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October 2013


Incentives for Employees, Customers See Dramatic Growth

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A new study conducted by the Incentive Federation confirms that the non-cash incentives market is thriving, with 74 percent of U.S. businesses spending $76.9 billion annually on incentive travel, merchandise and gift cards. The study also reveals that half of this market is driven by smaller businesses ($1 and $10 million annual revenue), whose budgets may be tighter, but whose total volume generates $39 billion a year. The study found that overall, U.S. businesses spend $22.6 billion annually on incentive travel and more than $54.3 billion on merchandise and gift cards to reward employees, partners and customers.

Conducted in partnership with Aspect Market Intelligence, the purpose of the study was to collect data from a national sample of nearly 2,000 business executives in order to estimate the current size and characteristics of the non-cash incentives marketplace.

The study also revealed:

  • 98 percent of businesses running non-cash incentive programs include merchandise or gift cards, spending $54.3 billion each year.
  • 46 percent of businesses running non-cash programs include incentive travel, spending $22.6 billion per year.
  • Non-cash employee awards are the most prevalent with 56 percent of U.S. businesses having programs, followed closely by corporate gift programs.
  • Non-cash sales incentive programs are present in almost one-half of U.S. businesses, and non-cash customer loyalty programs are used in one-third, while only one-quarter of U.S. firms use non-cash channel programs.
  • Gift cards are more frequently used for employee programs (88 percent) than for corporate gifts (55 percent), while merchandise is used relatively evenly.
  • The incidence of all program types tends to increase with firm size.

"This study reaffirms that the use of non-cash incentives has been and continues to be an important part of many businesses' growth strategy, even in light of recent economic challenges," said Melissa Van Dyke, research chair of Incentive Federation and president of The Incentive Research Foundation.

The study was made possible with assistance from: Promotional Products Association International, Incentive Marketing Association, Site, Incentive Research Foundation, O.C. Tanner, Rideau and Incentpros.

To read the full study, visit www.incentivefederation.org/associations/12350/files/Incentive%20Marketplace%20White%20Paper%2010132013.pdf.