B2B Gift Card Market Study

Incentive Gift Card Council and Incentive Research Foundation

June 2014

B2B Gift Card Market Study

Background
The Incentive Gift Card Council, in partnership with the Incentive Research Foundation and Aspect
Market Intelligence, collected data from a national sample of business executives to understand the
buying dynamics of the B2B gift card marketplace.
Executive Summary
A study of a cross-section of US businesses offers insights into the gift card buying behaviors of
incentive program managers. Key findings from the study include:

Confirming earlier studies, approximately half of US businesses use gift cards to reward or
recognize employees, partners, and customers
The most common application is employee recognition programs, followed by sales and
customer recognition programs. Channel partner programs are the least prevalent.
Average gift card award is highest for sales programs (~$150) and lowest for customer
programs (~$50)
Open loop continue its reign as the most prevalent type of gift card, followed by closed loop.
Restricted cards have the lowest incidence, and are more likely to be used by large businesses.
For closed loop cards, dining is by far the most popular merchant category, with department
stores in second place.
A business might use multiple sources for gift cards. Purchases from a local retailer are the
most common across all company sizes. However, large companies are more likely to also
purchase from the corporate sales group of a retail brand or from a gift card reseller.
Of those ordering online from a retail corporate sales group or a reseller, 86% are highly
satisfied with the online ordering experience.

Methodology
Sample was source from the Research Now B2B panel. A fifteen-minute survey was distributed via
email invitation. Data collection took place in April 2014.
A total of 1,123 business people responded to the survey. Of those, 222 are responsible for managing
a gift card rewards program and were able to provide detailed information regarding the purchase and
application of gift cards in their organization. This sample size provides a 95% confidence level and
6.58% margin of error. This means if the study was replicated, 95 times out of 100 the results would be
within 6.58% of the results presented in this paper a very high degree of reliability.
See the appendix for notes regarding efforts to control estimation error.

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B2B Gift Card Market Study

Weighted Calculations
Because the study objective is to project findings to the population of U.S. businesses, measures of
incidence and market size are statistically weighted to reflect the highly-skewed distribution of firms; for
every firm over $1 billion in revenues, there are 472 firms between $1 and $10 million in annual
revenues.
Company Revenue

Number of US Companies

Percent of All Companies

Over $1Million in Revenue

1,244,164

86%

176,850

12%

20,605

1%

$1 to $10 million
$10 to $100 million
Over $100 million
Totals

1,441,619

Findings
Incidence of Gift Cards as a Reward
This study confirms prior studies regarding the incidence of gift card use among US businesses. Within
the statistical margin of error, approximately half of US businesses are using gift cards to reward and
recognize employees, partners, and customers. Use of gift cards increases in larger companies.
Company Revenue

Gift Card Incidence

$1 to $10 million

44%

$10 to $100 million

51%

Over $100 million

56%

Weighted Incidence

45%

Type of Program
Respondents were asked whether their firm uses gift cards as rewards or incentives in four categories:
Sales, Channel Partner, Employee, and Customer. Use of gift cards for Employee rewards is the most
prevalent application.

Employee Rewards

Weighted Total Incidence*

67%

Sales Incentives

38%

Channel Incentives

8%

Customer Rewards

30%

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B2B Gift Card Market Study

Breaking the data down by firm size, we see that the incidence of all types of programs generally
increases with firm size.
Employee
Rewards

Sales
Incentives

Channel
Incentives

Customer
Rewards

Between $1 Million and $9 Million

66%

38%

8%

30%

Between $10 Million and $99 Million

74%

34%

5%

31%

Over $100 Million

79%

45%

16%

35%

Weighted Total

67%

38%

8%

30%

For each type of program, respondents were asked to estimate the average value of a gift card award
and the number of gift cards that are awarded annually. The face value of the gift card does not
increase with company size.
Average Dollar Value of Gift Cards
Employee
Sales
Channel
Customer
Rewards
Incentives
Incentives
Rewards
Between $1 Million and $9 Million

69

140

88

56

Between $10 Million and $99 Million

77

226

54

62

Over $100 Million

57

123

188

58

Weighted Total

70

149

84

56

As we might expect, the number of gift cards awarded annually does increase with firm size. This
increase is particularly notable for Employee, Channel, and Customer programs.
Average Number of Gift Cards Awarded Annually
Employee
Rewards

Sales
Incentives

Channel
Incentives

Customer
Rewards

Between $1 Million and $9 Million

50

83

92

58

Between $10 Million and $99 Million

99

67

22

282

1,104

323

1,441

4,519

66

82

96

129

Over $100 Million

Weighted Total

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B2B Gift Card Market Study

Respondents were also asked to estimate the percent of their program budgets that were allocated for
various spend categories: Gift Cards, Other Awards, and Program Administration. Interestingly, 25%
of respondents indicated these categories were not exhaustive; therefore responses will sum to less
than 100%.
Percent of Total Program Budget that goes to:
Gift Cards

Other Awards
(merchandise, travel,
etc.)

Program
Administration

Employee Rewards

41%

36%

6%

Sales Incentives

45%

34%

9%

Channel Incentives

40%

21%

21%

Customer Rewards

37%

35%

6%

Budget Breakdown by Program Types:

In larger firms, Gift Cards account for a smaller percent of the overall rewards budget across all
program types except for Customer Rewards. Its likely that recognition events and other non-tangible
types of awards and activities account for some of the Employee, Sales, and Channel program budgets
in these larger companies.
Percent of Total Employee Program Budget that goes to:
Gift Cards

Other Awards
(merchandise, travel,
etc.)

Program
Administration

Between $1 Million and $9 Million

41%

37%

5%

Between $10 Million and $99

Million
Over $100 Million

48%

32%

9%

29%

37%

7%

Weighted Total

41%

36%

6%

Percent of Total Sales Program Budget that goes to:

Gift Cards

Other Awards
(merchandise, travel,
etc.)

Program
Administration

Between $1 Million and $9 Million

47%

34%

9%

Between $10 Million and $99

Million
Over $100 Million

39%

30%

13%

22%

47%

8%

Weighted Total

45%

34%

9%

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B2B Gift Card Market Study

Percent of Total Channel Program Budget that goes to:

Gift Cards

Other Awards
(merchandise, travel,
etc.)

Program
Administration

Between $1 Million and $9 Million

42%

21%

23%

Between $10 Million and $99

Million
Over $100 Million

25%

23%

9%

31%

33%

15%

Weighted Total

40%

21%

21%

Budgets do not seem to vary by firm size for Customer Rewards programs the bulk of the spending is
split between gift cards and other awards, with only a small portion of the budget going to program
administration.
Percent of Total Customer Program Budget that goes to:
Gift Cards

Other Awards
(merchandise, travel,
etc.)

Program
Administration

Between $1 Million and $9 Million

38%

34%

6%

Between $10 Million and $99

Million
Over $100 Million

37%

40%

9%

35%

35%

11%

Weighted Total

37%

35%

6%

Gift Cards Used

The type of Gift Card used varies slightly by firm size. Larger firms are more likely to incorporate
Closed Loop and Limited-Open cards, while small businesses rely more heavily on Open Loop cards.
Which Types Of Gift Cards Does Your Company Use In Its Programs?
100%

Open Loop

90%

Closed Loop

80%

Restricted/Limited-Open

70%
60%
50%
40%
62%

30%
20%

57%
39%

10%

56%
37%

8%

10%

44%
14%

0%
Between $1 Million and
$9 Million

Prepared by Aspect Market Intelligence

Between $10 Million

and $99 Million

$100 Million or More

B2B Gift Card Market Study

For the Closed-Loop card category, respondents were asked to indicate their relative use of various
merchant categories, such as Dining, Retail, Electronics, etc. Dining cards are by far the most
prevalent, and Department Stores are the second most-popular category. Moderately-used categories
include Music/Movies, Gas, and Electronics. Travel and Accessories/Jewelry are the least-offered
categories.
Which Type of Closed-Loop Cards Does Your Company Buy?
Dining/Coffee (e.g. Olive Garden,
Starbucks)

47%

Department Stores (e.g. Macys,

Target, Walmart)

37%

27%

16%

42%

31%

Exclusively-Online Retailers (e.g.

Amazon, Overstock)

12%

33%

55%

Music/Movies (e.g. iTunes,

Fandango)

12%

34%

54%

Gas (e.g. Exxon, QuikTrip)

12%

34%

54%

Electronics (e.g. Best Buy,

Crutchfield)
Sporting Goods (e.g. Dicks
Sporting Goods, Sports Authority,
REI)
Clothing/Apparel (e.g. Gap,
Aeropostale, Banana Republic,
Nike)

10%

35%

9%

28%

7%

Travel (e.g. Expedia, Hyatt) 4%

63%

19%
14%

Accessories & Jewelry (e.g.

2% 12%
Coach, Maui Jims, Zales)

We buy a lot of these types of gift cards

Prepared by Aspect Market Intelligence

55%

73%
82%
86%

We buy some of these types of gift cards

We don't buy these types of gift cards

B2B Gift Card Market Study

Firms using Closed Loop cards were asked whether participants are offered a choice in the brand of
card they receive. Larger firms are much more likely than smaller firms to offer participants this choice.
Are Participants Able To Select The Brand Of Card?
100%
90%
80%

49%

70%

69%

60%

67%

50%

No

40%

Yes

30%

51%

20%

31%

33%

Between $1 Million
and $9 Million

Between $10
Million and $99
Million

10%
0%

$100 Million or
More

Gift Card Sourcing

For all types of cards (Open, Closed, and Limited), respondents were asked how many times per year
they ordered or purchased cards. On average, large firms purchase more frequently than smaller firms.
How Many Times Per Year Do You Purchase/Order Gift Cards?
7
6
5
4
5.4

6.1

6.7

2
1

Between $1 Million and

$9 Million

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Between $10 Million

and $99 Million

$100 Million or More

B2B Gift Card Market Study

Larger firms are more likely than smaller firms to be sourcing their cards directly from the retailer
(working with corporate B2B sales) or working with a reseller to procure their gift cards. Smaller firms
rely on local retailers for their gift cards, and often leverage gift card kiosks, such as those found at
supermarkets and drug stores.
From Which Source Do You Get These Gift Cards?
100%
Local retailer

90%

Local retail location - kiosk

80%
70%

Directly from the retailer (corporate

offices)

60%

A company that specializes in selling gift

cards (e.g. Giftcards.com)

50%
40%
30%

62%
51%

20%
10%

52%

43%

13%

16%

43%

8%

23%

15%

30%

36%

0%
Between $1 Million and $9 Million

Between $10 Million and $99

Million

$100 Million or More

Companies relying on resellers and retailer corporate sales were asked the channel used to order
gift cards. Smaller companies are much more likely to be using online ordering for their gift cards.
How Do You Get The Gift Cards For Your Program?
100%

Online

90%

Account Manager/CSR

80%
70%
60%
50%
40%

81%

30%

56%

20%

69%

63%
46%

57%

10%
0%
Between $1 Million and Between $10 Million
$9 Million
and $99 Million

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$100 Million or More

B2B Gift Card Market Study

Buyers who order gift cards online were asked to rate their overall experience with online ordering.
Responses were overwhelmingly positive, with an 86% top 2 box rating. (Top 2 box is the percent of
people who rated their experience either a 6 or a 7 on a scale where 7 is Excellent.)
Companies relying on resellers and retailer corporate sales were asked to rate the importance of a
variety of card-provider characteristics. Ease of ordering is by far the most important characteristic of a
card provider, followed by offering online ordering and competitive discounts on cards. Of least
importance are allowing for merchant logos and offering consultation around gift card programs and
purchasing.

6.2

Ease of ordering
5.7

Offers online ordering

Offers competitive discounts on cards

5.6
5.1

Ability to supply multiple brands of cards

Can fulfill or deliver gift cards on behalf of our company

4.9

Has dedicated support for corporate gift card customers

(e.g., call center, chat)

4.8

Offers both open and closed loop cards

4.7

Has an account manager to service my business

4.7
4.4

Ability to provide personalized or branded gift cards

Offers e-gift cards or virtual gift cards

4.2

Allows us to use merchant logos for our marketing

communications
Offers consultation around gift card programs and
purchasing

4.1
4.1
1.0

2.0

3.0

4.0

5.0

6.0

7.0

Respondents were asked whether they use e-gift cards (aka virtual cards) in their programs. While still
lagging behind physical gift cards, firms are incorporating e-gift cards into their programs. Most
notably, 28% of the largest firms use e-gift cards.
Do You Use E-Gift Cards In Your Programs?
100%

16%

17%

84%

83%

80%

28%

60%
40%

72%

20%
0%
Between $1 Million and Between $10 Million and
$9 Million
$99 Million
No

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$100 Million or More

Yes

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B2B Gift Card Market Study

Gift Cards Budget Changes

Compared to 2013, the majority of businesses report their 2014 budget for gift cards remained the
same. However, it is worth noting the 32% of firms with revenues between $10 and $99 million reported
their
budgets
How Did Your Budget Change From Last Year?
increased by 10% or more.

Between $1 Million and $9 Million

Between $10 Million and $99 Million

$100 Million or More

Weighted Total
64.1%

80.0%
70.0%

.0%

DECREASED 10% OR
MORE

DECREASED BY LESS
THAN 10%

STAYED THE SAME

INCREASED BY LESS THAN

10%

14.1%

12.8%

12.6%

12.5%

4.6%

2.1%

4.8%

4.7%

4.2%

0.0%

10.0%

4.7%

20.0%

1.6%

30.0%

15.9%

40.0%

21.1%

31.7%

50.0%

16.1%

46.0%

60.0%

61.3%

90.0%

64.2%

100.0%

INCREASED 10% OR
MORE

Looking forward to 2015, buyers are anticipating an increase in their spending good news for the
industry.
How Will Your Budget Change Next Year?

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B2B Gift Card Market Study

100.0%
Between $10 Million and $99 Million

$100 Million or More

Weighted Total

.0%

DECREASE 10% OR MORE

DECREASE BY LESS THAN

10%

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27.0%

14.7%

30.0%

27.0%

2.9%

1.1%

1.7%

3.2%

4.3%

2.1%

1.7%

10.0%

4.8%

20.0%

15.9%

30.0%

16.9%

40.0%

27.4%

50.0%

54.7%

60.0%

41.7%

49.2%

70.0%

25.0%

80.0%

Between $1 Million and $9 Million

47.9%

90.0%

STAY THE SAME

INCREASE BY LESS THAN

10%

INCREASE 10% OR MORE

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B2B Gift Card Market Study

Respondent Profiles
Respondents were from a wide range of industries, with solid representation from Financial Services
and Retail.
Financial Services
Retail
TransportaSon & LogisScs
Healthcare
High Tech
Real Estate
ConstrucSon
Government & Nonprots
Travel & Hospitality
Wholesale
EducaSon
Telecomm
Energy
AutomoSve
Security
Personal Services
Mining
InformaSon
Agriculture
Travel
Oce Equip
0%

5%

10%

15%

20%

25%

Additionally, a good range of functions were represented, including Sales, HR, Administration,
Operations, and Marketing.
Sales
HR & Training
AdministraSon
OperaSons
MarkeSng
Finance
Sales & MarkeSng
Customer Service
Purchasing
Risk
IT
Safety
LogisScs
0%

5%

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10%

15%

20%

25%

30%

35%

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B2B Gift Card Market Study

Appendix
Efforts to Control Estimation Error
Aside from the issue of sampling, a B2B study such as this will include inherent bias that will affect the
accuracy of market projections. This error has been deemed tolerable by the sponsors because any
error of projection will likely make the estimates conservative underestimating the market, not
overstating it.
1. False negatives: It is likely that the true incidence of gift card programs is higher in the
marketplace than reported here. The likelihood of a respondent being unaware of a program is
higher than the likelihood of a respondent believing there is a program where one is not. This is
particularly true in larger companies, where a respondent typically will not be aware of the
activities of various divisions, subsidiaries, and locations.
2. Multiple decision-makers: As firm size increases, so too does the number of divisions and
locations. The Fortune 500 are complex microcosms unto themselves, with subsidiaries,
branches, divisions, operating units, etc. It is unlikely a respondent will have perfect information
within a company with revenue above $100 million, and firms over $1 billion are highly
complex. Interviewing a stakeholder in marketing, for example, may give some information
about the activity of that department, but is unlikely to yield accurate data for sales, HR,
operations, and other departments.
3. Discretionary spend: In many large companies, department managers will use some small part
of their budget, or perhaps their own money, to buy thank you gifts for their teams. The
amount a single manager spends may be small, but in a firm with thousands of managers, the
impact on the market is worth noting. These funds may not be captured in the official program
budgets of the firm.
All of this to say, the findings of this study are far more likely to understate the size of the B2B gift card
market than overstate it.

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