Is a Cost of Giving crisis looming for your business?

As Christmas approaches, UK businesses are facing a cost of giving crisis, whether they want to support employees through tough times or reward them for their efforts this year.

The problem: what do people really value when it comes to Christmas gifts – and what is seen as an empty gesture?

Love2shop – has more than 30 years of experience in helping employers get Christmas gifting right through good times and bad – so avoid potential pitfalls this year.

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Employee gifts – give them something they appreciate

Christmas gifting in work is tricky. We may feel we know our employees and work colleagues well but according to the Motley Fool website, Brits on average throw away £32 million of Secret Santa gifts every year – which is a lot of waste!

Getting gifting wrong can also leave a sour taste, sending employees into Christmas feeling undervalued by a gift chosen with little thought.

If you’re considering offering gifts to your employees, ask yourself – do you really know what they want? Or ‘need’ for that matter.

Truth is, there is evidence at Love2shop – that recipients of gift cards are increasingly redeeming their gift cards in shops selling everyday essentials, which includes supermarkets. The ‘treat’ moment is now serving as something else.

If your employees might welcome the chance of doing an extra food shop or buying a household appliance over receiving a selection of wines, wouldn’t it be best to give them a choice?

Offering employees the flexibility to choose what they really want – or need – has a more positive impact.

Such non-cash gifts can also be given tax-free. HMRC’s Trivial Benefits allowance permitting you to give gifts up to the value of £50 for each employee with no additional tax to pay.

The Cost of Living – gifts to ease spending pressure

The cost of living and the cost of giving go hand-in-hand. As an employer you will already have seen employees beginning to struggle this autumn and winter with rising energy costs and general inflation.

To avoid embarrassment, take time to listen to how people feel. Speak to key individuals, even carry out an anonymous survey – see how people are feeling in your business and what support they would like to see.

You may find that they don’t really want the traditional bottle of bubbly or box of fancy chocolates, but something flexible, such as an exclusive festive-themed Love2shop multi-retailer Gift Card, which allows them to choose their own benefit. They can accept the gift without the risk of stigma attached to a ‘handout’ and choose to spend it on essentials like the weekly shop, new winter coats for the kids or little luxuries for the festive season.

To take things one step further, offering employees an Everyday Benefits Card is a cost-effective way to help them spend less on every shopping trip. By pre-loading funds onto the card at a 7.5% discount, they save on purchases across a range of retailers throughout the year. It’s a great way to offer longer-term support to your employees.

The Christmas party – don’t force the fun

Since Covid, the Christmas party has had a mixed return. Some people have been keen to get back to ‘normal’ while others remain more cautious – so what should you do?

Ask your workforce – there’s no point putting deposits down for a venue, food and entertainment if only a handful of people are going to turn up. Can they afford the taxi home, say? So run an internal survey to make sure you’re investing in the right treat for your staff.

If you do choose the Christmas party option, remember – similar to trivial benefits, HMRC allows employers to spend £150 per employee on an annual social event tax-free. Just remember, if you go over the threshold you have to pay tax and National Insurance on the entire spend, not just the difference and this threshold INCLUDES VAT – so don’t get caught out!

Alternatively, you may choose to go for a nice meal together. That way it’s easier to control who your group comes into contact with and to be respectful of those whose culture means they don’t drink alcohol or have specific dietary requirements. Again, this would qualify for the £150 per-head tax allowance.

Whatever you opt for, remember to consider additional expenses such as travel costs and baby-sitting. With everyone trying to balance their household budgets, travel or even hotel stays may be beyond employees’ reach this year so it’s a good idea to avoid additional expenditure for each employee.

You may decide to axe the Christmas party and offer Love2shop Gift Cards or digital e-codes instead. This gives employees the freedom to choose whether to organise a smaller get-together with work friends or offset some of the rising costs of Christmas this year. Love2shop e-Codes can also be scheduled to arrive via email at any time – even on Christmas Day – so it’s never too late to bring some festive cheer.

“Christmas gifting can be a challenge for businesses,” said Frank Creighton, Director of Business Development at Love2shop.

“The right course of action is complex. The ‘cost of giving’ isn’t just about how much it might cost the company in expense but how a company will be judged for its opportunity to show it cares and understands – which has a different sort of cost.

“Love2shop has more than 30 years of experience in gifting and rewarding and we’ve helped businesses get it right through recessions and recoveries. Gifting may seem more complex than ever but we have developed simple solutions so that employers can get gifting right for their workforce.

“Multi-retailer Love2shop Gift Cards and e-Gift Cards offer incredible flexibility. Employees can choose how a gift can be used – whether that remains as a treat, or goes on essential things. Similarly, gifting a pre-loaded Everyday Benefits Card which offers discounts all year-round will provide a longer-term feeling of thoughtfulness when colleagues feel valued, ensuring that your well-intentioned Christmas gift brings a smile to their faces.”

Everyday Benefits Cards and Love2shop are flexecash products. Flexecash is the prepaid card platform that issues flexecash Love2shop Cards. This facility is provided by Park Card Services who are Authorised and Regulated by the Financial Conduct Authority to issue electronic money. FRN: 900016.

Love2shop Cards are regulated by the Financial Conduct Authority and as such we may need to complete an electronic identity check.

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How you and your team can both reap the rewards of a culture shift

It can start with something as simple as ‘thank you’.

Motivation through rewards isn’t a new idea. The notion that ‘people respond to incentives’ is a cornerstone of economics. Each new generation reinvents the concept. One of the buzz phrases out there right now is ‘nudge theory’.

This is based on the idea that you can influence the behaviour of individuals by changing what has been called “choice architecture”. In Liverpool, a behavioural science company was asked to install audio-visual prompts at a dangerous road crossing in the city centre. They used ‘embedded nudges’ to encourage safer crossing by pedestrians.

There is no doubt that subtly manipulating human behaviour has a place in specific settings such as road safety – but it seems cold and transactional. It isn’t very collaborative.

Moving away from transactional dynamics

Millions of people spend a significant proportion of their lives in their workplace. It is how they pay their mortgages, put food on the table, heat their home and are able to do the things they enjoy, whether that is socialising, eating out, going on holiday or something entirely different.

We accept that we have to graft a little to get the things in life we need and want. The traditional view is that work is a mainly transactional concept: we turn up and do a job for our contracted time and we receive money in return.

But given how much time we spend at work, it is not unreasonable to expect to spend those shifts in an environment that makes us feel welcome, values our ideas and input and acknowledges our hard work.

Prompting productivity

Study after study has shown workplaces that create this kind of environment are more productive and more likely to retain talented people.

It was, therefore, surprising to find out how many employees in the UK feel undervalued at work. According to a new survey, 10m people across the country are unhappy in their jobs with an incredible 79% of employees saying they would take a job elsewhere if given the opportunity.

Corporate rewards and employee recognition specialist Love2shop carried out the study. It also found that just 12% of employees ‘strongly agree’ that their employers are generous.

Love2shop organises reward and recognition programmes for both employees and customers in partnerships with firms and organisations in multiple sectors. Its reward services include the popular Love2shop brand, which offers physical or digital vouchers that can be spent with more than 150 leading consumer brands.

But a rewards programme has to be more than just a manager handing a voucher to an employee who has completed a piece of work. People want to feel genuinely valued and appreciated. That requires a culture shift within the organisation.

Small gestures have a huge impact

 In a discussion on the Road to Recognition: How to make employees feel valued organised by HR Magazine, Nebel Crowhurst, Vice-President of international education partnering organisation Into University Partnerships, said even the smallest gestures can have a huge impact.

She explained: “The things that really stand out, sometimes, are really small moments when someone can just say ‘thanks’. That thanks can be for the tiny things when you’re having a difficult time.

“Maybe someone notices you struggling and says ‘what can I do to help you?’ or ‘thanks for that really great piece of work that you did.’

“No matter what your role in a business, it’s just really nice when you have that feeling of someone saying thank you for that real ‘in the moment’ appreciation. Those moments that come from all different directions are what make a difference. People feel cared for and feel like they belong.”

Making people feel connected

Also on the panel was Stuart Curtis, senior director of global talent development at Workhuman. He said an effective recognition programme can also help more introverted employees feel more part of the team

“Investing in recognition also helps people who are highly introverted and don’t like to talk about themselves,” he said. “It’s got to be authentic. It can’t be generic, it can’t be copy and paste. Done right, the impact that has is just incredible in somebody’s life.

“People who are recognised frequently are 70% more likely to report thriving in the rest of their life because it gives some incredible feeling. They’re also five times more likely to connect that success to the culture of your organisation.”

Once you have started to establish a business culture that is both inclusive and nurturing, building on that with tangible rewards can create a powerful offer that can help create a productive and dynamic environment.

Strong results, low cost

Frank Creighton, Director of Business Development at Love2shop, said: “The extent to which UK workers feel undervalued and under-appreciated is worrying. The fact that one-third of staff feel undervalued should be a massive wake-up call for UK business.

“How undervalued employees are resolving this situation poses even greater concern. Our report indicates that many will continue to vote with their feet by finding a business that does appreciate them.”

This unwillingness by some employers to value their people has led to the rise of a phenomenon known as the ‘Great Resignation’. With the number of job vacancies at an historic high, people are seeking new jobs in ever greater numbers. This is bad news for staff retention and business continuity – and ultimately, expenditure.

“This ongoing nationally recognised trend is costing companies a huge amount of unexpected expenditure in recruitment, training and time,” added Frank. “That’s why it’s so important for more businesses to start making staff feel appreciated – by changing their attitude towards rewards.”

Attract, retain and engage through rewards

Love2shops offers a choice of multi-retailer gifting rewards, helping businesses attract and retain employees and customers.

With its award-winning digital platform, Love2shop also enables clients to plan, launch, communicate and maintain incentive or reward programs with minimal effort while delivering performance improvement.

Love2shop’s Everyday Benefits Card is already proving invaluable for employers who want to support their staff during the cost of living crisis. It offers a 7.5% discount on card loads to employees, helping them reduce their day-to-day spending.

Appreciate has calculated the average family can save more than £1,300 a year via the Everyday Benefits Card. It can also help with one-off purchases which is useful with Christmas just around the corner.

Visit love2shop.co.uk to learn more about how Appreciate can help your business introduce a reward and recognition programme that is cost-effective, simple and right for you.

Everyday Benefits cards and Love2shop are flexecash products. Flexecash is the prepaid card platform that issues flexecash Love2shop Cards. This facility is provided by Park Card Services who are Authorised and Regulated by the Financial Conduct Authority to issue electronic money. FRN: 900016.

Love2shop Cards are regulated by the Financial Conduct Authority and as such we may need to complete an electronic identity check.

Read our previous blogs…

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Cost of living rise presents big challenges – and there are ways to mitigate the impact

Evidence of the UK’s worsening cost of living crisis is becoming impossible to ignore – it is there in the data and in countless anecdotal examples.

One high street butcher, Raymond Millar, reports that his customers had already started saving for their Christmas dinner in July. His savings scheme that allows people to buy their meat for the festive season doesn’t usually start until September.

Then there is the GP, Dr Laurence Dorman, who for more than a year has been offering food vouchers to his patients. He is now giving them out with increasing frequency. Dr Dormam told the BBC the cost of living crisis could have “massive, profound implications” for patients’ health.

It feels like the price of everything is on the rise. As we emerged from the pandemic supply chains struggled to keep up with demand. This caused an initial spike in inflation and now the Russian invasion of Ukraine has accelerated the crisis.

Energy costs push inflation upwards

Russia is a major global source of oil and gas and the war has put huge constraints on supply. From June 2021 to June 2022 gas prices for UK households soared by 95% and electricity prices by 54%. The UK’s wholesale electric price is linked to the price of gas.

From October 1, the energy price cap will go up further. The price cap is a mechanism that sets the maximum amount that suppliers can charge in England, Scotland and Wales. From October the typical annual gas and electricity bill is likely to reach £3,358, according to consultancy Cornwall Insight.

In contrast, in October 2021 the average annual bill was just £1,400. And Cornwall Insight is forecasting this could go above £4,200 by January 2023. Millions of people are wondering whether they will be able to afford to switch the heating on at all this winter. This may dampen the enthusiasm from some for working from home.

Finance and consumer rights guru Martin Lewis, says: “This is a national crisis on the scale that we saw in the pandemic.”

Martin, and many others, are now calling on the government to take urgent action to soften the blow. From September it is likely that, whoever is prime minister, whether that’s Liz Truss or Rishi Sunak, will be forced to act. Both have been vague on the issue during their campaigns. But once they take office, the pressure to act will be irresistible.

Inflation is now above 10% and the Bank of England is projecting it will hit 13% in the next few months, tipping the UK into recession. Food prices are rising rapidly in the shops. Who can forget the price of a tub of Lurpak surging above £9 in July?

Ukraine impact felt in the supermarkets

Again, the conflict in Ukraine is having a major impact. Ukraine is a leading exporter of essential commodities such as sunflower oil, grain, maize and wheat. The United Nations has warned global food costs could rise by 20%. The rising price of oil means the cost of moving food around is also much higher, adding to high prices.

Rising costs are also hitting businesses which are in turn facing the dilemma of whether or not to pass the costs onto their customers. Some cafes, bars and restaurants are considering reducing their opening hours to reduce outgoings, according to a study by eEnergy and Censuswide.

And even nipping out for a sandwich in your lunch break is now becoming more expensive. In the last few weeks both Boots and Co-op have hiked the prices of their meal deals. Outside London, Boots has put the price up from £3.39 to £3.59. In London it has gone up from £3.99 to £4.19.

Co-op’s meal deals have jumped in price from £3.50 to £3.75. And the nation’s favourite bakery chain, Greggs, is warning of rises of up to 9% on some products in the coming months.

There is upward pressure on the cost of getting to and from work. Motorists have already seen petrol prices at the pumps rocket. And public transport users face further unpredictability. Train tickets prices rise each January based on the retail price index from the previous July, plus 1%. This means commuters could face 12% fare rises in 2023.

Although still low by historical standards, interest rates are also on the rise. At the time of writing the Bank of England has pushed up rates to 1.75% from 1.25%. Those on fixed-rate mortgages have some protection for the moment. However, the average monthly cost of a tracker mortgage has increased by more than £160 since December 2021.

Simple actions that make a difference 

There are steps people can take to mitigate some of their daily outgoings. Sharing car journeys into work with colleagues could make a significant difference to fuel costs. As could using park and ride schemes. And although grocery prices are rising, taking your own lunch into work will always be cheaper than buying a sandwich.

And many coffee shops run loyalty schemes where you get a free hot drink after your card’s been stamped so many times, or a reduced price if you use a reusable cup. These smaller benefits can make a difference over time.

There are also things employers can do. There is an increasing number of businesses which are being pro-active. According to the Living Wage Foundation, 10,000 employers in the UK have now committed to paying the Real Living Wage. At £9.90 for most of the country and £11.05 in London, this is higher than the mandated National Minimum Wage.

In recent weeks there have been multiple reports of companies pledging one-off financial payments to help their people deal with the cost of living. One of those is Love2shop, which has offered a payment to all of its employees.

And the company is doing its bit for the wider community by partnering with digital payment business PayPoint. This agreement will see both parties expand their product range to provide local authorities with a new way of servicing the most financially at-risk people.

Employers can do their bit to help

Love2shop is also working with businesses across the country to help them offer real financial rewards and incentives through its Love2shop gifting products. Given the broad range of retailers available on Love2shop, it allows employers to meaningfully contribute to their employees’ cost of living dilemmas if that’s how they choose to spend their gift cards.

As well as the ‘treat’ opportunities with a Love2shop Gift Card, it’s also accepted by more than 150 leading UK consumer brands including Sainsbury’s, Argos, Tesco, Wilko, Iceland, Matalan, New Look, and Argos. So people can choose to buy everyday essentials or for those little luxuries.

With the new school year about to start, a multi-retailer gift card could offer great savings on the price of school uniforms or other essential items such as school shoes or a PE kit.

This is also the time of year when we start thinking about Christmas. People could use their gift card to get a head-start and buy gifts in advance, taking away some of the stress normally felt in November and December.

Some employers may be able to negotiate cheaper corporate discounts with local car parks to reduce parking costs, or allow more people to work from home when practical – if the costs don’t outweigh the costs of going to work considering the rising fuel costs come winter.

There are tough times ahead but employers can make a big difference to the lives of their employees for a modest outlay.

If you can see how Love2shop reward and recognition products could help your business, contact our business team today. Email [email protected] or call  0344 375 0739.

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Why incentives are key to brand loyalty

Why incentives are key to brand loyalty

After two years of COVID turmoil businesses across the UK are now grappling with the cost of living crisis that is ushering in a period of extreme caution among customers.

With inflation at a 40-year high, consumer confidence is falling rapidly. Even if people have money in the form of savings they are now more reluctant to spend. They fear soaring prices for energy and food will put the squeeze on their spending capacity for the foreseeable future.

GfK’s latest Consumer Confidence Index reported confidence was now at an historic low. Data based on interviews with 2,000 adults in July showed the worsening economic situation was “darkening the mood” of the nation.

This fear and caution is mirrored in the B2B market where businesses are being much careful about their spending with other businesses. An index from NatWest looking at business activity across the UK recorded the lowest reading in six months in July.

Retailers are facing a more permanent shift in market dynamics. A move away from high street shops to e-commerce during the pandemic has swung back the other way. E-commerce market share peaked at 37.4% in February 2020 but has now fallen back to 25.3%.

However, research published by global professional services firm, Alvarez & Marsal, reveals an estimated 17.2m UK consumers plan to make permanent changes to the way they shop.

Whether your customers are consumers, or other businesses, the message is clear: you are now in a fiercely competitive trading environment.

People and businesses will still have to spend money, of course, but now more than ever they are looking for that extra bit of value. Extra incentives can make all the difference when decisions about major supply contracts are made.

Putting together the right package

So in this tougher period what can brands do to keep people and other businesses coming back and spending? What is the key to customer loyalty?

Economists across the world swear by the same four-word phrase – ‘people respond to incentives’. Some are more obvious than others. Offering the right product, available quickly, and at the right price is one of the basics.

What must also be remembered is that all buying – online or on the high street, personal or business – is an experience. Make the experience a frustrating or unpleasant one and people will take their business literally, and virtually, across the street.

Social media has put more pressure on brands to deliver both the product/service and the experience. Pity the poor souls in charge of the big brand Twitter accounts when the ‘my nan is 85 and you have treated her appallingly’ tweets arrive on their timelines.

So let’s say you have got the basics right. The stuff is all in stock, the price is low or competitive, smiling staff are ready and eager to cater for the customers’ every whim. If that is the baseline what extra value can you offer over and above?

What do the customers tell us?

Love2shop is working with businesses across a whole range of sectors to help them improve customer engagement and, in turn, retain customers in a challenging environment. Love2shop offer a number of solutions that will incentivise customers to keep coming back time and time again.

In a major survey carried out by Love2shop, 13,000 people were asked about what they thought were the best rewards when it came to brand loyalty or moving to a new supplier. The results were no surprise. They revealed people love choice and they love gift cards.

It ran two polls across two months asking people to pick their ideal loyalty prize, and their ideal sign-up gift from a selection of popular rewards. Both showed a big preference for multi-retailer gift cards and discounts, with the former by far the most popular.

In fact, a whopping 76.6% of respondents said it was their favourite option. This was followed by 13% for discount on their next purchase with VIP experiences, upgraded memberships and merchandise all scoring in single digits. Read more about the poll on the original blog.

This explains the popularity of the Love2shop rewards and the Love2shop Engagement Platform offered by Love2shop to reward and incentivise both staff and customers.

Love2shop rewards can be used in around 150 retailers, including well-known brands such as Marks & Spencer, Wilko, Iceland, Matalan, Argos, Costa, Harvester, Tui and Jet2Holidays and many, many more.

For customers or employees, Love2shop rewards can offer a treat, or it can be invaluable for life’s essentials such as food and even school uniforms. When money is tight it can make all the difference to people.

Hard data shows incentives do work

Brakes is the UK’s number one wholesaler to the hospitality trade. It also offers food delivery services direct to consumers. In 2021 it forged what proved to be a hugely successful partnership with Love2shop.

Utilising both the expertise of the Love2shop team and the engagement platform technology, the Brakes ‘Help for Hospitality’ campaign was created and launched. The reward programme, delivered through the platform, offered Brakes customers a blend of discounts, cashback, charitable opportunities and Love2shop rewards.

Added to that, Love2shop provided strategic, technical, creative, and software support for the campaign. Love2shop provided the software to deliver cashback and also the Love2shop rewards to Brakes customers.

At that time, the UK was still only slowly emerging from the final pandemic lockdown. In this context the outcome of the collaboration was spectacular. It delivered what was described as “exceptional” growth.

During the five months of this specific campaign Brakes reported that 7.5% of sales came from new categories and products. Additionally, 20% of Brakes customers engaged in the Help for Hospitality. It generated more than 60% of Brakes’ sales revenue during the promoted period.

Help for Hospitality’s success was recognised when it picked up Best Channel Partner Programme at the 2021 Incentive Awards. This annual event recognises excellence in the reward, incentive, and loyalty industry.

Adam Heywood, Head of Commercial Marketing at Brakes, said: “The Love2shop team did a phenomenal job with the Help for Hospitality campaign.

“We’re incredibly proud to see that valuable work recognised by the Incentive Awards. I’d like to congratulate both our team here at Brakes and thank Love2shop for all their support.”

People do indeed ‘respond to incentives’. The data on that is irresistible. It is food for thought for those businesses selling directly to the public and those trading with other businesses. Increasingly, offering extra value to your customers is no longer just optional.

If you can see how Love2shop reward and recognition products could help your business, contact our business team today. Email [email protected] or call  0344 375 0739.

Read our previous blogs…

What is customer acquisition
50 Employee Perks
What is customer acquisition