The incentives industry is thriving with 84% of U.S. businesses now using non-cash rewards to recognize and motivate their key audiences. Non-cash rewards come in many forms: from award points, gift cards, incentive travel, to merchandise, and more. In 2015, businesses spent $90 billion for these rewards and sales and employees are the largest audiences targeted when it comes to these non-cash rewards.
The 2015 Incentive Market Study compared spending on non-cash incentives to their 2013 study. There were a few updates to the study including slight changes to terminology in order to more accurately represent non-cash incentives and get a clearer picture of the current state of the industry.
Award Points – Points can be earned in a variety of ways; companies and credit card companies award points to loyal customers for dollars spent, and employees earn points for meeting goals. Award points are then redeemable for non-cash rewards such as gift cards, travel, or merchandise.
Gift Cards – Gift cards are purchased and distributed to program participants. Gift cards can be for anything from travel, merchandise, retailers, dining, and more.
Trips & Travel (incentive travel) – Both individual and group trips are awarded to program participants. Travel rewards are often included in award points programs and gift card programs so they are also accounted for appropriately within these categories.
Merchandise – Electronics, luggage, company branded apparel, movie passes, appliances, and more are purchased by businesses and distributed to program participants.
Sales Rewards – Sales rewards are used to reward and recognize sales teams for reaching goals and to help as a motivational tool when goals are just out of reach.
Channel Rewards – Channel incentives can drive behaviors that build a sales funnel and drive a consistent flow of revenue. They are used to reward partners for raising awareness, generating leads, and moving customers in the right direction.
Employee Rewards – Rewarding employees lets them know that they are valued and their hard work doesn’t go unnoticed. Employee rewards have been shown to increase loyalty, engagement, and morale.
Customer Loyalty Rewards – Today’s marketplace is highly competitive and it is much harder (and more expensive) to find a new customer than it is to retain a current customer. Programs that reward customers for their loyalty help to keep them coming back.
Corporate Gift Spend – This category represents corporate spending on rewards, appreciation, and gifts for their clients, vendors, and more. In the 2 years from 2013-2015, businesses using non-cash rewards to thank clients, prospects, and partners increased by 19%.
Here is the breakdown of how the $90 billion non-cash incentive market by category spend changed from 2013 vs. 2015:
Total spend based on type of reward
*Corporate Gifts are not included in the total spend breakdown because they fit into multiple categories.
One-third of the $90 billion in spending on non-cash rewards was in the form of gift cards (when corporate gift spend is included).
Gift card usage by reward type
Gift cards remain to be one of the most requested gift by employees and customer alike. Along with generous discounts by many merchants for volume orders, gift cards are also one of the most affordable options for any reward program.
You can find the full study breakdown from the Incentive Federation here.