Buyer’s guide to motivation vouchers

Paper or electronic card-based gift vouchers are a cost-effective way to reward employees.

Motivation vouchers are a great benefit to offer employees during an economic downturn while pay increases and bonuses remain in short supply.

A simple thank-you is sometimes not enough to make staff feel appreciated, but a retail voucher or gift card, because of its tangible nature, can do the trick.

Employers are increasingly seeing the value in motivation cards, as the latest data from the UK Gift Card and Voucher Association (UKGCVA) shows. Voucher sales increased by 3.3% in the third quarter of 2012, with business-to-business sales growth up by 5.8%. However, this is down on the 8.4% growth seen in the second quarter of the year.

Employers can use motivation vouchers and cards to incentivise staff in various ways. For example, they can be used to reward loyalty or long service, reaching targets, special performance or just to say thank-you for a job well done.

Unlike cash incentives, such as bonuses, which are often added to an employee’s overall salary at the end of the month and risk going unnoticed, motivation vouchers are an instant reward that employees are more likely to spend on treats or bigger purchases. The effect of this is increased employee engagement.

Flexible options

Motivation vouchers are also attractive to employers because they offer flexibility in terms of voucher choice, ease of administration and delivery, and cost-effectiveness by avoiding an increase in payroll costs.

Vouchers can be offered in paper format or as an electronic gift card that can be loaded with a monetary value and spent at one, or a range of, retailers.

Paper vouchers enable employers to give staff a tangible reward when it is due, for example if someone has performed well or given good customer service. Presenting vouchers publicly in front of employees’ peers can reinforce their achievement.

Electronic gift cards come in three forms: open-loop cards, which use payment networks such as Visa or MasterCard and are accepted at multiple retailers; closed-loop cards, which are redeemable at one specific retailer; and restricted-use cards, which can be used at a selected group of retailers.

UKGCVA data shows that paper and e-voucher sales declined by 7.9% in the third quarter of 2012, compared with restricted loop card sales, which increased by 33.9%.

Electronic cards offer many advantages over their paper counterparts. For example, they can be branded with an organisation’s name and logo, and can be reloaded and reused, reducing administration.

Staff can also be awarded gift cards with no assigned value, which their employer can activate and load with credit remotely after handing them out. Issuing gift cards without an assigned value can help to guard against theft as well as help employers to avoid secure delivery charges, which are required for paper gift vouchers or pre-loaded gift cards, because these are deemed ‘live’ currency.

Automated remote activation and re-loadable functionality are key developments in the electronic card market, helping to reduce costs and improve speed of delivery.

Online reward account

Some electronic vouchers can be linked to an online reward account, which enables employees to check their balance at any time.

They can then choose whether to spend their credit immediately or save it up to buy a more expensive item at a later date.

The growth in retailer cards has increased the value of this benefit to employees, as well as enabling employers to reward staff quickly and instantly by loading a card the employee has already received.

Other types of motivation voucher available include travel, theatre or restaurant vouchers. Experience days, such as a trip to a spa or skydiving, are also popular.

However, adventurous rewards, such as a day’s skydiving, are losing out to more practical rewards, such as multi-store gift cards, particularly in the current economic climate, when many employers are focusing on helping employees to make their take-home pay go further.

Giving staff the opportunity to save money on essential purchases, such as a weekly supermarket shop, makes the incentive tangible and makes an immediate difference to employees’ everyday expenditure.

Alternatively, cinema ticket vouchers are a popular way of rewarding and motivating staff. A cinema voucher is not only a convenient and cost-effective reward, but it carries wide appeal and accessibility for all employees, regardless of age, sex or marital status, which makes it a flexible incentive option.

Mobile technology

In the future, motivation card providers believe the mass take-up of smartphones will revolutionise the delivery of gift cards and vouchers within motivation programmes.

As regards cinema tickets, the technology is already available to send mobile vouchers containing barcodes, so that the recipient can have the screen of their mobile phone scanned at the cinema box office.

The transition to electronic gift cards is also leading some providers to explore next generation vouchers that are supported by mobile technology.

Vouchers offered via mobile phone applications (apps) are more secure than those sent via text message, which are often not susceptible to spam filters or plug-ins to download.

With Christmas on the horizon and money in even shorter supply for many employees, there is no better time for employers to use motivation vouchers.

Organisations could also consider splitting the reward process by offering gift cards or vouchers before and after the Christmas break, making the most of the motivational message to stimulate employee performance for longer.

Either way, motivation vouchers are a reward to which most employees will respond.

The facts

What are motivation vouchers?
Paper-based vouchers or electronic cards with a monetary value, which can either be spent at a single store or at multiple retailers. Travel and experience vouchers are also available.

What are their origins?
Gift vouchers first appeared in the 1930s in the form of book tokens, but they did not become a motivational tool until the 1970s. The first multi-store vouchers appeared in the 1970s.

Where can employers get more information and advice?
The UK Gift Card Voucher Association on 08702 416445.

What are the costs involved?
Vouchers are available in various denominations, often starting at £5. Discounts of up to 5% are available when they are bought in bulk, with paper vouchers generating higher discounts.

Any legal implications?
There are no legal implications.

What are the tax issues?
Employers must pay national insurance on a voucher scheme, but can pass the income tax on to staff. There are tax breaks for long-service awards, loyalty awards and suggestion schemes.

What is the annual spend?
The UK gift voucher, gift card and stored-value solutions market was worth £4.5 billion in 2011, according to the UKGCVA.

Which providers have increased market share?
The UKGCVA does not disclose market share information.

Which voucher providers have the biggest market share?
Some of the biggest players in the market include: Asperity Employee Benefi ts, Boots, Edenred, Grass Roots, LogBuy, Love2reward, Next Jump, One4all, P&MM, Ovation Incentives, Personal Group, Projectlink Motivation, Red Letter Days, Sodexo, SVM and The Voucher Shop, as well as large retailers such as B&Q, Comet, Debenhams, HMV, House of Fraser, John Lewis, Marks and Spencer, New Look, Sainsbury’s, Thomas Cook, Thorntons, Tesco, Waitrose and Waterstones.


90% of respondents say employee recognition programmes motivate them to do their job

11% of employees whose employer does not offer a recognition programme feel appreciated in their job.

70% of employees whose employer offers them a recognition programme feel appreciated in their job.


Source: Globoforce UK workforce mood tracker survey, August 2012