The Science Behind Incentive Cards for Employee Recognition


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The science behind using incentive cards for employee recognition. Statistics and best practices for HR managers looking to start or improve a rewards and recognition program. Original presentation by Glen Holbert, Chief Sales Officer at

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The Science Behind Incentive Cards for Employee Recognition

  1. 1. The science behind using Incentive Prepaid Cards for Employee Recognition Accelerating Performance:
  2. 2. Objectives • To present research on how prepaid cards have become the award of choice for corporations for employee reward and recognition programs. • To understand why prepaid card rewards are more preferred and more effective than equivalent cash rewards. • To correlate prepaid card use and popularity with motivational psychology. • To share data on where open-loop prepaid card recipients spend their reward dollars. • To present prepaid card award best practices to maximize effectiveness. 2
  3. 3. • Any non-cash reward given to an employee for recognition of achievement. • It does not include payroll, commissions, bonuses or any other type of cash compensation. • Does include travel, merchandise, recognition symbols (pins, plaques) and gift cards. Defining Employee Reward and Recognition Programs 3
  4. 4. Source: 2012 Research by First Data Employee Non-Cash Awards by Percentage of Spend 4
  5. 5. 5 Why Prepaid Cards?
  6. 6. 6 Rated Most Effective
  7. 7. 7 Recipients' Favorite Non-Cash Award
  8. 8. • Most businesses (73%) use a single type of card, but some use multiple types. Of those who use multiple types, the most common combination is open loop and closed loop. • When firms are using multiple cards, they generally are splitting their budgets 50/50 between open and closed-loop cards. 8 Types of Prepaid Cards Used*
  9. 9. 9 Recipients Prefer Open Loop Cards Recipient preference given a choice between a $50 open loop card and $50 in cash
  10. 10. Even though open loop cards are near-cash equivalents, recipients prefer the open loop card over cash nearly 5 to 1. 10 Better Than Cash! Why: could be explained in the behavior and psychology of recipients
  11. 11. Possible reasons… • Recipients classify cards as discretionary or “fun” spending vs. cash they receive as rewards. • Recipients more likely to add the value of award to monthly budget vs. incorporating value, as with cash. • Recipients make more memorable purchases with prepaid cards than cash (Schweyer, 2012). • Recipients associate the award with the corporate sponsor. 11 Why Better Than Cash?
  12. 12. Click to edit the outline text format − Second Outline Level Third Outline Level −Fourth Outline Level Fifth Outline Level12 Are Prepaid Cards Memorable to the Recipient?
  13. 13. 13 Motivational Award Theory
  14. 14. *Based on historical aggregate spend data of over 1 million open loop cards given as corporate employee awards 60% of open loop card spend is for non-essential items Maslow's Pyramid Core Values Employee Needs Percentage of Spend Merchant Category Self Realization (achieving full potential) Self-Fulfillment Needs 38% hobbies, books, specialty clothes, shoes, electronics Personal Esteem (prestige and feeling of accomplishment) Social Acceptance (relationship and friends) Psychological Needs 22% restaurants, real estate, drug stores, pharmaciesSafety Needs (security and safety) Psychological Needs (food, water, warmth) Basic Needs 40% grocery, gas, fast food 14 Spend Pattern Data*
  15. 15. • Personalize the card with recipient’s name • Print personal note on the card and on the carrier (if applicable) • Customize the card with corporation’s branding and/or program’s branding • Combine award issuance with recognition event • Consider “gifting” packaging 15 Best Practices for Open Loop Prepaid Card Awards
  16. 16. • Prepaid cards are the favorite award choice for employee recognition, as measured both by program planners and recipients. • Open loop prepaid cards are the most popular type of prepaid card. • Recipients prefer open loop prepaid cards 5 to 1 over cash even though its a cash equivalent. • Reasons include: – Guilt free, memorable spending as compared to cash – Association with giver/company/sponsor – Fulfills all levels of Maslow’s hierarchy of needs • Data confirms that 60% of open loop card spend is for non-essential items • Open loop prepaid cards provide cash equivalency with non-cash award advantages 16 Conclusions
  17. 17. • 2010 & 2011 Consumer Insights into the U.S. Gift Card Market, First Data; poll of 6,000 users – January to October, 2010; Incentive Mag 2011 Gift Card IQ Study • Huff, C. 2006. So Plastic Gift Cards Are Most Popular Incentive. Retrieved from plastic-gift-cards-are-most-popular-incentive • Incentive Gift Card Council and Incentive Research Foundation. 2012. Research Shows Recipients Prefer the Control and Personalization Gift Cards Provide vs. Cash. Retrieved from • Lipman, V. 2013. 3 Substantive Ways Companies Can Invest In Employee Engagement. Retrieved from engagement/ • 2005 Premium and Incentives Report, Promo Magazine • Schweyer, A. 2012. An In-Depth Look at Prepaid Cards in Incentive, Rewards & Recognition Programs. Retrieved from 17 References