Premium Incentive Products - Inspiration for Motivation Newsletter Features

Feature Story

July 2016

Incentives Market Reaches $90 Billion Annually

Recent Inspiration for Motivation Feature Stories

Report Reveals Proven Ways to Create a More Human Workplace - June 2016

Employers Falling Short in Recognizing Millennials - May 2016

SHRM Survey: Employee Job Satisfaction Hits 10-Year High - April 2016

Which Generation Is Most Engaged? Survey Says: Gen X - March 2016

IRF Spotlights Top Motivation Trends for 2016 - February 2016

Bersin by Deloitte Looks at Growing Challenges in Engagement, Productivity - January 2016

SHRM Says Fewer Are Hosting Holiday Parties for Employees This Year - December 2015

New IMA Study Examines Award Preferences, Dispels Myths - October 2015

IMA Recognizes Five Firms with Circle of Excellence Awards for Successful Incentives - August 2015

Employee Recognition Programs Continue Upward Trend to Achieve Organizational Goals - June 2015

IRF Study Looks at Incentive Trends - April 2015

Bersin by Deloitte Offers Predictions for HR in 2015 - February 2015

Loyalty Reward Points to Go to Holiday Gifts - December 2014

IRF Fall 2014 Pulse Study Indicates Positive Trends - October 2014

Study: Business Buyers Boost Gift Card Marketplace - August 2014

A new Incentive Marketplace Estimate Research Study released by the Incentive Federation confirms that the non-cash incentives market grew a remarkable 17 percent since the last market estimate study in 2013. With 84 percent of U.S. businesses spending $90 billion annually on award points, gift cards, trips and travel, and merchandise, the study also found that overall the businesses spend $14.4 billion annually on incentive travel and $75.6 billion on award points, merchandise and gift cards to reward sales staff, employees, channel partners and customers.

The latest study also reveals that a third of this marketplace is driven by smaller businesses ($1 to $10 million in annual revenue), whose budgets may be tighter, but whose total volume generates $29 billion a year, and firms with up to $100 million in revenue accounting for 84 percent of the total spent on non-cash incentives. Conducted in partnership with Intellective Group in St. Louis, the purpose of the study was to collect data from a national sample of nearly 1,400 business executives in order to estimate the current size and characteristics of the non-cash incentives marketplace.

Respondents were asked what types of non-cash awards were used in their various programs. Here the methodology differed from the 2013 study, in a manner that very likely increases the resulting market estimates. In 2013, as in previous iterations of the study, award types were defined in two categories: incentive travel, and merchandise/card. In 2015, the study was updated to more accurately reflect the proliferation of award points and gift cards as the delivery mechanism for non-cash rewards, and included trips and travel, and merchandise.

Other insights from the study include:

  • While it appears on the surface that the use of incentive travel has declined since 2013, travel rewards are frequently included in award point and gift card programs, so incidence and spend for some travel rewards may be accounted for differently in the current study compared with earlier iterations.
  • Employee rewards and corporate gifts are the most prevalent forms of non-cash incentives with 72 percent of businesses having one or both types of programs.
  • Non-cash sales incentive programs are present in three of five U.S. businesses, and non-cash customer loyalty programs are used in 45 percent of firms, while 41 percent of firms use non-cash channel programs.
  • Gift cards are the most prevalent reward type in all programs except customer loyalty, which has a similarly high incidence of award points. Trips and travel is highest within sales programs and lowest within customer loyalty. Merchandise use is highest in channel programs.
  • The incidence of firms using non-cash rewards to thank clients, prospects and partners increased from 2013 to 2015—a 36 percent increase. The change was consistent across firm size. This increase is offset, however, by a decrease in reported spend in this category. The net impact of these changes is a larger number of firms using non-cash items as appreciation, but a decrease in overall spend in the market—down 32 percent to $10.5 billion.

"This study reaffirms that the use of non-cash incentives has been and continues to be an important part of many business' growth strategy. The growth in the use of non-cash incentives is an important signal that U.S. businesses value tangible incentives over simply using cash to recognize performance and loyalty," said Melissa Van Dyke, co-chair of the Incentive Federation and president of The Incentive Research Foundation.

"The Federation's research in 1996 revealed that only 26 percent of U.S. businesses were using non-cash incentives, and our 2000 research reflected a $27 billion marketplace," said Steve Slagle, The Federation's managing director. "The growth in the marketplace over 20 years is certainly gratifying and a tribute to the excellent work the industry's companies have done to educate businesses about the value of all forms of non-cash incentives."

The study was made possible with assistance from the Incentive Marketing Association, the Incentive Research Foundation, the Promotional Products Association International, and the Society for Incentive Travel Excellence.