A new study by the Incentive Research Foundation (IRF) confirms that the incentive gift card market is a vast, multi-billion-dollar industry. The 52% of U.S. businesses that currently use gift cards spend $22.7 billion a year in this category. Employee gift card programs are the clear favorite – over 60% of firms using gift cards name employees as recipients. Other key recipient groups include salespeople, channel partners and customers. The IRF, in partnership with the Incentive Gift Card Council (IGCC), collected and analyzed data from a national sample of business executives in an effort to estimate the size and spread of the gift card marketplace. Researchers found that a total of 59% of U.S. businesses use some type of non-cash award program, and 52% use gift cards to recognize and reward their employees, salespeople, channel partners or customers. This means that fully 87% of companies offering non-cash awards use gift cards as part of such programs. Other highlights from the study:
- Open- and closed-loop cards are used by far more businesses than restricted and virtual cards. Sixty-eight percent of the market uses open-loop cards, and 54% use closed-loop. Approximately 12% use restricted cards – a lower incidence than virtual cards, which 14% of businesses are now using.
- There are differences in how companies of various sizes source the gift cards for their programs. Large businesses are more likely to use a card provider that can deliver many different types of cards, while smaller businesses are more likely to go directly to retailers for their cards. Approximately one-third of U.S. businesses use both card providers and retailers, regardless of the size of the business.
- Most gift card buyers report that their future spending will either remain the same or increase, raising an expectation that this market category will continue to thrive and grow.
“The economy over the past years has affected many things, but the research confirms that the use of gift cards in business is still very strong,” says Betty Weinkle, Past President of the IGCC. “We find that the convenience, variety and desirability of gift cards contribute to their ability to motivate, reward and recognize.” For more information on the IRF Gift Card Market Study, click here.