Could this be a sign of hard times ahead?
The results of P&I's latest survey on voucher receipt and redemption are now in. Working with online rewards and motivation provider iPoints, we have compiled responses from more than 200 people in an effort to assess how vouchers are given in the UK B2B sector and how the recipients redeem them.
While most changes over the past 12 months have not been dramatic, there are a few surprises. The first is that the proportion of people saying they receive vouchers as a reward or incentive from work has dropped markedly, from 30 to 15 per cent this year. Could this be a sign of belt-tightening in a recession?
Andrew Johnson, director-general of voucher body the VA, says: "The VA figures for 2007 showed an increase in sales to the corporate sector, so I am surprised to see a decline in the number of companies offering vouchers."
Salary boost
Frequency of distribution has also changed. Last year, more than a third of companies handed out vouchers once a year, and one in five once a quarter. Now, however, 71 per cent choose to give them on an ad hoc basis. Kingfisher Gift Vouchers' head of incentive business, Tracy Aslam, is encouraged by this.
"We should be giving staff the opportunity to be rewarded for achieving a range of tasks, as opposed to just giving them a thank you once a year," she says.
One4all Gift Vouchers UK sales manager Michelle Barrett agrees that a tactical focus is welcome. "Structured incentive schemes are being replaced with day-to-day motivation and staff engagement programmes," she says.
But what do consumers do with their vouchers? Nearly a third spend them immediately, while half get around to it later. Reassuringly, the number of people who leave them mouldering in a drawer is zero - down from six per cent the previous year. But the proportion saving them for a special treat is also down, by eight percentage points, and may indicate a trend for using vouchers as a salary boost for everyday items.
Robert Barker, chief operating officer of ipoints owner Maximiles, says: "It could possibly be that shoppers keep a closer eye on fulfilling value given to them, and are being more prudent with their money." P&MM executive director John Sylvester adds: "There are perhaps signs of a tightening economy with faster spend and a lower likelihood of unspent vouchers."
There are other surprises here, too. First, the proportion of recipients topping up a voucher with their own money has risen from 69 to 80 per cent. Barrett and Aslam believe the "special treat" view of vouchers plays a part, letting people trade up to a product or experience they really want. "Vouchers give them the extra spending power they need to buy their desired reward," says Barrett.
One puzzle is the decline in the use of experiential vouchers. Experiences are often perceived as more special than goods, so it seems strange to see a fall from 11 per cent to just two per cent in this category. Johnson wonders if the squeeze on personal finances means recipients switching their voucher spend to everyday spending. Barrett argues time pressure may be more to blame. "Experiences can demand a commitment by the recipient in terms of time and travel," she says. "This will limit their long-term usage in any single scheme."
Household bills
Financial pressures may also be behind the use of vouchers to pay for food and other household bills, but Barrett suggests food doesn't have to be the weekly shop. "We have seen a slight increase in enquiries regarding the use of vouchers for food purchases, but we are talking here about 'treat' food, such as high-end products in speciality foodhalls," she says.
This may be borne out by the income breakdown of these recipients. Some 40 per cent of those spending vouchers on bills earn less than £20,000 a year, but only 8.6 per cent of this group spend vouchers on food. Over 30 per cent of those spending on food earn more than £40,000.
The finding that 67 per cent of people spend the voucher on a "treat" - up from 44 per cent last year - is also a little contradictory. "It's very surprising given the tighter economic environment and rising food costs," says Barker, "but it would appear people seem intent on using vouchers as a source of reward - perhaps precisely because they are cutting back on the luxury and discretionary spending."
Plastic's popularity
Another oddity is an admittedly small drop in the popularity of giftcards over paper. This is a trend that seems to have no relationship to age - plastic and paper are nearly equal in popularity among 18 to 30-year-olds, while plastic is slightly more popular among the over-50s.
Weren't giftcards supposed to be the future? Aslam believes they still have some way to go in the B2B market. "Gift cards are being issued and used, in the main, exactly like paper," she says. "Once the value is spent, they are discarded. Until we develop the functionality of gift cards further, paper will stay popular."
Johnson notes that while gift cards account for around half of the consumer market, recent VA figures show B2B gift cards account for less than 10 per cent of revenues in B2B. Sylvester suggests that "the market seems to maintain a broad indifference between paper and plastic, perhaps indicating the retailers need to do more to promote the benefits of their plastic to the consumer."
There certainly seems to be no loss of appetite for vouchers generally - and the survey indicates their usage in reward and motivation is even more important as we face tougher economic times.