Dramatic Growth of Incentives for Employees and Customers

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Study Shows Dramatic Growth In Use of Incentives for Employees and Customers

Nearly a $77 billion market

Non-cash Corporate And Consumer Incentives A $77 Billion Market

Thursday, Oct. 31, 2013

A new study conducted by the Incentive Federation, in partnership with Aspect Market Intelligence, confirms that the non-cash incentives market is thriving with 74% of U.S. businesses spending $76.9 billion annually on incentive travel, merchandise and gift cards. Half of this market is driven by smaller businesses (between $1 million and $10 million in annual revenue), whose budgets may be tighter, but whose total volume generates $39 billion annually, says the report.

A study of a cross-section of US businesses confirms that incentive travel, merchandise, and gift cards are popular tools for firms seeking to reward and recognize their employees, sales teams and customers. U.S. businesses spend $22.6 billion annually on incentive travel and over $53 billion on merchandise and gift cards to reward employees, partners and customers, the study reports. Key findings from the study include:

74% of U.S. businesses use non-cash rewards to recognize and reward key audiences in the form of incentive travel, merchandise, or gift cards
U.S. businesses spend $76.9 billion per year on incentive travel, merchandise, and gift cards
98% of businesses running non-cash programs include merchandise or gift cards as a reward spending $54.4 billion each year
46% of businesses running non-cash programs include incentive travel as an award, spending $22.5 billion per year
Smaller firms account for half of the market based on the sheer number of these companies
Non-cash employee awards are the most prevalent, with 56% of U.S. businesses having programs, followed closely by corporate gift programs
Non-cash sales incentive programs are present in almost half of U.S. businesses, and non-cash customer loyalty programs are used in one-third, while one-quarter of U.S. firms use non-cash channel programs
Gift cards are more frequently used for employee programs (88%) than for corporate gifts (55%), while merchandise is used relatively evenly

Non-cash Employee programs are the most prevalent, followed closely by Corporate Gifts. Non-cash Sales programs are present in almost one-half of U.S. businesses, and non-cash Customer Loyalty programs are present in one-third. Non-cash Channel programs are the least prevalent, with one-quarter of U.S. firms reporting the presence of these programs. The incidence of all program types increases with firm size.

Incidence of Non-Cash Programs
Weighted Total Incidence % of Respondents
Sales Non-cash Rewards 46%
Channel Non-cash Rewards 26%
Employee Non-cash Rewards 56%
Customer Non-cash Rewards 32%
Corporate Gifts 53%
Source: Aspect Market Intelligence/Incentive Federation, October 2013. To avoid bias, calculations exclude respondents from industry lists such as Incentive Magazine. Calculations are based to all U.S. businesses, not just those offering non-cash awards.

Concluding, the report says that the study findings confirm that the incentives market is very large and thriving – the 74% of US businesses using incentive travel, merchandise, and gift cards spend $76.9 billion annually in this category. The market is largely driven by smaller businesses (those between $1 and $10 million in annual revenue).

For additional information about the Incentive Federation and to access the complete study with charts and graphs in PDF format, please visit here. http://salesandmarketing.com/content/study-shows-dramatic-growth-use-incentives-employees-and-customers

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