Stored-value cards making inroads into Canada
More memorable than cash, say proponents
by Bernadette Johnson (edited)
August 28, 2000 - Strategy Magazine
Special Report: Premiums & Incentives

Remember the last time your company handed out bonuses? Remember how satisfying it was, after all those months of blood, sweat, toil and tears, to finally see some recognition, in the form of cold, hard cash? Sure you do. But do you remember how you spent the money? Most people don't - which is why there's such emphasis in the incentives business nowadays on alternatives to cash rewards.

One type of reward system that's gaining increased currency - both in employee incentive programs and consumer promotions - is the stored-value card (SVC). Programs featuring SVCs allow participants to amass points, which can then be redeemed, using the card, at participating retail stores.

While cash remains the most common choice of incentive, research suggests that it means relatively little to recipients. Indeed, a study sponsored last year by AEIS showed that just 9% of people who'd received cash rewards actually spent the money on a special treat for themselves. Approximately 29% of respondents said they'd used it to pay bills, while another 18% confessed that they couldn't remember where the money went.

Industry experts, however, remain somewhat ambivalent about the concept of stored-value cards as incentives. SVCs certainly offer convenience and choice, says Rob Stonehewer, president of Burlington-based Rob Stonehewer & Associates. But they're impersonal, and they don't really have any more prestige than cash. "There's more trophy value in travel awards or a custom selection of merchandise," he says.

Stonehewer, however, is quick to add that the reward mechanism isn't really the factor that will make or break an incentive program. Much more depends on things like program objectives, structure, tracking and communications.

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