Falls Church, Virginia. July 15, 2016 -- A new Incentive Marketplace Estimate Research Study released by the Incentive Federation confirms that the non-cash incentives market grew a remarkable 17% since the last market estimate study in 2013.  With 84 percent of U.S. businesses spending $90 billion annually on award points, gift cards, trips and travel, and merchandise, the study also found that overall the businesses spend $14.4 billion annually on incentive travel and $75.6 billion on award points, merchandise and gift cards to reward sales staff, employees, channel partners and customers.

The latest study also reveals that a third of this marketplace is driven by smaller businesses ($1 to $10 million in annual revenue), whose budgets may be tighter, but whose total volume generates $29 billion a year, and firms with up to $100 million in revenue accounting for 84% of the total spent on non-cash incentives.  Conducted in partnership with Intellective Group in St. Louis, the purpose of the study was to collect data from a national sample of nearly 1,400 business executives in order to estimate the current size and characteristics of the non-cash incentives marketplace.

Respondents were asked what types of non-cash awards were used in their various programs.  Here the methodology differed from the 2013 study, in a manner that very likely increases the resulting market estimates. In 2013, as in previous iterations of the study, award types were defined in two categories:  incentive travel and merchandise/card. In 2015, the study was updated to more accurately reflect the proliferation of award points and gift cards as the delivery mechanism for non-cash rewards, and included trips and travel and merchandise.

The study also revealed:

  • While it appears on the surface that the use of incentive travel has declined since 2013, travel rewards are frequently included in award point and gift card programs, so incidence and spend for some travel rewards may be accounted for differently in the current study compared with earlier iterations.
  • Employees rewards and corporate gifts are the most prevalent forms of non-cash incentives with 72 percent of businesses having both types of programs
  • Non-cash sales incentive programs are present in three of five U.S. businesses, and non-cash customer loyalty programs are used in 45 percent of firms, while 41 percent of firms use non-cash channel programs.
  • Gift cards are the most prevalent reward type in all programs except customer loyalty, which has a similarly high incidence of award points. Trips and travel is highest within sales programs and lowest within customer loyalty.  Merchandise use is highest in channel programs. 
  • The incidence of firms using non-cash rewards to thank clients, prospects, and partners increased by 36 percent from 2013 to 2015 – a 36% increase. The change was consistent across firm size. This increase is offset, however, by a decrease in reported spend in this category.  The net impact of these changes is a larger number of firms utilizing non-cash items as appreciation, but a decrease in overall spend in the market – down 32% to $10.5 billion.

"This study reaffirms that the use of non-cash incentives has been and continues to be an important part of many businesses' growth strategy. The growth in the use of non-cash incentives is an important signal that U.S. businesses value tangible incentives over simply using cash to recognize performance and loyalty," said Melissa Van Dyke, Co-Chair of the Incentive Federation and President of The Incentive Research Foundation.

“The Federation’s research in 1996 revealed that only 26% of U.S. businesses were using non-cash incentives, and our 2000 research reflected a $27 billion marketplace,” said Steve Slagle, The Federation’s Managing Director. “The growth in the marketplace over 20 years is certainly gratifying and a tribute to the excellent work the industry’s companies have done to educate businesses about the value of all forms of non-cash incentives.”

The study was made possible with assistance from: the Incentive Marketing Association, the Incentive Research Foundation, the Promotional Products Association International, and the Society for Incentive Travel Excellence.

You may also see the 2015 Incentive Program and Design Study and read about incentive industry legislative and regulatory issues.

About The Incentive Federation

Founded in 1984 to focus on government affairs, the Incentive Federation continues to educate state and federal governments and agencies and has been successful at providing constructive input into tax laws related to the treatment of qualified noncash rewards, in helping OSHA see the benefits of safety incentive programs when writing related regulations, and in helping federal regulators understand that financial institutions have legitimate uses for premiums and incentives. An alliance of associations and corporations involved in various aspects of the incentive marketplace, the Federation has expanded into three related domains: corporate outreach, education, and research. More information can be found at: http://www.incentivefederation.org

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Steve Slagle
Managing Director