Incentive & Motivation

Whether it’s that longed-for, sub-tropical fortnight or a whirlwind city break, holidays are undoubtedly ranked up there as our favourite times of the year.

They are also times when people long for a perfect, hassle-free experience that provides happy memories, regardless of whether they’re careful planners or impulsive turn-up-and-see-where-the-mood-takes-them travellers.

But those halcyon visions jar with the reality of having to spend part of that time queuing to cash a stack of travellers’ cheques or returning home with that post-holiday glow to find a credit card statement that’s loaded with charges for foreign use waiting on the doormat.

There is, of course, an alternative in the form of prepaid currency cards, as growing numbers of consumers are starting to realise. Despite emerging into the marketplace seven years ago, it’s only been in the last couple of years that these cards have started to catch the public’s attention, after the bigger travel companies decided to back the cards.

As Tessa Unsworth, product and solution director, PrePay Solutions explains: “Big-name holiday companies provide consumers with brand trust – for example, Thomson will look after your holiday and, therefore, the perception is that they will look after your money.”

Their support has paid off and now thousands are issued each year. But what are they? Prepaid cards can be loaded with currency and used at cash points or to make payments abroad. They are issued by the likes of Visa, MasterCard and Maestro, and come in numerous currencies with specific cards for euros and US dollars.

The beauty of prepaid currency cards is that, although they can be topped up while the cardholder is abroad, the amount on the card at any one time is finite – there’s no ‘overdraft’ facility and therefore, they act as a budgeting tool for holidaymakers who are watching the pennies. They, therefore, combine the budget discipline imposed by travellers’ cheques with the ease of use and security of a credit or debit card.

Currency cards are gaining popularity gradually, but is there a ‘big break’ that will make them burst into popular conscious? Unsworth believes that there is, and it lies in the ability for fully engage  mobile technology, so that cardholders are able to manage or view their balance via their phone anywhere in the world.

“Resorts also need to ensure they have good levels of card acceptance and it’s up to MasterCard and Visa to improve their networks in order for this to happen,” she adds.

To date, the value of prepaid currency cards has lain in the consumer market, and they have yet to make much of an impact on the B2B sector, where corporates send employees on international travel.

Unsworth continues: “At the moment, credit solutions are more superior and international business travellers tend to be senior to the company and will be trusted with credit. Prepaid cards are not a corporate expense replacement at present but that’s not to say they won’t be in the future.”

There could, however, be a market for companies wanting to engage their overseas sales forces overseas with rewards issued in their own currencies.

Unsworth concludes: “We’re currently looking at SMEs that don’t have corporate credit. The next natural step is to take the currency price, so that they get the best advantage on foreign travel. Some corporates also have fleet travel abroad to pay for, so by giving their fleet drivers a prepaid card, they can give them money to get fuel without giving them huge amounts of credit, meanwhile making significant savings on currency exchange rates.”

THE ADVANTAGES

Security
Prepaid currency cards are safer than travellers’ cheques because if they are lost or stolen, the issuer can be contacted and a replacement card sent out. The cards use Chip and PIN and the balance also sits separately from the holder’s current account, so it’s safer to manage from an overseas Internet connection.

Exchange rates
Exchange rates tend to be good, are held at the point when money was loaded and secured at that rate for when it is spent.

Accessibility
Anyone with a UK bank account can get apply for a card by producing specific forms of identification. All the applicant has to do is choose the currency they require and the load value and wait for the card to arrive. Currency can be withdrawn from a million ATMs over 210 countries.

Emergencies
Some providers offer emergency cash replacement funds, which can be sent directly to the cardholder if their card goes missing while they are abroad.

Budgeting
Holders can only spend up to the value of funds on the card. This is great for those who want to budget they are away but can be problematic for those who need to access additional funds.

Flexibility
Cardholders can top up their cards as often as they want, giving them complete control over their money. Most card accounts can be managed online, allowing cardholders to stay abreast of their transactions. Some also offer text updates on the outstanding card balance.

Longevity
Any unspent funds can be saved on the card until the next holiday and, in the meantime, they can use it as a savings account.

THE DISADVANTAGES

Card limits
Some card issuers place an upper limit on the load amount, potentially restricting the cardholders’ spending, which could put the individual off applying for the card.

Checking the balance
Different issuers offer varying degrees of capability for cardholders to have complete access to their card balances and until this issue is rectified through full global mobile access, cardholders may run into difficulties in remembering or accessing this important information.

Budgetary constraints
The spend limit of prepaid currency cards is a double-edged sword. While many applicants welcome the opportunity to holiday on a finite budget, others may find it too restrictive, and may find it better to use them in conjunction with a credit card.

Fees
Fees and charge structures can vary wildly across issuers, making comparisons for consumers tricky. Some providers charge a one-off application charge while others levy a monthly fee. Some issuers charge for purchases and withdrawals abroad, and others opt for replacement card or inactivity fees.

Top-up and withdrawal charges
Although cardholders can top up their card and make withdrawals free of charge in the UK, some issuers do charge when the service is used overseas. However, these charges do not tend to be on the same level as those incurred by overseas credit card usage.

Protection
At present, currency cards cannot boast the same level of protection that credit cards can for purchases made overseas.

In the corporate arena, gift vouchers have grown into an all-encompassing answer for incentives and rewards, in many forms and reaching into all areas, both physical and virtual…

Long gone are the days when gift vouchers were the preserve of the consumer market, given at Christmas or birthdays, almost as an afterthought, by Great Aunt Flo who didn’t know what else to buy. Today gift vouchers and their more high-tech counterparts, gift cards, are stalwarts of the corporate market, used extensively for rewarding, motivating and incentivising employees.

In current market conditions, where salaries are squeezed, jobs cut and members of staff disillusioned, gift vouchers and cards offer an opportunity to savvy companies to cultivate loyalty and motivate the workforce.

According to Martin Cooper, head of national accounts and marketing at Love2reward: “Employers now appreciate the pivotal role that motivation has to play in the workplace. We’ve seen very impressive growth from this sector, as bonuses and pay rises have been removed from the reward agenda. Non-cash rewards have taken their place and gift cards and vouchers, in particular, are proving the most effective substitute.”

Rob Froome, head of New Look Business Solutions, adds: “Reward and recognition programmes have a huge part to play in a tough economic environment. When budgets are tight, employers need to get clever in the way they approach and resource. They must start by choosing a reward and brand that represents great value and provides the recipient with more for their money.”

In other words, a simple thank you will no longer cut it; for lasting appreciation you need a tangible reward, something that can be enjoyed for more than a fleeting moment. Gift vouchers are one way of providing this.

Tear it up?

The paper voucher has been standard for years but in this digital age, are its days numbered? It would appear not. “Paper gift vouchers continue to be the mechanic of choice,” says Mark Spicer, head of loyalty at Maximiles. “Especially for staff motivation programmes.” While according to John Dove, manager at House of Fraser Business Incentives they “present an immediate perceived value and they feel like cash, which everyone likes”.

Paper has another benefit over plastic, albeit perhaps an emotional one. It somehow feels better to be presented with vouchers than plastic – they’re worth the same but paper has a physical appeal that plastic lacks, it has a presence that works well when combined with presentation and ceremony. “It is vital not to forget the importance of trophy value,” explains John Sylvester, executive director at P&MM Motivation. “We cannot forget why incentives are offered in the first place; to make the emotional connection of personal reward so that the recipient feels appreciated and encouraged to continue to perform. The traditional paper voucher always worked well in this respect because it provided something tangible, a decorative reward that did more than just offer a cash alternative; it said ‘thank you and well done’. When making the switch to newer forms of reward vouchers, failing to capture this sentiment could mean that a great deal of the impact is lost.”

Furthermore, paper vouchers are uncomplicated, says Kuljit Kaur, head of business development at The Voucher Shop. “They do what they say on the tin; they are easily understood and are liked for their ease of use, as there is no need to go online or to ring a hotline to check the available balance.

“They are as close to cash as you can get but with added benefits. Whereas cash often simply gets swallowed up in the costs of everyday living, vouchers are more memorable and therefore have a greater impact in terms of being an effective tool to incentivise or motivate.”

Flexible benefit

Plastic gift cards, however, offer benefits to the issuer that paper vouchers cannot, namely an opportunity to gather information about spending habits and products bought, that can be used to influence the future operation of company schemes. They don’t have the associated costs of their paper counterparts, such as secure postage, handling and storage, and they can be used more than once, topped up as necessary. “A gift card can hold greater, more flexible values and as such is more ‘wallet-friendly’,” says Joanne Taylor, corporate sales manager, Asda Business Rewards. “Our gift cards are reloadable, therefore the cardholder simply keeps their card and has value added remotely through their employee benefit scheme.”

The challenge of enhancing the appeal of plastic as a rewards mechanism has been met with innovative measures, such as creating extra value for recipients and engaging with them. Fashion retailer New Look offers regular fashion updates and free music downloads to gift card holders, in addition to the face value of its card. “In using the card within their employee reward schemes, corporate clients are rewarding with a great fashion brand, and delivering added value, at no extra cost to themselves,” explains Froome.

This aspect is emphasised by Rachelle Smith, regional director for UK and Ireland at PrePay Solutions, who makes the point that personalising a gift card adds an emotional touch. “If I love Chanel and I’m given a Chanel gift card, then I’m going to appreciate the thought put into choosing that product.”

Changing times

Just as we become accustomed to cards, so the industry is on the move again with developments such as virtual online vouchers already widespread and more electronic wizardry just around the corner. “We are investing heavily in mobile for virtual gifting, SMS and email,” reveals Smith. “Tying in mobile with CRM, we are using both for cardholder self services, allowing cardholders to view their account and perform transactions via their mobile phones. We also use SMS and emails to communicate with cardholders.”

House of Fraser’s Dove says: “SMS and E-vouchers offer immediacy and traceability, which meet business and customer needs. They are an attractive proposition, giving businesses the means to simplify the processing of high volumes of gift cards or vouchers.

“Even though smart phones still only account for less than 15% of the market, we will see increased usage as companies discover the benefit of ‘instant gratification’ at the point of purchase.”

Whatever form taken, gift vouchers/ cards/ virtual vouchers are a vital part of the incentive and motivation market. As Dove comments: “They are a visible and effective way to deliver a reward. Choosing a premium brand retail gift card can add value and weight to that reward, being perceived as a real treat, and one which won’t simply be absorbed into everyday living expenditure.”

In focus

Sellafield Ltd

Nuclear waste management company Sellafield decided to implement a rewards scheme for its 10,000+ staff and 2,500 contractors across its three UK sites. The aim was to encourage behavioural safety at work, says Joe McCluskey, head of human performance. “We wanted to reward staff for sharing information relating to safety observations, which would be
used to influence and reinforce our safety strategies.”

Love2reward’s Virtual Incentive Points (VIP) programme was selected, with individuals earning points that could be saved and spent on more than 3,000 products including Love2shop high street gift vouchers, Love2travel and Love2play experience days.

When the ‘Peer to Peer Observation Programme’ was launched, 5,500 observations were recorded in its first five weeks. “Participation exceeded our expectations,” says McCluskey. “This is a major change in terms of engagement and we’re delighted.”