Historically, staff motivation vouchers have been paper-based. But recently, technology has allowed employers to offer an alternative: card-based vouchers that are topped up with a cash value electronically. It fits with the general trend in retail towards paying for goods by card, and indeed, buying them online.
Electronic overtook paper for the first time in 2009, accounting for 53% as opposed to 47% of voucher sales, says Andrew Johnson, director general of the UK Gift Card and Voucher Association (UKGCVA).
Research carried out by the UKGCVA in 2008 suggested a growing acceptance of electronic gift cards. Some 62% of those surveyed who had used electronic cards reported a positive experience, compared with only 33% for paper. “Once someone has used a card, they are more likely to become an advocate,” says Johnson.
There was also, not surprisingly, a greater preference for cards among the under-35s.
John Sylvester, executive director of marketing agency P&MM, says growth in cards has shot up in the past two years. “In 2008, we only did £4.5 million-worth of plastic,” he says, “But in 2009, that had jumped to £38.5 million, and this year, we’re projecting to hit £60 million.”
He estimates that 75% of the voucher business will switch to plastic by 2012.
But are the days really over for paper vouchers?
“We did a record number of paper vouchers last year, over £100 million,” says Martin Cooper, head of sales & marketing at voucher provider Love2reward. “There are many years of life in paper yet.”
Johnson admits that there is still what he describes as “trophy value” in paper vouchers.
“The employees can feel the value in their hands,” he says. “Paper vouchers have the cash value printed on them, whereas cards tend not to.
“There is that sense of instant gratification, which is important if you want to give an employee an immediate reward.”
Paper voucher schemes seem to have important perception value, but there are many practical advantages to the electronic cards.
First, there is the security aspect. “With electronic card schemes, the ‘load’ sits with the client, whereas vouchers have to be looked after by the client in a safe,” points out Raegan Matthews, business incentives manager at House of Fraser. “They are easily lost, either by employer or employee.”
P&MM’s Sylvester points to an added risk if vouchers have to be posted out to a remote location: “They will generally be posted out in first class post, but it costs too much to insure them, and inevitably a few go missing in the distribution chain, be it to theft or other losses.”
Vouchers are sometimes regarded as being a more straightforward for SMEs, which find that a small store covers their needs. But Love2reward’s Cooper argues that once the card system is in place, it is easy for the employer to manage.
“The company would keep a spreadsheet, which they would send to us monthly, advising us of values to be added to the cards it operates, if any people have left the scheme, and so on,” he says. “We can then manage the process of loading up those cards quite easily.
“It can actually translate into a big time saving for whoever runs the scheme.”
Depending on how sophisticated the card scheme is, electronic tracking can be used by employers to track their employees’ spending habits. “It is a useful way of establishing if the reward scheme is working as intended, and can feed into the planning for future schemes,” says Cooper.
Other advantages he points to include personalising of the voucher schemes – much easier with cards than paper – and restricting the scope of products that the card can be redeemed against. “With multi-retailer schemes, if you don’t, for example, want alcohol outlets, you can take them off the card scheme quite easily; you can’t with paper,” says Cooper.
In the longer term, it is hard to envisage the march of technology stopping, which suggests that electronic-based voucher schemes are only likely to grow. Besides the gift card, there are now pre-paid debit cards, e-vouchers or voucher codes offered by online retailers such as Amazon.
Johnson also expects mobile-phone-based schemes, where voucher codes are sent out by SMS, to emerge in the near future. “This method is growing in popularity in Scandinavia, but the market there is more advanced than in the UK,” he says.
But ultimately, says Johnson, before abandoning paper vouchers, “it is important to ask your employees first which scheme they would prefer”.