1. Positive Impacts on Program Design. 

The merchandise and gift card industry is alive and kicking.  In fact, the 2014 IRF Pulse Survey shows a decline in the number of organizations that believe economic conditions are having a negative impact on incentive programs.

2. Budgets Trending Up. 

Almost 50% of planners in the fall of 2014 say they will be increasing their budgets; additionally, per-person spend is up.

3. Experiences Lead The Way. 

We’re entering a phase that has been called the “Experience Economy,” with more robust experiences desired by different age groups.

4. Limited Luxury.

It’s important to seek a balance between necessity and luxury. Electronics and open gift cards are now popular items for programs.

5. An App IN Everything. 

The proliferation of mobile devices and apps is trending to merchandise having similar functionality.  Think GoPro meets Mystery Shopping experiences.

6. Wellness Is A Booming Industry. 

Both the types of incentives used to boost wellness and the reward products labeled with wellness attributes will continue to grow.

7. Disruption As A Constant State.

Social, political and environmental unrest continue to present program risks.  During such times, merchandise and gift cards are providing a safe haven for many companies.

8. Mobile Proliferation.

Program communications need to be available on mobile devices, and be configured across multiple platforms.  Mobile proliferation is also raising security and maintenance concerns.

9. CEOs Need To Attract And Retain Talent.

Thanks to shifts in worker population demographics, CEOs are confronted with a smaller number of people entering the job market than the number of people leaving it.  Merchandise and Gift Cards offer key retention and education benefits to address this challenge.   

10. Answering “Engaged In What?”. 

In today’s knowledge economy, successful organizations need their employees to be engaged in new (non-core) roles.  Non-cash awards such as merchandise and gift cards have been shown to be a key strategy in motivating employees to do more than just their “regular jobs.”

Business Driver #1: Positive Impact of Economy

To Look Forward, We First Looked Backward

Since the Incentive Research Foundation’s Pulse Study launch in 2008, the IRF has tracked how industry suppliers and program owners view the economy’s impact on merchandise and gift card programs.  

The IRF reviewed the last 6 years of economic impact questions to answer the question: Have economic conditions during this timeframe affected perceptions of non-cash programs, and if so, how?   

Perceptions of Negative Impact Continue To Decline

Note Figure 1 opposite.  While a third of the industry felt that the economy was having a negative impact on merchandise and gift card programs at the recession’s height in 2009, that number dropped to less than 10% in late 2014.

While a strong 40% of the industry still feels that the economy has little to no impact on these programs, a more significant 50% of program owners and suppliers feel the late 2014 economy is having a positive impact on merchandise and non-cash programs.1

Not only is the current view a positive outlook for non-cash reward programs, a comparative review of 2008-2014 data reveals:

  • The economic impact of the recession was felt less dramatically at the start of the recession; 2
  • The recovery was swifter in the gift card and merchandise side of the market compared to other sides of the market such as travel. 3 

Conclusions:  Both the relative long-term buoyancy and the overall current positive state bode very well for merchandise and non-cash reward programs in 2015.

Business Driver #2: Budgets Are Trending Up

As one would expect, this positive economic outlook reflects strongly on merchandise and gift card program budgets for 2015.

As shown in Figure 2 below, the 2009 IRF Pulse Study revealed that almost 60% of program owners were reducing their program budgets.4 The very next year, 55% of program owners reversed the trend, and began increasing their budgets.  

Anecdotal evidence showed that some of this initial increase in 2010 came from the use of card and merchandise programs to offset the lack of raises provided by employers or to compensate for cancelled Incentive Travel programs. This ‘replacement effect’ then tapered off slowly for the following two years with more budgets increasing than decreasing, but at a slightly slower rate.

Overall Budgets

As Figure 2 shows, the market hit its stride in 2013 and has experienced relatively consistent budget increase amounts ever since. Program budgets moving forward show 40% of program owners plan to increase them. 

Per Person Budgets

The Fall 2014 IRF Pulse Study shows that per- person budgets will be strong in 2015.  Our most recent poll among program owners revealed more than half of planners budgeting over $100 per-person:

  • 25% of planners were spending $50-$100 per person
  • 25% of planners were spending from $100-200 per person
  • 30% of planners were spending in excess of $300 per person

Conclusions:  Barring unforeseen   economic or extreme political changes, the Incentive Research Foundation anticipates budgets to maintain a strong positive trajectory for the next few years.

Business Driver #3: Experiences Lead The Way

From Service To Experience

We are in the midst of moving from a service-oriented economy to an experience-lead economy. Authors Joseph Pine and James Gilmore (Welcome To The Experience Economy) provide multiple scenarios of how significant value and profit gains in the new economy stem from a delivery of holistic experiences versus singular products or services.5

For example, whereas birthday party costs were initially comprised of a few staple goods purchased to prepare a homemade cake, incremental value was added when the cake and supplies could be purchased from a local grocery store.  But as many parents know, the price of birthday parties has now more than quadrupled the price of a store-bought cake. 

Why?  The emergence of experience-related party centers such as Chuck E Cheese, Dave and Busters, etc.  This societal movement to an “Experience Economy” applies to merchandise and gift card products as well.

Case in point: Many incentive travel program owners now forgo the standard merchandise pillow gifts and instead, offer robust "fitting experiences" for a range of products while trip earners are on the property.  This trend is also evident in our most recent Pulse study.  For example, Figure 3 below shows that 21% of program owners will be adding experience-related products and gift cards (which offer a variety of shopping experiences) to their award portfolios heading into 2015.7

Experiences Wrapped Around Individual Products

The experience being wrapped around individual products is evident almost everywhere, including consumer and packaged goods where marketing campaigns are tightly focusing different product “experiences” depending on the targeted generation.  

As an example, Coca-Cola portrays drinking regular Coke as an “ordinary” experience by infusing ads with classic scenes of people spending time together.  Diet Coke targets a younger demographic, focusing more on pursuit of the extraordinary with images of pop star and incredible personal feats.

This reflects a Wharton6 study, which showed:

  • People in the 45 and above age group favor ordinary/known experiences
  • People under 35 prefer extraordinary experiences


Conclusions: Suppliers of products in gift cards in non-cash award and recognition programs must fully understand what experience they are trying to deliver and carry that into the award delivery experience. Likewise, program owners must explore all aspects of their programs to ensure the overall experience intended for each individual recipient is appropriate and rewarding – whether employee, salesperson, channel partner, etc.

Business Driver #4: Limited Luxury Returning

Sensitivity To Extravagance

A core tenet driving the effectiveness of non-cash reward and recognition programs is the ability to offer performance-contingent merchandise and gift cards that individuals find personally motivating.  In other words, offering small tokens of personal luxury that individuals don’t normally allow themselves to indulge in or justify purchasing given the confines of personal and household budgets.

Not surprisingly then, balancing public sensitivities to extravagance and indulgence with the need to provide a personally rewarding experience to participant’s registered as one of the most significant influencers of non-cash program owner design choices throughout the initial recession and concurrent recovery. However, in the Fall of 2014 IRF Pulse studies showed that sensitivities to extravagance had returned to pre-recession levels.8 To illustrate, note Figure 4 below. 

The “New Luxury” Environment

As with all economic upheavals, the resulting environment has taken on a slightly different form – what might be considered a “New Luxury environment.” As expected, IRF Polls studies at the height of the recession showed Housewares and Apparel at the top of what was included in non-cash reward and recognition programs.  Today, in a rebounding economy, we’re seeing a strong shift: Electronics and Open gift cards are now at the top of the list.9

Both of these can be seen as items of luxury as well as necessity.  Whereas electronics used to fit squarely into an entertainment vertical, the role of iPads and other such devices in maintaining awareness and connectivity in an increasingly disrupted environment now allow them to straddle the fence between necessity and luxury.

Likewise, open cards provide the opportunity to meet both our day-to-day financial obligations and to satisfy our desire for luxury. 


Aside from the duplicitous nature of these top items, new luxury can be seen in the elevation of the personal brand.   Whereas price and corporate brand awareness often drove luxury perceptions pre-recession, the new economy gives us the ability to affix our personal brand through unique additions or personalization, essentially elevating the personal brand on par with the corporate brand.

This is evident in the ability to customize the design and uniqueness of everything from Nike tennis shoes to cowboy boots to iPad cases and even furniture.  

 Conclusions:  Items that can be personalized and items that ride the line between hedonistic and security drives will be key merchandise and non-cash reward trends in 2015 and beyond.  

Business Driver #5: An App IN Everything

We Are Officially Outnumbered

 There are now more mobile phones than people.  Consumers in most industrialized regions now expect constant connectivity. Likewise, the last decade has developed a consumer expectation of an app for everything, whether it be finishing a work paper, planning a wedding, doing your taxes or monitoring your nutrition.

As reported by Emarketer (Jan. 2014), there are approximately 4.6 billion smartphone users today.10 More processing power into ever smaller devices today has lead to a movement from an app for everything to an app in everything

Example Products

Consider the wellness and wearable markets. Wellness products include everything from thermometers that report temperature to parents phones to brassieres that detect early signs of cancer, to designer bracelets that monitor not just steps but sleep patterns and other biometrics such as heart rate.

Wearables include everything from vests that hug you when you receive a like on Facebook, to goggles that monitor your location while skiing on the mountain.  We even have socks that tell us where their pairs are located and if they need to be replaced.  

Conclusions:  The sky’s the limit for the next decade.  We will no doubt see movement away from specific devices that maintain multiple applications to applications embedded in all aspects of daily life and products.  

Business Driver #6: Mobile Progression

Mobile Solutions Are The New Mandate For Business Today

Between 68-80% of all business applications are currently available over smartphones and laptops.11

  • Expectations are that mobile apps designed by businesses for their internal use and competitive advantage will explode over the next two years – a market expected to reach $53B by 2017.12
  • The rapid adoption of smart devices in and outside the workplace will raise expectations about accessibility and user experience across all content providers -- including meeting and incentive vendors.

Mobile device saturation is leading many companies to allow employees to bring their own devices to work.  In some circles, “BYOD” is a recruitment concession companies make to younger audiences.  In fact, over half of the people in a recent survey believed “BYOD” could serve as a retention and recruitment tool especially with millennials.13

Conclusions:  For incentive providers and program owners, this raises the likelihood that all program communications will not just need to be available on mobile devices, but will need to be configured across multiple platforms.  Mobile proliferation is also raising security and maintenance concerns for the CTO. Executives must prepare to support the significant increase in the number of smartphones and tablets used by the workforce. Sixty eight percent of firms identify implementing a mobile device management solution as a critical or high priority in the coming year. This signals an opportunity for vendors to introduce apps that require no external maintenance or security burdens.14

Business Driver #7: Wellness

Most Companies Focused on Wellness Plans

A report released by the Employee Benefit Research Institute (EBRI), based on findings from the "SHRM/EBRI 2014 Health Benefits Survey," finds that few employers expect to trigger the so-called Cadillac tax on high-cost health plans in 2018, and few are planning to eliminate their health benefits.  Said report author Paul Fronstin, director of EBRI's health research and education program: "We found that very few employers plan to make major changes — at least for now — and most seem to be moving toward adoption of wellness programs.”

Of particular note is the survey finding that just 1% of plan sponsors are planning to eliminate health benefits in 2015; however, while most workers will not see major changes to their benefits next year, they likely will see a continuation of changes that employers have been making for a number of years.

Among other findings of the WorldatWork Survey:16

  • A relatively large number of employers continue to introduce wellness rewards and penalties, possibly the result of the combination of the PPACA-allowed higher financial incentives and the 2018 excise tax on high-cost health plans. Employers also may be focusing on wellness programs because of the link to worker risks and behaviors, which drive chronic conditions and account for a large percentage of overall health spending.
  • Ultimately, concerns about the excise tax on high-cost health plans may result in accelerated adoption of tiered networks, private health-insurance exchanges, value-based insurance design, and reference pricing.
Growth In Wellness Products and Programs

As programs continue to evolve, there is use for both financial and non-cash incentives. To the point, WorldatWork, reported "A relatively large number of employers continue to introduce wellness rewards" - noting the use of non-cash items drives participation (IRF Wellness study, J&J case study). 15

Employers are increasing their adoption of Wellness Incentives during open enrollments.  WorldatWork reported (Dec. 2, 2014) that few employers plan to eliminate or make major changes in their health-care benefits in the near future — but changes are inevitable, particularly with the growth of wellness programs designed to address worker risks and behaviors, which drive chronic conditions and account for a large percentage of overall spending.

The wellness market itself is expected to be the next trillion dollar industry, with beauty/anti-aging products, mind + body products and nutritional weight loss products respectively leading the way. 17 The market is driven largely by health-conscious millennials (who have the largest portion of discretionary spend) and baby boomers looking to maintain and increase quality of life.

While some products are new, some wellness offerings are re-marketed existing products, such as Spa Blankets.  The term “wellness” can also apply to both the products themselves (wellness apps)  and how they are made (for example, BPA-free bottles).  

Conclusions: Although major changes in health benefits are not anticipated in 2015, growth in use of merchandise and gift cards to incent wellness is expected.  Both the amount of products used to incent wellness and the types of products labeled with “wellness” attributes will continue to grow as well.

Business Driver #8: Disruption As A Constant State

Growing Risks

According to the New England Journal of Medicine, the incidence of natural disasters worldwide has steadily increased, primarily since the 1970's.18 Coupled with the current rise in social, political, and economic crises in the world (including the U.S.) a strong case can be made that disruption is the new normal.

Hurricanes, volcanoes, diseases such as Ebola, terrorists, unpredictable currencies, political fluctuations -- today’s environment poses risks greater than ever before.  This would be an issue for many businesses, but is exacerbated by the interconnected and multi-faceted nature of meetings and incentive travel.  This on-going geological-societal-economic disruption will lead to disruptive industry advancements as well.19

Counter Actions Being Taken

Finding new and creative ways to mitigate and account for these risks will be a key differentiator for incentive suppliers in the future, leading to new tools, processes and partnership dynamics. As noted above, the types of products offered in Reward and Recognition programs will reflect the underlying requirement for balance in luxury and necessity/security.

Likewise, the agility of Rewards and Recognition programs will become more attractive to organizations wanting to encourage employee motivation, while at the same time providing reward schemes that can be readily responsive to multiple dynamics.  Unlike compensation systems, non-cash R&R can we used to reward employees for volunteering in disaster, to thank them for continuing to work from home when weather causes central office closing, or to appreciate their support of the organization’s social efforts.20 

Preliminary IRF research has showed that these forces are shifting the role of procurement. Forcing them to deliver not only on cost/value metrics, but risk mitigation as well.21 

As the need for disaster planning extends beyond backed up servers and redundant data to broad-based understanding and experience in managing potential issues, the IRF expects to see outsourcing and partnerships take on new meaning.

Conclusions:  The constant state of disruption that now has become the norm will continue to impact the type products offered in R&R programs, increase the use of R&R programs, force suppliers to disclose their risk mitigation plans more readily, and increase the number of organizations looking to outside partners for risk mitigation.  

Business Driver #9: CEO's Need to Attract and Retain Talent

Fewer Incoming Job Seekers

For the first time, CEO’s are confronted with a smaller number of people entering the job market than the number of people leaving it. Non-cash awards offers key retention and education benefits to address this challenge.

We don’t often have a chance to sit with the CEO’s of our respective companies or clients.  But when we look for potential business drivers of non-cash rewards, we must stay focused on Senior Management’s concerns in the near future. 

Short of reviewing a company’s annual reports, surveys of CEO’s serve as the best proxy for uncovering leading indicators of what may (or may not) drive their market investments.  To that end, the Pricewaterhouse-Cooper’s CEO study in early 2014 noted that the mindset in the C-Suite has shifted from “recessionary” to a focus on “innovation and growth.” To illustrate, note Figure 5, which follows.

Talent Investments Becoming The Focus

As shown in Figure 5 above, the foremost investment focus for most CEO’s is not marketing or R&D – it’s talent. 81% of CEO’s said they were concentrated on talent, a position rivaled only by technology investments. In fact, 90% of the CEO’s said they were changing their strategies for attracting and retaining talent. Unlike technology however, 61% of CEO’s had not taken the first step to change their current approach. Unfortunately, only 34% feel that HR is prepared to help them.22

As incentives and recognition programs have a long-established history of augmenting the employee value proposition of an organization and providing employee retention benefits to sponsoring companies the executive focus on new talent strategies coupled with their open lack of faith in current HR partnerships will be a strong opportunity for incentives and recognition program providers to provide value at the highest organizational level. 

Changing Demographics

The impetus of this focus will not be short lived either.  Since the dawn of industrialization, the U.S. population pyramid had been decidedly triangular, with each generation outstripping the previous generation in size.  

Compare Figures 6 and 7 that follow.  In Figure 6, the triangular shape of yesteryear has given way to the hourglass shape shown in Figure 8 -- the Baby Boomer population of 74M now far surpasses the dwarfed Generation X of 44M and is on par with the Millennials that are 83M23 strong. 

A Different Way Of Thinking

As many outlets attest, Millennials think much differently about work and consumerism than do preceding generations.  For example, most Millennials will gladly give up pay for a flexible work schedule.24  

It’s a significance already seen. Millennials -- who generationally control the largest percentage of discretionary spend (21%)25 -- are the impetus behind commercials where daddies do the laundry and women bail hay and sip whisky.   

Next Eligible Working Population Smaller

Apart of the strength of Millennials, CEO’s are also now confronted for the first time with a smaller generation coming behind retiring senior leaders.

On the sheer size difference alone between Generation X and Baby Boomers, the working population is set to shrink by 30%.   Leaders must now not only attract and retain high performing Gen X’ers, they must also entice Baby Boomers to stay longer and ‘train up’ Millennials to fill the gaps. 

The growing number of highly skilled jobs in the U.S. economy only exacerbates these issues.  This issue can already be seen in the labor data. 

In August of 2014, 4.4M individuals separated from their jobs, and 4.6M individuals switched jobs – all at a time when 4.8M jobs went unfilled.26   

Given the need to attract and retain top performers AND the underlying need to “train up” a generation of Millennials, Executives are looking to proven tools such as non-cash reward programs for transferring best practices from top employees to the up-and-coming.Pu

For the first time in modern business history, organizations are faced with the issue of not only attempting to retain 100% of top performing baby boomers and Gen X’ers for as long as possible, they must also train high potential Millennials faster than ever before.  

Value of Incentive and Recognition Programs

Incentive and Recognition programs have, likewise, a long history of providing one of the only systems available in modern business that allows organizations to:

  • Quickly identify who the top performers are;
  • Catalog the behaviors that have made them successful;
  • Reward and recognize them so they stay longer;
  • Communicate and reward the cataloged behaviors that lead to success.

Conclusions:  Non-cash reward and recognition programs will be a key tool for executives seeking to motivate multiple generations and train up the next run of leaders more quickly.

Business Driver #10: Answering "Engaged In What?"

More Than “The Regular Job”

In the new economy, successful organizations need their employees to be engaged in new (non-core) roles.  Non-cash rewards and recognition have been shown to be a key strategy in motivating employees to do more than just their “regular jobs.”

Amidst the concern regarding shrinking skilled labor pools is the hope of not only attracting and retaining high performers, but also building a fully engaged workforce.  As the IRF paper “Engaged in What?” presents, two primary issues exist with the current engagement movement.27

First, like most HR topics, engagement was born in the academic realm and translated after short measure to consultants for practice and implementation.  

Unlike other HR topics however, in order for consultancies to garner investment for the topics, each developed their own definitions of what “engagement” really means.   Thus, there is little consensus in the market on the overall drivers and definitions of “engagement.” 

Core and Non-Core Roles

Secondly, engagement as a concept was originally meant to engage a workforce in their core job role; however, in the new economy, successful organizations need their employees to perform many non-core job roles, such as trainer, brand advocate, innovator, and change agent.  

Reward and recognition programs are more flexible than standard compensation systems and have a long history of agile implementation driving non-core job roles.

Answering the “engaged in what?” question, non-cash reward and recognition programs have:

  • Helped create brand advocates resulting in a 35% increase in customer service;28 Helped diminish the valley of despair to increase change adoption and a 63% increase in productivity; 29
  • Created better and more profitable ideas.30

 Top-performing organizations already understand these aspects.  According to research by Aberdeen, top-performing companies in 2013 (i.e. those with the highest customer retention and year-over-year growth rates) were slightly more likely (12% respectively) to give lip service to reward and recognition, saying recognition and verbal praise were vital.31

They were also significantly more likely than all others to actually make investments in reward and recognition; further, they were:

  • 90% more likely to invest in public recognition for top performers;
  • 95% more likely to offer peer-to-peer recognition schemes.

Conclusions:  As organizations continue to attract and retain top performers, agile non-cash programs like gift cards and merchandise will be key strategic tools.


  1. 2013 Incentive Federation: Incentive Market Sizing Study:

  2. See for the Fall 2014 Pulse Survey.

  3. See for the Fall 2014 Pulse Survey.
  4. See for the Fall 2014 Pulse Survey.
  5. Welcome To The Experience Economy.  Joseph Pine and James Gilmore, Harvard Business Review,
  6. The Wharton School of the University of Pennsylvania.
  7. See for the Fall 2014 Pulse Survey.
  8. See for the Fall 2014 Pulse Survey. 
  9. See for the Fall 2014 Pulse Survey. 
  10. Emarketer, Jan. 2014. “Smartphone Users Worldwide”)
  11. Latest IT Trends for Secure Mobile Collaboration, Forrester Research, Sept 2013.
  12. Mobile business apps market to reach $53bn in 2017 Information Age, January 2013.
  13. Is BYOD really that important to millennials? Government Resources Center. 
  14. Latest IT Trends for Secure Mobile Collaboration, Forrester Research, Sept 2013.
  15. Incentive Research Foundation: Energizing Workplace Wellness Programs: The Role of Incentives and Recognition.
  16. World At Work. Employers Increasingly Adopting Wellness Incentives During Open Enrollment for 2015.
  17. Health and Wellness Is Next Trillion Dollar Industry” Women’s Marketing November 2014.
  18. AccuWeather Nov 15, 2013
  19. Herman Trend Alert, September 2014.
  20. Look for the upcoming report from The IRF on the changing role of DMCs to be released in early 2015.
  21. Look for the upcoming report from The IRF on “Creating Better Partnerships With Procurement“ to be released in early 2015.
  22. PricewaterhouseCoopers ”17th Annual Global CEO Survey: Fit for the future.”
  23. U.S. Chamber of Commerce Foundation. The Millennial Generation Research Review.
  24. Forbes, August 3, 2013, “Why Millennials Are Ending the 9 to 5.”
  25. Barron’s, April 29 2013, “On the Rise.”
  26. Bureau of Labor Statistics October 7, 2014, Job Openings and Labor Turnover:
  27. “Engaged in What:  Creating Connections to Performance with Rewards, Recognition, and Roles.” Theresa Welbourne PhD, and Steven Schlachter PhD. 
  28. World at Work, Trends in Employee Recognition, June 2013.
  29. World at Work, Trends in Employee Recognition, June 2013.
  30. Harvard Business Review “What Madmen Got Right About Innovation.”
  31. Aberdeen Group “Non-cash Incentives: Best Practices to Optimize Sales Success.”