Now that 2021 is well on its way, the Incentive Research Foundation (IRF) has delved deep into incentive market predictions. Their Industry Outlook for 2021 report examines recent trends in detail and analyses correlating forecasts. Although some areas of the industry have been impacted by the pandemic, rewards programs have held steady in most organizations and per person spend on recognition is unchanged. Even though the IRF’s new findings are US-specific, the Canadian landscape has historically been similar. Let’s look at the key data.
2021 Gift Card Forecasts
When compared to other types of rewards, gift cards are growing the most. The study shows a predicted net increase of 33% for gift card spending and a 9% increase of participants earning rewards, with an average per person spend of approximately $765 (an amount similar to pre-pandemic years). Even though 2021 budgets are expected to modestly increase in areas such as merchandise rewards (24%) and decrease in areas such as experiential rewards (-12%), the gift card sector is set to remain robust.
Outlook for Gift Card Distributors
As we’ve previously discussed, many organizations choose to rely on gift card distributors when crafting their rewards programs. Access to a vast selection of gifts cards, convenience and support from dedicated staff are some of the main reasons why companies opt for this alternative. In their report, the IRF predicts that the use of partners such as resellers who carry multiple brands of cards will see an increase of 19%. As management teams continue to place recognition at the forefront of their human resources strategies, needs for tailored and professional gift card services will remain in high demand.
Changes in Gift Card Spending Since the Pandemic
When looking at trends in the non-cash reward and recognition world since the onset of the pandemic, the data shows high percentages shifting their investments in gift cards. 64% of respondents upped their gift card spend, resulting in a substantial net increase. 27% of companies who previously had travel programs redirected their budgets to rewards such as gift cards. This trend is expected to remain strong, particularly in the first half of the year, as vaccine development and distribution will be very gradual and phased out.
Overall, many incentive programs changed in 2020. The pandemic resulted in several organizations using gift cards to keep teams motivated while incentive travel was on hold. Looking ahead, the use of smaller gift card denominations can help broaden the reach of incentives. Even as we work toward recovery, some people may prefer gift cards as rewards rather than incentive travel, especially if they are reluctant to globetrot. As program owners plan for 2021, most will use varied portfolios to motivate increasingly more employees. The effectiveness of gift cards as motivators will continue to be a key to the growth and success of many rewards programs. If yours needs fine-tuning or you don’t yet have one, sign up with us for free today and get started!