Feature Article - September/October 2019

The Right Stuff

The Ongoing Evolution of Merchandise Rewards

By Rick Dandes

The strategic use of merchandise to incentivize, reward and recognize employees, sales teams, channel partners and customers continues to trend upward. In fact, according to the Incentive Research Foundation's 2019 Trends Report, the overall use of merchandise rewards is expected to increase, particularly among corporate audiences, with a net increase of 33 percent compared to a net 20 percent for suppliers and third-party providers.

Merchandise is an important motivator in any successful reward platform, said Sandra Gregoire, sourcing manager, All Star Incentive Marketing, of Fiskdale, Mass. "In order for a program to be impactful, gifts should be both tangible and memorable. As a full-service incentive house," Gregoire said, "we work with clients from several different industries, focusing on a wide range of engagement solutions. Each program has a unique goal, and merchandise needs can vary."

When you look at the industry, overall incentive trends will focus on products that are new and innovative and that spark interest within the program participant base, added Jack Koperski, sales merchandise coordinator, Bissell Homecare Inc. "Merchandise that the participant can see the value of within the program is important," he said.

Exactly. That's key to understanding how merchandise as reward programs have changed over the years, and why they are being increasingly used, noted Jeffrey Brenner, director, special markets, Seiko of America. "We can't use a cookie-cutter approach, meaning a one-size-fits-all reward doesn't work anymore. It's all about personalization and engaging the recipient with meaningful merchandise."

Trend Talk

The most popular term used after the 2019 Consumer Electronics Show is artificial intelligence (AI), said Raul Garcia, territory sales manager, Illinois and Wisconsin, Incentive Concepts. While the majority of people associate AI with self-driving cars, he explained, most consumers are unable to afford this luxury. However, there are more affordable products featuring AI, such as robotic vacuums. iRobot continues to dominate the category with the company's lineup of five models starting at $249.99 and capping out at $999.99 for the high-end version.

Even though artificial intelligence is commonly associated with human-like robots, AI-enabled products are becoming more prolific, smarter and faster, all the while making our lives easier, Garcia said. "Today we are seeing a strong presence of AI in cameras, smart TVs, refrigerators, ovens, smart home products and much more."

In the past, people were forced to adapt to AI. Now, tech companies are developing products that adapt to consumers' lives. In fact, Bose is one brand that is now offering built-in features like the Google Assistant and Alexa. Featuring a world-class listening experience, the newest Bose products now include the company's audio approach to augmented reality (AR). This cutting-edge technology includes embedded motion sensors that detect body movement and head orientation while worn.

Bissell is a 143-year-old company with a rich legacy, said Craig Frechette, key account manager, Bissell Homecare Inc., Grand Rapids, Mich. "If we look at the Bissell product in program business, the beautiful thing with Bissell is that it crosses a lot of categories within homecare, home cleaning solutions." The product lineup has incorporated some new technology, including cordless products. Bissell utilizes robotics, which is very popular, Frechette said. Those are the trends within Bissell's lineup and programs.

Meanwhile, "for us," explained Micah Vander Tuig, director special markets, O'Rourke Sales, of Kansas City, Mo., "there is a seasonality aspect to trends in merchandise. In the summer months, for instance, what we saw in O'Rourke Sales is lawn-and-garden-related merchandise. Because of the late spring this past year we added some mowers, pressure washers and trimmers to programs. We saw a big uptick in that."

There are always products that coincide with those changing seasons, Vander Tuig said, "and we, as well as our competitors, try to stay on top of that, when we offer merchandise to programs. A lot of programs are your standards, like coffee makers, TVs and watches, and there is nothing wrong with those, but we like to add things with a little more seasonality to it. And that definitely helps."

Outside of seasonality, Vander Tuig noted, "we have many different divisions and we have our eye on the radar, pulse on the ground of different trends within those channels: consumer electronics, and appliances. One of the lines we recently brought in was Thor Kitchen appliances, a high-end range of professional kitchen units, such as refrigerators. We brought that over to the premium incentive side, based on the trends we saw, and received some success in that."

The major trend in timepieces is that they have really become an accessory, said Brenner, of Seiko. "You will find people with multiple watches, something to wear during the day, then another watch for dress. Women seem to prefer a larger case and dial; you will also find that in a younger demographic. People will change their watch like they change a bracelet, or earrings."

In the world of timepieces, Brenner said, a strong color has emerged—shades of green, with an emphasis on emerald or a strong hue of the color. "Though blues will always tend to stay at the top of the food chain," he said, "it is exciting to see the emergence of such an impressive color, whose synergies with gold and silver metals, to include Swarovski crystals and diamonds is beyond impressive."

Brenner is further seeing the emergence of mechanical/automatics in the watch world, which are resonating with strong sales to a younger demographic. This demographic is intrigued by the automatic technology, though it has been around for many decades.

Links Unlimited, of Cincinnati, Ohio, plays on both sides of merchandise, said company president Scott Kooken. "We manage the logoed merchandise for the premium promotional side, and then we also manage the clean goods, the non-logo with the same products. So, when we launch a product we look at launching it to bulk buy, and putting a logo on it, and also the opportunity to put it into incentive and loyalty programs, which in a lot of cases are single-piece drop-ship programs."

When Kooken can find a product that fits on both sides of the market, it is a win for them.

"Our number one product right now, and I think it is the trend of merchandise is S'well, the insulated bottle," Kooken said. "The 17-ounce bottle keeps beverages cold for 24 hours. They also have a bottle for commuters, a coffee cup."

The point is, he said, is they have different bottle styles with many different colors to choose from. It's a unisex offering, and it sells at a good price point. "We sell it for $15. People are buying it, putting their logo on it and giving it away. People are buying them for their incentive programs, and their loyalty programs as single-piece drop-ship. That is a product that has worked well with us because it hits both sides of our company."

Links Unlimited's No. 1 brand in the electronics field is Amazon, Kooken said. "We represent the Amazon Echo, the Dot, the Amazon Paper White, plus all of their tablets, the Fire 7, the Fire 8, and 10. But our No. 1 is the Amazon Dot. It has a good price point, we can put logos on it, and we also sell it to the non-logo channel. We do it for incentive programs and also in bulk. The Dot basically can act as your home automation hub."

Best Practices for Programs

The most common ways in which merchandise is used in programs, said Garcia, are in loyalty programs, anniversary or years-of-service programs, dealer loader programs, safety programs, peer-to-peer recognition programs, tiered level programs, corporate gifting, event gifting experiences and holiday gifts.

Garcia explained how merchandise is effective in peer-to-peer. "It's a growing success in our business," he said, "and one that we model with our own team."

Merchandise is an important motivator in any successful reward platform.

Most corporations manage their programs from the top down, relying on managers or supervisors to determine employee rewards. Peer-to-peer programs involve employees recognizing each other, which results in staffers celebrating fellow team members who go above and beyond to get the job done. At the end of the day, it is fulfilling to be part of this process that involves thinking and working outside of the box.

When working with suppliers and manufacturers, Gregoire said, "We focus on a wide array of price points, top sellers and bringing new brands to our marketplace. We've seen growing success with health-related items, and also with smart home products. Additionally, multicookers, air fryers and vacuums continue to be some of the most popular redemptions in our reward catalogs. Experiential rewards, items that support a cause and eco-friendly products have grown in popularity as well."

The regular addition of new merchandise to a rewards catalog, she said, encourages end users to keep returning to their program websites, where they will also find tools and news stories to further engage them in their program.

Sometimes it is those oddball brands and products that are outside of the ordinary that surprise you and that make great rewards, advised Vander Tuig. "We try to utilize the data we have within our organization and various channels to bring to incentive programs. I think sometimes they get overlooked. The same consumers going out to buy those products are the ones who will redeem for those products, if they are given the option."

Vander Tuig works through company reps, through the Incentive Manufacturers & Representatives Alliance (IMRA), that have direct contact with suppliers, and their customers. They are in the front line with those customers, hoping to put those programs into place. They see what a client's needs are. "There are different budgets," he said, "and reps are essential to that relationship. They disseminate the information that we have at the warehouse level to the clients.

"We absolutely want to keep our offerings fresh, bringing in new products, or new products from existing lines that the company has," Vander Tuig explained. "We attend trade shows. Our suppliers have national meetings that we attend, where we look for new and cutting-edge products. We are always looking for new brands, whether we see them at houseware shows, see them on TV. We've seen products on the internet and we'll contact them. Small companies trying to break into a market. We will reach out to them and help them connect to a channel."

Vander Tuig is always on the lookout for new and exciting products that can be added to these different programs. "You've got to keep it fresh, keep an eye on trends and try to add these products to programs to make them exciting. If not, people can get bored, and the merchandise reward could lose its meaning."

At Bissell, the company is able to offer surprise and delight touch points through incentives that are relatively low in cost but high in perceived value: Think, a pet stain eraser and the time and money it could save you from, say, replacing an entire area rug or carpet because of one stain, Koperski said.

"What I've seen as input from our field professionals is, innovative products are those that make a difference in somebody's life," Frechette added. "You see more curated selection of products when you see loyalty or reward programs, as opposed to events, say, at a casino. We are seeing requests for products that are innovative, have a cause and change somebody's life in a meaningful way. We just want to get the right tools into the consumers' hands that can change their life in a meaningful way, to let them get on with the things they really want to do."

Frechette and Koperski have had some truly innovative approaches to customers in colleges and the military, with their cleaning products.

"In both cases," Frechette said, "You're talking about students and military personnel that might only be in their apartments or base living facility for a limited time. They have to clean when they leave. We've found that there is a huge potential here, for them to work with us within their established programs."

Event Gifting and Sprees

From a trend perspective, event gifting has exploded in popularity and effectiveness. The reason for that is people want experiences, Brenner said, "when they are at an event, say an incentive travel meeting. The experience is what is really driving the gifting industry and not just in my category," he said. "Everything from sunglasses to handbags to clothing are now being offered at event gifting."

Seiko has launched a new event gifting business called the Seiko Experience, which entails taking a look at the collections under the Seiko brand. The Seiko Experience, Brenner said, " was developed with the business community in mind. Because of who the brand is—our precision, our technology and brand recognition—Seiko is a highly valued brand from a gifting perspective."

The Seiko Experience takes a boutique approach to event gifting, where the event itself offers more of a retail experience, Brenner said. "It's as if you were walking into a high-end jewelry company. It is a change in the environment, in which the recipient, the person being gifted, selects their item. We use our normal visual displays that we would use in a high-end boutique. Depending on the budget, we will have someone there for fitting, to add links if that is needed, so the recipient can take it home with them.

"We are finding that people typically wear a watch to an event," Brenner said, "so we prefer to have them try things on and make it more of a social event and then provide exemplary service, get it turned around with them in less than a week. It's all about personalization."

Brenner is also working with sports teams. "The Boston Red Sox came to us. We did 400 watches, and it was really more of a thank you because there was an initiative that was taken and done internally. They wanted to thank everybody, from the maintenance guy at night cleaning up to the C-suite level and everything in between."

Brenner has found that color is big in this category. If you can find a highlighting color that might match with a team there could be an opportunity.

Kooken noted that the S'well bottle is a perfect room-drop gift, with a company logo on it. "But we also do some event gifting. For Ray-Ban, we'll fly down to where the client is having their incentive travel meeting. People will walk up to the Ray-Ban booth, try on their glasses and then we hand them the glasses that they pick."

Links Unlimited might bring 12 different styles to an event because they don't know what a recipient will choose. Sometimes, gifting might combine merchandise rewards. "When someone picks up a pair of glasses, they can also get a S'well bottle," Kooken said, for example. "We want to have a flexible gift giving experience."

Bissell also participates in event gifting sprees, explained Frechette. "A few years ago when I started working in the premium channel, the specialty market channel, which includes loyalty rewards, we were not involved in gifting events," he said. But Bissell went to some large gifting spree programs, where "we showed up casting a broad net of Bissell products. We brought products that were wet cleaning, dry cleaning, specialty wet, and specialty dry. It was phenomenal to watch the consumers walk by, stop and then want to spend time in our booth talking about their cleaning experiences and then dropping down their points not only to redeem one, but pick up anywhere from three to seven of these units to give out to friends and family, who they knew wanted these items."

Bissell is "continuing to hone and fine tune our messaging that our leadership team at the company has brought to life, because we know it is resonating with our consumers," Frechette said.