to £19,999 - 6% off orders
  • £20,000+ - 8% off orders
Homebase £1, £5, £10, £20
  • £1,000 to £9,999 - 6% off orders
  • £10,000 to £29,999 - 7% off orders
  • £30,000 to £49,999 - 8% off orders
  • £50,000 to £99,999 - 9% off orders
  • £100,000+ - discounts negotiable
House of Fraser £1, £5, £10, £25, £50, £100
  • £1,000 to £4,999 - 2.5% off orders
  • £5,000 to £9,999 - 5% off orders
  • £10,000 to £14,999 - 7.5% off orders
  • £15,000+ - 10% off orders
John Lewis £1, £5, £10, £25, £50
  • £1,000+ - 2.5 % off orders
  • £10,000+ - 5% off orders
  • £50,000+ - 7.5% off orders
Marks & Spencer £1, £5, £10, £25
  • £1,500 to £4,999 - 2.5% off orders
  • £5,000 to £9,999 - 5% off orders
  • £10,000+ - 7.5% off orders
Sainsbury's £1, £5, £10, £20
  • £1,000 to £19,999 - 2.5% off orders
  • £20,000 to £49,999 - 5% off orders
  • £50,000 to £149,999 - 5.5% off orders
  • £150,000+ - discounts negotiable
Tesco £5, £10, £15, £20, £25, £50, £75, £100
  • No discount, minimum of £1,000 must be spent or 20 gift cards purchased

 
 

Voucher schemes can be run at a very low cost, especially if employers are purchasing in bulk.

Martin Cooper, Love2Reward

 

But whether an employer opts for the electronic card or the paper-based voucher, the low costs associated with the voucher benefit are a huge plus for any scheme. Aside from the cost of the vouchers themselves, which can see significant discounts when bought in bulk, there are no set-up costs, and there is the option of distributing the vouchers internally rather than using a provider.

Martin Cooper, head of national accounts and marketing at voucher provider Love2Reward, says: "Voucher schemes can be run at a very low cost, especially if employers are purchasing in bulk. Typically, voucher providers will offer discounts on the face value of vouchers, with no other charges on top of that, and some [employers] will take that discount to spend on additional vouchers or treat it as a profit."

But employers, particularly in large companies, need to get wise if they want to keep their scheme as cost-effective as possible. To get the best deals, employers should purchase all their vouchers from one provider, rather than spread their loyalty across two or three. Yet too often line managers hoping to boost staff motivation are allowed to spend an allocated budget without any top level supervision, warns Kevin Harrington, director at Sodexo Motivation Solutions.

"One problem today is that employers aren't streamlining the vouchers they buy, so what often happens is that line managers can buy vouchers out of petty cash as an instant reward for an employee, which is fine, but unless all managers use the same supplier, the company won't get the best deals," he says.

And while the assurance of low costs during a recession is a fairly decent selling point, providers are also keen to point out that it is the instant reward element of the gift voucher perks that makes them so valuable to employers and employees.

Motivating staff with instant rewards

Harrington adds: "The beauty of vouchers is that they can be immediate. An employer can say to a member of staff, 'I want you to change your attitude or work ethic on the production line and if you do that you'll get an immediate reward'."

Such reward potential and the savings available should also be enough, as far as providers are concerned, to convince employers that vouchers are far more valuable when it comes to motivating staff than simply offering money.

And companies that claim cash is the finest motivator because it rewards employees with ultimate spending choice, are in fact reducing the benefit of gifting substantially, argues the UKGCVA's Johnson. "Yes, everyone wants cash at the moment, but everyone always wants a nice treat. If I gave you cash you'd feel guilty for spending it on a treat for yourself, but vouchers take the guilt away because they offer you permission to get the treat. There is a reason why chocolate sales are higher during a recession - people enjoy small treats at difficult times," he says.

Single or multi-retailer vouchers

Interestingly, making sure that employees do actually treat themselves to something memorable when given a gift voucher, rather than spending it on the weekly shopping or in a petrol station, has become an important feature of the scheme, particularly since the onset of the recession.

Companies using the voucher benefit today have to decide which is the most valuable to staff - a single retailer voucher that confines them to spending in one particular store, or a multi-retail voucher that can often be used with many different retailers or service providers. While the single retail voucher is useful to force an employee to treat themselves, the multi-retail voucher offers a good deal of choice, adds Johnson.

"With the single retail voucher it's all about the brand. If you know the person and know where they shop, the brand can be a strong motivator. With multi-retail you get more choice and more flexibility, but you lose the strong brand associated with single retail vouchers," he says.

The corporate gift voucher's ability to reward employees instantly at low cost to employers is something that companies find value in, and despite the inevitable switch from paper vouchers to electronic cards, it seems to have established a permanent slot in the UK company benefits package. While it may be enjoying its current success thanks to the recession, the corporate voucher looks well placed to grow in popularity as the economic recovery takes hold.