The incentive business may be booming, but it isn't attracting many new clients, the new Incentive Federation study shows American companies spent $46.08 billion on incentive awards for employees, channel partners and consumers, along with business gifts to partners and clients, in 2006, according to a study released in late September by the Incentive Federation.-By Leo Jakobson
American companies spent $46.08 billion on incentive awards for employees, channel partners and consumers, along with business gifts to partners and clients, in 2006, according to a study released in late September by the Incentive Federation.
"The United States Incentive Merchandise and Travel Marketplace Study" is a follow-up to a similar Incentive Federation study on the size of the incentive industry in 2000. That study put the size of the industry at $26.9 billion.
In 2006, $32.7 billion was spent on incentive merchandise and $13.4 billion on travel. "In both cases, users of merchandise and travel expect that budgets will increase," says Frank Katusak, the Incentive Federation's chairman. "This underscores the immensity of the industry. "Katusak, whose organization is a research and government lobbying group, adds, "It will help from a legislative perspective."
Incentive spending is clearly on the upswing, the research found. Katusak noted that of the large companies (those with revenue of more than $100 million annually) that responded, more than half of those that use travel programs expect their budgets to increase in the next two years, as do 60 percent of those using merchandise programs. "The incentive industry is booming," he says.
And yet, by one important measure, the industry is not growing very fast, Katusak admits. The study found that 34 percent of American companies large and small use travel or merchandise incentive programs, a very slight increase over the 32 percent cited in the 2001 study. That was a more substantial 6 percent increase over the 1996 market size study's figure of 26 percent.
"This points to the fact that we still have to get our act together," Katusak says. "We have to get out to Corporate America and show them that incentives work."
One of the biggest industry trends in recent years has been the popularity of incentive programs for non-sales employees, and the study reflects that. These programs accounted for nearly one third of all incentive spending, ahead of consumer promotions (27 percent) and sales incentives (25 percent), and far ahead of business gifts (12 percent ) and dealer channel programs (4 percent). Compare that to 2000, when non-sales employee programs accounted for just 13 percent of incentive spending, while sales and dealer channel programs each accounted for about one third of the total.
This market size study, released at The Motivation Show, while the most eagerly awaited, was not the only research announced there. The Incentive Federation and the Incentive Research Federation (IRF) collaborated on the incentive travel portion of the research, with the IRF incorporating it into a broader study: "The Market for Incentive Travel, Motivational Meetings and Special Events in 2006."
This research found that American firms spent $77.1 billion on incentive travel, motivational meetings and special events in 2006, $13.4 billion of it on incentive travel, $25.9 billion on motivational meetings and $37.8 billion on special events. The incentive travel portion of the IRF research did not include individual incentive travel, according to Roger Stotz, vice president and managing consultant of Maritz Inc., and chair of the IRF's research committee.
incentivemag.com | November 05, 2007
