Incentive Market Shows Significant Growth In IFI Survey

The non-cash incentives market has grown 17 percent since the last study in 2013, says the Incentive Federation, Inc. (IFI), in its recent Incentive Marketplace Estimate Research Study.

The IFI’s research found that 84 percent of U.S. businesses spend $90 billion annually on award points, gift cards, trips and travel, and merchandise. Overall, 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. Smaller businesses with between $1 million and $10 million in annual revenue drive a third of the incentives market, accounting for $29 billion in spending per year.

“This study’s findings, including the fact that 84 percent of companies have adopted some form of non-cash incentive, is good news for distributors and suppliers,” says Steve Slagle, the federation’s managing director and former president and CEO of PPAI. “Merchandise, the core of the promotional products industry, is a prominent piece of the incentives world. This study gives them data that they can take to clients and show them how non-cash incentives can be used to reward employees, thank customers and more.”

While it appears on the surface that incentive travel has declined since 2013, the study also found that travel rewards are often included in award point and gift card programs. It also revealed that employee rewards and corporate gifts are the most prevalent forms of non-cash incentives with 72 percent of businesses having 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; and gift cards are the most prevalent reward type in all programs except customer loyalty, which has a similarly high incidence of award points.

“This study reaffirms that the use of non-cash incentives has been and continues to be an important part of many businesses’ growth strategy,” says Melissa Van Dyke, co-chair of IFI and president of the Incentive Research Foundation. “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.”

The use of non-cash rewards to thank clients, prospects and partners also grew 36 percent between 2013 and 2015. Spending in the category has declined, however. The IFI reports that the net impact of these changes is a larger number of firms utilizing non-cash items as appreciation, but a decrease in overall spend in the market—down 32 percent to $10.5 billion.

“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,” adds Slagle. “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.”

For more on the study’s findings, click here.

filed under industry-news | july-2016
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