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Can Gift Cards Be Offered as a Part of a Reward System?

Home » Small Business » Gift Cards » Can Gift Cards Be Offered as a Part of a Reward System?

There are two ways gift cards can be used as part of a reward system.

Merchants can offer gift cards as a reward for large or frequent purchases. Many retailers offer gift cards as an after-purchase reward for spending a certain amount. These gift cards can then be used for future purchases. Not only does this give the consumer the feeling that they received a discount, but it also brings them into the store again at a later date. When they redeem the gift card, they often purchase an amount greater than the original gift card value. This process increases sales and customer satisfaction at the same time.

Companies can offer gift cards as incentives, benefits, or rewards for outstanding service. When companies offer gift cards as part of their benefit and reward system, they are able to offer a cost effective bonus that has more value to the recipient than a certificate, plaque or trophy. Many times these cards can be purchased in bulk at a discount, which benefits both the company and the employee. This type of reward system not only shows the employee they are valued by the company, but also leads to a feeling of good will from the employee for the company when the future purchase is made. Note: Companies who use this reward system for their employees should speak to their tax professional to discuss how to document this benefit to the employee and to cover any taxes that might be due in relation to it.

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