Feature Article - September/October 2017

Positive Direction

State of the Industry Shows Continued Growth

By Deborah L. Vence


Industry pros concur that the state of the incentive industry is continuing to move and grow in a positive direction.

"As our 2016 outlook study showed, the industry is still positive and growing. The IRF has tracked the net optimism score (NOS) of the incentive travel and gift cards/merchandise side of the market since 2008. Net optimism shows the number of individuals who feel the economy is having a positive impact less the number saying it is having a negative impact on programs," said Melissa Van Dyke, president of the Incentive Research Foundation.

Net optimism for the incentive travel and gift card/merchandise sides of the market was at 26 percent and 14 percent respectively in late 2016.

"These are still positive showings, but they are down from highs of 40 percent or more over the past two years," Van Dyke said. "Net optimism correlates highly with budget growth. So, we anticipate the market to continue to grow, but at a slower rate perhaps than in the past few years."

Richard Blabolil, president of Marketing Innovators International Inc., in Rosemont, Ill., added that the economy is allowing companies to invest in their employees.

"Although the return on investment is more pronounced in good times, investing in your greatest asset, your people, is equally as critical in hard times," he said. "The upswing in the economy (wage growth and corporate performance) allows for more perceived risk taking. Companies can test programs, contests and award schemes to engage employees and channel partners. There is more room for trial and error in positive economic environments."

A Positive Direction

For sure, the industry is moving in the "right direction," Blabolil said, "Because Corporate America, the buyers, are moving in the right direction.

"Companies are aggressively pursuing employee engagement strategies, and partners in our industry are responding with new ideas—mobile platforms, a diversity of award options, analytic support and employee marketing strategies," he said.

There also is an increased focus on the American worker.

"The concept is to be attentive to each individual's needs at every touchpoint through onboarding, development, anniversaries and achievement from 'hire' to 'retire,'" Blabolil said.

Michelle M. Smith, vice president, marketing, O.C. Tanner, a Salt Lake City-based company that specializes in employee recognition awards and programs for service, sales, performance and employee motivation services, believes this an exciting time in the incentive and recognition industry.

"It's never been more competitive, but we also have more tools, more options and more research to help us deliver a wonderful experience—and a wonderful result—for clients," Smith said, adding that clients are continually raising the bar, seeking new ideas and methods to improve program performance, and expect incentive and recognition professionals to deliver sustained and quantifiable results.

Studies conducted this year have shown what is affecting the incentive industry the most, such as increasing demand for non-cash rewards, incentive travel, etc., as indicated in the IRF 2017 Trends Study.

"An inability to credibly demonstrate competency in these areas will likely take us out of consideration," she said. "We have to continuously embrace new tools and new insights to remain competitive and to grow as professionals."

While increased competition, new research, and the introduction of new technologies and methods might feel overwhelming at times, they are all working together to deliver a much more robust incentive program, which is good news.

In addition, Smith believes the Great Recession did the industry at least one favor: "Many leaders discovered the power and value of recognition and incentive programs to define a company culture and fully engage employees in the organization's goals," she said. "Not every leader has made the transformation, but many more are on board and receptive to our industry than I've ever experienced."

Industry Research

Studies conducted this year have shown what is affecting the incentive industry the most, such as increasing demand for non-cash rewards, incentive travel, etc., as indicated in the IRF 2017 Trends Study.

Van Dyke said the five biggest findings from the last year comprise the following:

  • Changes in the labor market are driving increased demand for non-cash rewards and recognition.
  • Emotion is an important part of business now.
  • Top-performing businesses use non-cash rewards at a greater rate.
  • U.S. regulations are making it difficult to design and execute programs.
  • In many instances, budgets are not keeping up with rising costs.

Meanwhile, Smith cited the study, "Using Behavioral Economics Insights in Incentives, Rewards, and Recognition: The Neuroscience," as being her favorite one from the IRF this year.

"The insights in the study," she said, "help those of us selling incentive and recognition programs to better understand human motivation, and to ultimately create more compelling and effective programs."