Posted October 1, 2013 4:16 pm by with 3 comments

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report-preference-web01You’re about to buy a new car. You can have a $250 discount off the price or a $200 Visa gift card. Which would you choose?

If  you’re like most people, you’d choose the gift card. The new Parago 2013 Shopper Reward Preference Study shows that people are two times as likely to pick the lower, gift card reward rather than the higher discount. Value wise, it’s a bad choice but in this case it’s about perception.

You won’t even notice a $250 savings on the total price of your car, but you’ll feel richer when you go to spend that $200 gift card at Target. Plus, spending found money is a whole lot more fun than saving it.

Given that logic, a digital gift code should be just as enticing as a plastic card but not so says Parago. The higher the dollar amount, the more people want plastic.

reward preference

To be fair, it appears that the survey participants were asked to choose between a Visa or Mastercard gift card or an Amazon gift code. In that case, you can understand why more people would want the card with a wider range of spendability.

Still, the preference increase with the dollar amount increase is interesting. Putting on my psychologist hat, I’d say that’s because we don’t feel guilty blowing $25 on Amazon DVDs and CDs but $100 is a different story.

I also think people prefer physical cards so they can give them as gifts and trade them. Don’t tell my family, but quite a few of the free rewards I win all year long doing surveys, etc, end up in their Christmas stockings.

Looking at different industries, Pargo found:

  • 1 out of 2 consumers will pick a cable, internet or utility provider that offers a prepaid card reward.
  • For hotels, a prepaid card reward is 4x more powerful than 50% off a third night.

The only time the trend changes is in households that make more than $200,000 a year. Those people showed interest in high dollar Amazon gift codes and expensive baseball or football tickets over generic gift cards and discounts. I guess at that stage, blowing $200 on fun stuff doesn’t worry you at all.

Which would you choose?

  • Give me the $200 off the price of what I’m buying NOW. If you get one of these cards, you’ll just have to spend more money later and pay full price now.

  • Jeff Kershner

    Perceived value usually wins. How about a $50 gift card for Starbucks vs $75 off your purchase – that’s a lot of coffee.

    In this example / study, it’s based on a car purchase. I would bet most consumers are thinking the $250 is a “hidden” discount off the price of the car and they’re not truly receiving a $250 discount.

  • As much as we have become a digital culture, there is still something appealing about holding an actual gift card that you can use anywhere you’d please as opposed to a discount code with an online retailer. There is still a significant number of people that prefer to spend money offline.