Background

The Incentive Manufacturers and Representatives Alliance (IMRA) includes manufacturer’s representatives who provide name-brand merchandise to companies for their reward/motivation and appreciation needs. 

IMRA sought to learn more about the small business market – companies with between $1 million and $50 million in annual sales.

In partnership with the Incentive Research Foundation (IRF), IMRA retained Intellective Group to conduct an online survey of small business merchandise decision-makers to understand:

  • Incidence of various types of programs (sales, employee, channel, customer)
  • Use of merchandise
  • Types of merchandise used
  • Sourcing for merchandise
  • Buying behaviors
  • Awareness of other options for sourcing merchandise
  • Merchandise purchase criteria
  • Size of this market opportunity

 

Methods

Intellective Group facilitated an online survey of small business merchandise decision-makers during April 2015.

A total of 215 decision-makers qualified and completed the full survey as those:

  • Whose companies use name brand merchandise to reward one or more audiences (salespeople, distributors, employees, or customers)
  • ...and who offer merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts
  • ... And who are knowledgeable and make purchase decisions as they relate to merchandise

Results were weighted to reflect the true proportion of U.S. businesses $1MM-$10MM and $11MM-$50MM in annual revenue size.

 

Summary (1)

Smaller U.S. companies (those with $1MM-$50MM in annual revenue) represent a considerable opportunity for sellers of name-brand merchandise for a variety of reasons:

Summary (2): The Market Opportunity

The activities reported by these smaller companies look in many ways like their larger counterparts, with the exceptions that:

  • Their budgets are smaller
  • They utilize online and retail for merchandise more than they do representatives of manufacturers

In sum, smaller U.S. businesses represent over $16 billion in merchandise spend:

*Qualifying merchandise categories: merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts

 

Respondent Profiles (1): Revenue and Audiences

By design, responding decision-makers were equally divided between the $1MM-$10MM and $11MM-$50MM annual revenue groups.

In terms of audiences they offer name brand merchandise rewards: employees are most included, followed by salespeople. Overall, the distribution is consistent with larger companies.

S1: “Please select the option that best describes the annual revenue for your company?” (based to total market)
S3: “To the best of your knowledge, does your company use name brand merchandise to reward/motivate/thank .:” (based to total market) (see questionnaire for exact language by audience)

 

Respondent Profiles (2): Company Growth

Smaller, merchandise-purchasing companies are in good health: most decision-makers report growth.

D1. “Which of the following best describes your organization – in the past year?” (based to qualifying respondents: use qualifying merchandise categories and knowledgeable about/make merchandise purchasing decisions)

 

Merchandise: Salespeople

A majority of merchandise-purchasing small businesses use merchandise of interest to reward their salespeople: 87% of these companies reward their salespeople with merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts. Merchandise awards/gifts are most prevalent.

S4. “Does your company offer the following types of merchandise awards to your salespeople to reward and/or motivate them to achieve desired goals/objectives? Please limit your response to merchandise itself, and not gift cards for recipients to purchase merchandise themselves.” (based to those who offer merchandise to salespeople)

 

Merchandise: Distributors

A majority of merchandise-purchasing small businesses use merchandise of interest to reward their distributors: 83% of these companies reward their distributors with merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts. Merchandise awards/gifts are most prevalent.

S4. “Does your company offer the following types of merchandise awards to your distributors to reward and/or motivate them to achieve desired goals/objectives? Please limit your response to merchandise itself, and not gift cards for recipients to purchase merchandise themselves.” (based to those offering merchandise to distributors)

 

Merchandise: Employees

A majority of merchandise-purchasing small businesses use merchandise of interest to reward their employees: 89% of these companies reward their employees with merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts. Merchandise awards/gifts are most prevalent.

S4. “Does your company offer the following types of merchandise awards to your employees to reward and/or motivate them to achieve desired goals/objectives? Please limit your response to merchandise itself, and not gift cards for recipients to purchase merchandise themselves.” (based to those offering merchandise to their employees)

 

Merchandise: Customers

A majority of merchandise-purchasing small businesses use merchandise of interest to reward their customers: 80% of these companies reward their customers with merchandise awards/gifts and/or logo’d brand name merchandise and/or premium symbolic awards/gifts. Merchandise awards/gifts are most prevalent.

S4. “Does your company offer the following types of merchandise awards to your customers to reward and/or motivate them to achieve desired goals/objectives? Please limit your response to merchandise itself, and not gift cards for recipients to purchase merchandise themselves.” (based to those offering merchandise to customers)

 

Points-Based Merchandise Rewards

Half of small businesses that offer qualifying merchandise utilize points-based merchandise reward programs.

Q2. “Does your company offer points-based merchandise rewards – where participants redeem accumulated points for merchandise awards of their choice, or earn different awards based on level of achievement?” (based to those offering qualifying merchandise to one or more audiences)

 

Merchandise Budget

The merchandise budgets of small businesses vary considerably. Nearly half (47%) businesses that offer qualifying merchandise have budgets of $10,000 or more.

The vast majority of these businesses report their budgets have grown or stayed steady in the past year. Nearly half (47%) of the $11MM-$50MM companies report their merchandise budgets have increased

Q1. “Please select the option that best describes your company’s spend during the past 12 months for merchandise to incent, recognize, or thank (audiences they include).”
Q1a. “Is this more, less, or about the same as your company’s (audiences they include) merchandise spend from the previous 12 months?”
(both questions based to businesses offering qualifying merchandise)

 

Merchandise Award Types: Total

A majority of the target audience include apparel, food/beverage, electronics, writing instruments, and sporting goods in their merchandise award mix. Across all of the award types, apparel is most often offered.

Q3. “Thinking about the merchandise your company provides to (audiences included), approximately what percentage of each of the following types are included as merchandise awards at your company? Please exclude promotional items (e.g., T-shirts, mugs, frisbees) and gift cards.” (based to those offering qualifying merchandise)

 

Merchandise Award Types

The $1MM-$10MM and $11MM-$50MM small businesses differ in just a few ways in terms of the merchandise award types they provide. There are more similarities than differences between the two groups, however.

Q3. “Thinking about the merchandise your company provides to (audiences included), approximately what percentage of each of the following types are included as merchandise awards at your company? Please exclude promotional items (e.g., T-shirts, mugs, frisbees) and gift cards.” (based to those offering qualifying merchandise)

 

Benefits to Recipients: Total

Across the target audience, buyers prefer merchandise items that are practical, high quality, exclusive, and name brand.

Q4. “Thinking about the merchandise your company includes as part of its reward and recognition, how important are each of the following as benefits to your participants/recipients?” (based to those offering qualifying merchandise).

 

Benefits to Recipients

Comparing the two size groups, results are similar with one exception. The $11MM-$50MM group is more concerned with item practicality than the smaller group.

Q4. “Thinking about the merchandise your company includes as part of its reward and recognition, how important are each of the following as benefits to your participants/recipients?” (based to those offering qualifying merchandise) $1MM - $10MM (n=104) $11MM - $50MM (n=101)

 

Program Types for Merchandise Rewards

A majority of the target audience use merchandise to reward or thank for:

  • Sales quotas
  • Other types of goal-earning
  • Top performers
  • Team recognition
  • Service anniversaries/milestone achievements
  • Customer gifts

Q5. “Does your company use merchandise to reward or thank in the following ways..” (see survey for full descriptions of each type) (based to those offering qualifying merchandise)

 

Merchandise Reward Distribution

In-person presentation of merchandise rewards are most preferred and most done: for the majority of companies, merchandise is presented in person to recipients and most decision-makers prefer this distribution.

Many companies both present in person and ship items to individuals’ homes. 

Q8. “How are your merchandise rewards/gifts distributed?”
Q8a. “How do you prefer your merchandise rewards/gifts are distributed?” (both questions based to those offering qualifying merchandise)

 

Merchandise Reward Sourcing

Merchandise-purchasing small businesses source items online or from retailers more often than they do via sales representatives. Results show they use multiple channels to source their merchandise.

Among those who purchase merchandise from sales representative(s), it is equally from those selling promotional products and those focused on brand name merchandise. Many firms use both types of representatives.

Q6. “How does your company purchase your brand name merchandise rewards?” (based to those purchasing qualifying merchandise)
Q7. “Please tell us about the sales representative(s) from whom you purchase brand name merchandise rewards. Are they:” (based to respondents who purchase merchandise from sales representative(s). 

 

Merchandise Reward Sourcing (2)

Merchandise purchasers who work with sales representatives are likely to also source items online or from retail. The opposite (that those who source online or from retail also work with reps) is less likely.

 

  • For companies that source items online, 31% of them also source from sales representatives.
  • For companies that source items from sales representatives, 71% of them also source from online.
  • For companies that source items from retail, 31% of them also source from sales representatives.
  • For companies that source items from sales representatives, 54% of them also source from retail.
     

Purchasers who work with sellers of brand name merchandise are likely to also work with sellers of promotional products.

  • For companies that work with persons selling promotional products, 57% of them also work with persons selling name brand merchandise.
  • For companies that work with persons selling name brand merchandise, 67% of them also work with persons selling promotional products.


Q6. “How does your company purchase your brand name merchandise rewards?”
Q7. “Please tell us about the sales representative(s) from whom you purchase brand name merchandise rewards. Are they:”

 

Why Companies Don’t Work with Sales Reps

Among those small businesses that don’t work with sales representatives, reasons for not doing so are varied. Most interesting are factors that would increase likelihood of working with reps: for 20%, it is simply knowing more about what sales representatives can bring to their programs.

Q11: “Why does your company not work with a sales representative?” (base 113)
Q12: “What, if anything, would make you more likely to work with a sales representative?” (base 113: both questions based to those offering qualifying merchandise who do not work with sales reps)

 

Sales Representatives

Respondents more frequently report being approached by persons selling promotional products than by those selling brand name merchandise. A notable proportion (22%) have never been approached by either.

While decision-makers are generally aware that reps provide merchandise to companies, they are less familiar with the range of benefits reps offer.

Q9. “Which of these, if any, have ever approached you to describe their services relative to providing merchandise?” (base: companies offering qualifying merchandise)
Q10. “Are you aware that sales representatives work with companies like yours to provide the following?” (base: companies offering qualifying merchandise)

 

Important Merchandise Provider Selection Factors

Good news for manufacturer’s representatives: top merchandise provider selection factors are those they can sell to.

Q13-Q15. Importance of factors in selecting a merchandise provider. Qsort design questions (based to companies offering qualifying merchandise)

 

Important Merchandise Provider Selection Factors

$1 million to $10 million

Q13-Q15. Importance of factors in selecting a merchandise provider. Qsort design questions (base: companies offering qualifying merchandise)

 

Important Merchandise Provider Selection Factors

$11 million to $50 million

Q13-Q15. Importance of factors in selecting a merchandise provider. Qsort design questions (based to companies offering qualifying merchandise)

 

Attitudes Concerning Merchandise Incentives

The target audience believes in merchandise reward incentives.

Q. “Please indicate your level of agreement with the following statements, where “1” means “strongly disagree” and “5” means “strongly agree.” (based to companies offering qualifying merchandise)

 

Appendix

For comparison purposes, the pages that follow include similar measures for U.S. companies $1 million+ in annual revenue from the Incentive Federation Program Design Study, 2014. The study included U.S. firms as follows:

 

Types of Merchandise Used in Sales Programs: $1MM+ Annual Revenue

Types of Merchandise Used in Channel Programs: $1MM+ Annual Revenue

Types of Merchandise Used in Employee Programs: $1MM+ Annual Revenue

 

Sourcing for Merchandise and Gift Cards: $1MM+ Annual Revenue

Sourcing of Merchandise and Gift Cards by Firm Size

Rewards Sourcing by Total (Cross-Audience) Spend: $1MM+ Annual Revenue

 

How Merchandise and Gift Cards Are Sourced: $1MM+ Annual Revenue

 

How Merchandise and Gift Cards Are Sourced by Firm Size

 

Rewards Ordering by Total (Cross-Audience) Spend