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FEATURESTORY

Study Shows Increased Use of Non-Cash Incentives

A whopping $46.1 billion was spent on incentive travel and merchandise in 2006, according to a newly released study funded by The Incentive Federation, a lobbying group comprised of incentive industry suppliers, associations and tradeshow promoters. These highlights from the new study can help incentive users benchmark their own use of incentive travel and merchandise.

• Approximately $32.7 billion was spent in 2006 on merchandise incentives and $13.4 billion on incentive travel.

• Overall, 34 percent of U. S. companies used either incentive travel or merchandise incentives last year. Almost one-third (31 percent) of companies used merchandise incentives, while 10 percent used incentive travel.

• The most common incentive travel application is for sales incentives, but travel also is widely used for non-sales employee recognition and consumer/user promotions. Merchandise incentives are most often used for non-sales employee recognition and business gifts.

• Larger companies use both merchandise and incentive travel more than smaller companies. The incidence for merchandise incentives among companies with revenues over $100 million is 48 percent and for incentive travel it's 23 percent, compared with 30 percent and 10 percent respectively for companies with revenues less than $100 million.

• The average budget for travel incentives in 2006 was $164,271. More than three fourths of incentive travel end-users spent between $100,000 and $500,000 last year.

• The typical budget for merchandise incentives last year was $119,008. Almost half of the merchandise incentive users spent between $100,000 and $500,000.

Bright Future

The study, conducted by GfK, an international market research company, reveals that the future is bright for the use of both travel and merchandise as motivators. More than half of large companies state that their budget for incentive travel has increased over the past two years and almost one-third say budgets have remained the same. Just over half of the respondents believe spending on incentive travel will increase over the next two years, while 37 percent are confident their budgets will stay the same.

The budgets for merchandise incentives over the past two years have remained the same for six out of 10 respondents. Approximately 30 percent report that their budget for merchandise incentives has increased over the past two years. 59 percent of respondents report that estimated budgets will increase over the next two years, while 34 percent expect budgets to remain the same.

"Executives who understand the purpose of incentives see them as an investment, not an expense," says Frank Katusak, Chairman of the Board for The Incentive Federation. As a matter of fact, incentive travel is seen as an investment by 85 percent of all end-users in the study. Only one is six views incentive travel as a cost. Merchandise incentives are seen as an investment by over three-fourths of respondents.

GfK conducted telephone interviews with executives responsible for the development and budgeting of incentive travel and merchandise incentives. In total, 1,121 executives were interviewed. A complete copy of The Travel and Merchandise Incentives Study is available free from The Incentive Federation Inc. at www.incentivecentral.org.

See also in the article: Reflections on Rewards

Study Shows Increased Use of Non-Cash Incentives

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