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PRODUCTS AND IDEAS THAT INSPIRE PERFORMANCE

Premium Incentive Products Magazine - Products and Ideas That Inspire Performance
The Right Stuff
The Ever-Expanding Universe of Merchandise Incentives

People just aren't as interested in "stuff" these days. They want unique, memorable experiences like exotic vacations or nights out at big theatrical productions. Or they want the opportunity to help out a worthy cause they care deeply about. Or they just prefer the flexibility of cash and gift cards.

That seems to pass for conventional wisdom around some incentive programs these days. However, if you talk to the companies that do rewards fulfillment, you'll quickly discover that merchandise, overall, is as popular today as it's ever been. The landscape has shifted considerably over the past few years, though—and sometimes in surprising, counterintuitive ways.

So, what's different? Everything. From the kinds of products that resonate with incentive program participants to the ways in which those products are presented, this space is going through some significant changes. One example: Merchandise incentives today are often "enhanced" with something else, whether it's a memorable experience or more merch.

"We hear a lot about people wanting experiences versus things, but there's something satisfying and lasting about physical merchandise," said Becky Sawicki, director of special markets at JURA Inc., a provider of upmarket coffee machines. "The best incentives combine both sides of the equation."

To use JURA as an example, which of these would you find to be more of an incentive: a high-end coffee maker, or a high-end coffee maker and a basket filled with gourmet whole bean coffees from around the world? Both have undeniable appeal, but nearly everyone would likely choose the latter. Or how about this: a new set of state-of-the-art golf clubs, or a new set of state-of-the-art golf clubs plus a weekend getaway to Pebble Beach?

If you talk to the companies that do rewards fulfillment, you'll quickly discover that merchandise, overall, is as popular today as it's ever been.

"Giving an award winner a personalized shopping experience either through an experiential event or an online redemption program is very popular right now," said Chad Glamann, a marketing manager for Top Brands, a supplier of name-brand corporate incentives. "Empowering the award winner by giving them options is a very strong motivator and allows them to feel like they're more involved. One of the coolest opportunities we recently had was providing a selection of Vera Bradley duffels that were used as gifts at a movie premiere because one of the stars of the film carried the same product onscreen."

"Merchandise incentives are really strong because you need that kind of 'sticky' factor in rewards and incentives programs, whether it's customer loyalty, sales incentives or employee engagement," said Allyson Krichman, senior director of product sales at Rymax Marketing Services Inc.

So, which kinds of products are stickiest of all? Read on to find out.

Meet the Jetsons

In the animated sitcom "The Jetsons," the eponymous family from a far-off future use all sorts of gadgetry to keep their lives in order, from household appliances that run themselves to Rosie the robot maid. It seems as though we're on the verge of living that kind of lifestyle with the arrival of hyper-connected, multifunction technologies powered by automation and artificial intelligence. (However, talking dogs and flying cars that turn into briefcases when you arrive at work still seem to be out of reach.)

Those technologies are popular in both merchandise incentives and general retail. First and foremost among them are Amazon Echo products that come equipped with Alexa, the company's artificially intelligent personal assistant software. If you have the right setup, these devices can control everything from the temperature of your refrigerator to the temperature of your bath. They can also purchase products for you, manage your home media systems and schedule appointments. And they do all of that without a word of complaint.

"The Amazon Echo can do all kinds of things, from playing music in the morning to helping kids with their homework," said Scott Kooken, president and owner of corporate fulfillment company Links Unlimited.

Apart from the Amazon Echo line, which tech and electronics products are most popular right now? Essentially, anything that can connect with the Amazon Echo or comparable technologies like Apple and Siri.

At a time when Martha Stewart and Mario Batali are media moguls, cooking and home entertaining items are among the hottest retail goods. And that popularity has definitely carried over into the merchandise incentives space. Demand is high for products in the culinary arts and home design.

"In the electronics category, we are seeing a lot of interest in Bluetooth devices like portable speakers and smart home and home automation accessories," Glamann said. "Smart home products were one of the most talked-about categories at this year's CES [Consumer Electronics Show] and will continue to be a hot category in the incentive industry for years to come. We already have products like the Incipio CommandKit Wireless Smart Power Strip that lets an award winner remotely control their home appliances through their smartphone and is even compatible with Siri. Bluetooth speakers and headphones are really trending right now, especially since the latest iPhone only connects to audio devices wirelessly. Products like the Braven Balance, which combine portability and rich sound all in a waterproof exterior, have been really popular."

Kooken predicted that the future of this category would belong to non-analog, connected tech—that is, devices that perform at least a few different and useful functions and also have the ability to link with other, similar devices. And companies that keep track of what's trending here and integrate that into their incentives programs will be better able to motivate their employees.

"We always keep an eye out for up-and-coming technologies," he added. "It's all about getting the highest-quality products out quickly."

Keeping up with all that can be a challenge, but Glamann sees it as an appealing one.

"Product innovation will continue to drive the merchandise incentive market forward," he said. "One of the most frequent questions we get from our customers is 'What's new?' The electronics and technology category is always going to continue to surprise us with the latest gadget or device that takes the populace by storm, but we will also continue to see innovations in other categories. That's the fun thing about this business—seeing all of the unique and innovative ways that products evolve and change year after year."

Home Sweet Home

At a time when Martha Stewart and Mario Batali are media moguls, cooking and home entertaining items are among the hottest retail goods. And that popularity has definitely carried over into the merchandise incentives space. Demand is high for products in the culinary arts and home design.

"Over the past 20-something years, we've really seen a shift in redemption, which mirrors what's going on in retail trends," Krichman explained. "Years and years ago, the redemption patterns were around 70 to 75 percent for anything that plugged in. Now, more people are going toward home and fashion. We're definitely seeing a rise in those areas."

This has led to a rise in anything related to epicurean delights, from deep fryers to coffee makers.

"Our JURA automatic coffee machines create the gourmet experience of Swiss coffee culture in your own kitchen," Sawicki said. "Few categories have the broad appeal of gourmet coffee, which is popular with men and women of all generations. We're also seeing increased interest in our Capresso coffee makers, espresso machines, grinders, iced tea makers and frothers."

According to Krichman, one reason many of these items are so popular in incentives programs is that they give people a creative outlet.

Merchandise incentives have evolved a great deal over the past several decades, and certain products might not be as popular as they once were. But as long as people need and want "things"—whether those are computers, music players, saucepans, serving trays, purses or kayaks—merch will retain its appeal on the whole.

"It's a different approach to DIY," she said. "Several years ago, people were into tools and trying to build stuff. But who's really building these days? This allows people who aren't going to paint or sculpt or something like that to do something a little bit creative."

Another reason they're in demand is within incentives programs is that people aren't as willing to spend their own money on them, particularly since they often own some version of those products already.

"In incentive programs, people will spend for certain things in home categories that they wouldn't want to spend cash for," she said. "That's where we'll see a lot of people get their cutlery or replace certain cookware that they got when they registered before getting married. When they're getting cookware, for example, they're upgrading to Viking brands. They could've gotten something similar to that piece of cookware they've had since college, but now they're upgrading themselves to the 'grown-up' version."

Status Symbols

There's another reason why that hypothetical married couple would want Viking cookware, Krichman explained. Even if neither of them are great cooks or enthusiastic foodies, that brand signifies refined cultural tastes. Though it doesn't represent a category per se, this notion of brand consciousness represents an undeniably significant rising trend in merchandise incentives.

The most important "status symbol" product category right now might be handbags—"anything with a logo on it, whether it's Michael Kors, MCM or the Coach brands," as Krichman said. She added that backpacks by Totes and a few other select manufacturers are in demand.

In the sporting goods category, golf gear is perennially the "status symbol," Kooken said. And right now, there may be no hotter brand than Parsons Xtreme Golf, or PXG. The latest in design and engineering, a set of PXG clubs retails for nearly $3,000. That's a steep price to pay, but the "cost" is softened somewhat when it becomes something that can be redeemed with points in a sales contest.

No matter which category you're considering, it is well known and respected brand names that deliver the kind of status symbol that turns a piece of merchandise into a trophy.

Merch Is Here to Stay

Merchandise incentives have evolved a great deal over the past several decades, and certain products might not be as popular as they once were. But as long as people need and want "things"—whether those are computers, music players, saucepans, serving trays, purses or kayaks—merch will retain its appeal on the whole.

"Employee recognition programs have come a long way from the days of trophies and plaques," Sawicki said. "Strategically selected gifts will be valued and appreciated over time, making them a strong motivational investment. Client gifting programs rely on merchandising incentives for the same reason: They can touch someone's life in a meaningful and memorable way. We expect merchandise incentives to increase in importance over time. As communication outlets grow and proliferate, it's getting harder and harder to make a lasting impression on people. What better way to get attention than putting desirable merchandise in their hands?"

Glamann agreed. "Merchandise rewards are a great fit for any type of incentive program and have been proven to have a more powerful motivating factor than cash," he said. "Having a firm grasp of the demographics of the program will definitely aid in creating a rock-solid merchandise rewards offering."

That notion of understanding people's desires and how those evolve over time is critical for the success of any incentives program that includes merchandise, Krichman said. That means doing things like going to all sorts of industry-specific trade shows and reading publications and research that point to trends in retail. It also means proactively showing program participants the latest and greatest products and what they can do.

"It's really important to think about what's trending in retail and be able to change with the times," she said. "We don't just have things people can redeem online. We're able to bring that merchandise to people. Even though retail is 'dogging,' we're so fortunate in the incentive industry that we can bring those products to people so they can see it, feel it and get that fun interaction. In the incentive channel, we're fortunate to be able to do what retail increasingly can't do anymore. We bring brands to people who don't necessarily think about it."



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