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Trends in Incentive Industry Reveal Sure, but Slow Recovery
By Deborah L. Vence
The incentive industry is showing signs of recovery, though slowly, as industry professionals are optimistic about business for 2011, and have an even stronger confidence for business in 2012.
But, still, more needs to be done, experts say.
"We were a little surprised to see how strongly some of the new trends we are tracking showed up in the numbers," said Melissa Van Dyke, president of the Incentive Research Foundation, referring to the Pulse Survey: Incentive Industry Trends for 2011 produced by the IRF. The survey queried 130 incentive providers and suppliers, as well as corporate incentive travel buyers online between Sept. 13, 2010, and Sept. 30, 2010, about trends concerning incentive travel programs, merchandise non-cash programs and budget changes forecast for 2011.
Overall, the survey, which can be found at www.theirf.org, showed that the trends in the incentive industry have steadied, for the most part, and continue to be on a positive upward trend for each of the core issues since July 2009.
"We knew CSR was a trend, but to learn that three-quarters of all respondents are receiving requests for Corporate Social Responsibility as a part of programs shows exactly how prominent it is today," Van Dyke said. "I also thought the response on industry support was interesting. Only 11 percent of survey participants said they feel the industry is 'doing enough to demonstrate the business value of incentives.'
"This means that we, in the industry associations, need to continue and even step up our efforts to provide information, education and tools on the value of incentives," she said.
Many respondents (66 percent) indicated that more C-level support is needed, though, with regard to demonstrating the business value of incentives—something that remains an issue in the industry. Fifty-five percent of respondents indicated that more case studies would assist in demonstrating the business value of incentives to C-level executives; while 47 percent stated that testimonials would assist in demonstrating the business value of incentives.
"Building the case to C-level executives takes both quantitative and qualitative information. From a quantitative perspective, most importantly, we can make use of the research and tools that are already available. I am always surprised at the number of industry professionals who are not aware of the data and education that organizations like The Incentive Research Foundation, IMA or the Forum have to offer," Van Dyke said, referring to the Incentive Marketing Association and Forum for People Performance Management and Measurement.
"For example the IRF's study, 'Incentives Motivations and Workplace Performance,' has the most extensive meta-analysis on academic incentive research to date. It can provide a number of supporting data points for almost every type of program: short-term, long-term, quota-based, open-ended, etc.," she said. "Equally important, however, is balancing this data with the emotional or people side of the story."
Van Dyke added, "Having a continuous stream of feedback from individual employees or channel partners on the personal impact of programs will go a long way to bring the data to life. The good news is that today there a number of social media tools that allow those of us in the industry to receive this type of feedback."
Pulse Survey respondents—who were categorized as providers (e.g., incentive company) (60.0 percent); corporate incentive travel buyers (16.2 percent); suppliers (11.5 percent); and other (12.3 percent)—also indicated that they believe the economy would not have as negative of an effect on their ability to plan and implement merchandise non-cash incentive programs compared with 2009.
For one, the change in attitude by incentive providers and suppliers can be attributed, Van Dyke said, to the fact that the economy has begun to stabilize.
"This allows executives in many industries to feel more comfortable with beginning longer planning cycles and releasing previously frozen initiatives," she said.
In addition, salaries have not yet rebounded.
"This has left some executives looking for alternative opportunities to encourage productivity and performance in the interim. The result is that many respondents are probably starting to see budgets open up," she explained. "In industries that have not yet rebounded, the programs have already been cut or reduced so dramatically that providers do not plan on the economy having a major impact on these programs in the near term."
In another category, the use of social media as elements of incentive programs garnered a 58 percent majority response, indicating that social media is used "to communicate with participants prior to an incentive or recognition program." Meanwhile, 36 percent indicated that they use social media to communicate with participants during an incentive and recognition program; while 27 percent stated that they use social media to communicate with participants after an incentive or recognition program.
And regarding 2011 anticipated changes in merchandise non-cash incentive programs award selections, the 41 percent of respondents anticipating "increased use of debit/gift cards" as an award selection represents an increase from what the IRF saw last winter and earlier in the spring. Last winter only 22 percent saw an increase. In the spring of 2010 only 21 percent saw an increase.
Meanwhile, the nation's economic conditions continue to play a role in the budget process. The 22 percent of respondents who stated that the budgets for incentive travel programs in 2011 will be reduced represents a much better outcome than in the past.
"At this same time last year, over 50 percent of respondents saw a decrease in travel budgets. This spring, 33 percent saw some sort of decrease. Now we are down to 24 percent predicting a decrease, with 20 percent only predicting a slight decrease," Van Dyke said. "This shows some adjustments still taking place while the 'new economy' settles in, but, overall, it is better than where we have been."