The incentive industry is booming.
That was the core message the Incentive Research Foundation
(IRF) President Melissa Van Dyke delivered at the inaugural Incentive Live
show in Las Vegas today.
Van Dyke's keynote address focused on a new study released exclusively at Incentive Live -- The IRF's 2017 Trends Study
. Incentive Live is produced by Northstar Meetings Group, Incentive
's parent company.
Looking at the top 10 trends uncovered by the IRF's annual study, the key takeaway, according to Van Dyke, is that there is a strong and growing increase in the use of non-cash incentives by corporate America.
"In 1996, 24 percent of firms were using non-cash incentives," she said, citing the Incentive Federation's ongoing series of Incentive Marketplace Estimate Research Studies
-- better known as the Industry Size studies. "In 2016 that had grown to 84 percent. And there has been 17 percent growth in just the last two years."
As for why that is, Van Dyke points to the fact that the U.S. economy is now primarily a service economy -- 77 percent of our jobs are now in the service sector, according to the U.S. Bureau of Labor Statistics.
"And the No. 1 thing you need to succeed in the service sector is 'shiny happy people,'" she noted, pointing to the fact that the companies with the best employee engagement scores have beaten the return of the S&P 500 Index by 20 percent over the past two years. Add in the fact that employees are now being asked to do far more than just their core jobs, and that "research shows that non-cash incentives are crucial in how we engage people with their non-core job roles, and the implications for growth are obvious."
That said, Van Dyke noted that a number of the other top 10 trends can be described as headwinds for the industry. These include increased regulation, increased disruptions, the growing consolidation of suppliers, and globalization.
As far as regulation, Van Dyke says the IRF's last Pulse study of the incentive industry found that nearly two-thirds of planners "say regulation is the primary thing interfering with how they plan programs," and eat up a lot of resources.
As far as disruption, Van Dyke noted that 60 percent of planners say they have encountered some sort of disruption over the past year. But while the No. 1 cause was no surprise -- weather events -- the second most common disruption was neither terrorism and security nor health-related issues like Zika. It was vendor partner failures, Van Dyke said, noting that full 28 percent of the planner respondents cited this as a problem they have faced.
The study also found that the use of merchandise and gift card awards are growing, with 58 percent of all U.S. businesses using merchandise and 73 percent using gift cards. In addition, 60 percent use corporate gifts, 46 percent award points, and 38 percent use incentive travel.
On the incentive travel front, while the average per person budget has grown from $3,400 in 2014 to $3,755 in 2016 -- and one fifth spend more than $5,000 per person -- nearly 60 percent also said that costs are rising faster than their budgets. "We see growth, but it is tempered growth," Van Dyke said. Pointing to the Pulse industry outlook study the IRF will release in February, she noted that the growth incentive planners are seeing in 2017 is not as strong as in the two previous years.
The IRF's Top 10 Trends for Incentive Travel, Rewards and Recognition Programs in 2017
1) The Increasing Demand for Non-Cash Rewards & Recognition
2) Mastering the Changing & Challenging Regulatory Environment
3) Incentive Travel Market: Growth and Challenges
4) Merchandise and Gift Card Expansion
5) Shifts in Safety Perceptions and More Fe=requent Disruptions
6) The Emerging "Next Level" of Experience: Individualized Experiences and the Importance of Emotion
7) Technology Changes
8) The Evolving Design of Reward and Recognition Programs
9) Industry Consolidation