Todd Zint, Vice President, Meetings and Event Strategy, NFP; Trustee, Incentive Research Foundation
Rodger Stotz, Chief Research Officer, The Incentive Research Foundation
Suzanne Scully, Director of Meetings and Conventions, Visit St. Petersburg/Clearwater
Kurt Paben, President, Channel and Employee Loyalty, U.S., Aimia; President, SITE Foundation Board
Greg Bogue, Vice President of Experience Design, Maritz Travel
Steve Damerow, CEO, Loyaltyworks, Incentive Solutions, Travel Solutions
Anne-Sophie Rabreaud, Manager, Meetings & Incentives, Atout France US - France Tourism Development Agency
David Gabri, CEO, Associated Luxury Hotels International
Richard Low, Vice President, Special Markets, Citizen Watch Company; President Emeritus, Incentive Marketing Association
Martin Hood, Vice President, Channel Partnerships, CashStar
Donna Nardella, Director of Corporate Sales, Orrefors Kosta Boda
Jerry Duci, Director, Field Sales Development, Information Builders
Every year, Incentive
gathers a group of professionals from all sectors of motivation and engagement to talk about the state of the industry. This summer, 12 participants gathered at the Sheraton New York Times Square to discuss topics ranging from concerns that good times will lessen companies' focus on incentive return on investment (ROI) to the opportunities presented by CEOs' growing focus on human capital, as well as what's happening in the merchandise, gift card, and travel awards categories. What follows are highlights of that discussion.INCENTIVE: What's the current state of the incentive industry?
STEVE DAMEROW: I've been doing this since 1981, and this is the best time I've ever seen. I think there's pent-up demand for it. I think that incentives have gotten a lot smarter and are much more aligned with true business objectives, versus being just a free trip. I think that education, social media, and feedback have become much more of a component.
GREG BOGUE: From our vantage point, business is really great. It's a full-blown sellers' market, and it's the best it's been in 30 years. So we're very optimistic, and we're very happy with the way things are, and we're looking forward to a pretty consistent run for maybe the next 24 to 36 months.
RICHARD LOW: From the merchandise standpoint, we're doing really, really well. Our company, and other companies that I talk to -- everybody says they're busier than they've ever been since the recession.
At the Incentive Marketing Association, we find there's a really big interest in not just Fortune 100 companies , but also the Fortune 200 and 500, because that really has been an under-served market. It's not that they're small companies, but there are a lot of mid-size companies that just haven't been penetrated by incentives. And as more companies focus on their employees and employee retention, we see a lot of interest in that segment.RELATED: To see video interviews of the Roundtable participants, head here.
RODGER STOTZ: I would say two things. The IRF has been doing "Pulse Surveys" tracking different trends about twice a year since 2008, when the bottom fell out in the recession. In that first survey, we found 86 percent of respondents were reducing the room-nights and/or number of rooms in their programs. At the end of 2014, we saw only 12 percent doing that, and others were increasing. We have come a long way from where we were during the depths of the recession.
Second is the growth of the focus on employees and, particularly, employee engagement. There has been a tremendous growth in the last five years in terms of employee recognition programs, which has been a tremendous opportunity for incentives going to the non-sales and non-channel-sales part of the marketplace.
INCENTIVE: How serious are clients about tracking ROI?
KURT PABEN: One of the major lessons learned from the recession is that the primary goal of incentive programs is to contribute incremental improvements to the bottom line. Well-designed programs demonstrate a quantifiable link between the incentive reward and performance, allowing companies to drive behavior to help reach financial goals. It's like any other investment that you make as a company. You need to be able to justify the expense. The SITE Foundation's annual "SITE Index Study" found that 79 percent of respondents reported that the emphasis on measurement or ROI will increase.
STOTZ: In 2008-2009, the IRF was inundated with "show us the data," because everybody was getting challenged on the budgets. As a result, we did three studies on incentive travel to try and show how people measured it. Very few people made it a requirement to measure the outcome, as long as the CEO and the head of sales were happy. Now, what I'm seeing is less people saying "I need it" again, because things are good.
MARTIN HOOD: It's getting easier as technology tools evolve. You don't need to custom build a $100,000 or $200,000 employee-tracking module. A lot of organizations buy a platform that has the ability to track results and have the "do this, to get that" logic behind it.
INCENTIVE: Are wellness incentives becoming a bigger part of the business?
LOW: That goes right to ROI. Companies are investing in wellness incentive programs because they do reduce insurance costs. We have seen a huge increase in [redemption of awards] that encourage people to live a healthier lifestyle. It is probably the largest-growing segment of merchandise awards.
STOTZ: It's moved from wellness to wellbeing. Companies are looking at the whole person, because there was a perception that the reason corporations wanted wellness was to reduce healthcare costs -- that it wasn't a benevolent process, it was a very calculated process.
HOOD: There's clearly a financial return for companies that embrace this and get their employees to engage in it. At my last company, we started a wellness program that found early-stage health problems in five out of just 150 employees. It was life changing, and it made me a bit of a believer in making wellness more mainstream.
STOTZ: There are human resource consulting firms and benefits firms that are competing for the same [wellness program] dollars -- their proposal is to reduce [health insurance] premiums for people who participate. The IRF did a wellness case history on Johnson & Johnson and found that by just using those financial rewards versus non-cash, they didn't get enough participation and they couldn't promote it as well. They went from something like 16 percent participation -- this is a healthcare company -- when they announced [their program] without any kind of promotion and awards, up to almost 80 percent when they included non-cash awards.
TODD ZINT: We rolled out the John Hancock Vitality Program at NFP. Wellness is a big issue around here -- we have a boot camp that people can jump into after work. We sponsor marathons. The Vitality Program is really interesting, because if you do engage in that, and you do participate, then you do get lower premiums. And you do get points for awards like Amazon gift cards and for movie tickets.
INCENTIVE: The Conference Board said CEOs' top concern for 2015 is human capital. How can this industry help?
PABEN: The competition for talent has never been stronger, and I think that those companies that, during the recession, kept employee engagement at the center are benefitting now. That was an easy budget to push to the side when things got tight -- and that's why [human capital] is the No. 1 thing on the list. Engagement is a big deal.
BOGUE: Doesn't the conversation need to shift though? From better business and better performance to better people? Let's make better people. And aren't we losing that? It seems like a lot of the time, incentive programs have all been about driving numbers. Let's talk about driving people, and creating better people.
STOTZ: I think we have the opening. The conversation has changed to human capital. And if you can go under that moniker, human capital, that does get attention at the C-level -- from the CEO -- because they're looking at talent shortages, and people leaving, and turnover of some of their key people. Some organizations are starting to see human resources moving up into the conversation of strategic planning. MERCHANDISE
INCENTIVE: What are the hot incentive award products for this year?
LOW: Anything fitness related. That's No. 1. Programs are being developed to maximize the use of Fitbit and Jawbone [activity trackers]. Of course that doesn't take away from the traditional TVs, electronics, and watches.
JERRY DUCI: We did an analysis, looking at everything that was [redeemed] in the last year or so in our organization. Far and away, the
No. 1 award item was the Fitbit. The iPad Mini was next, the iPad Air was next, and the MacBook was next. Far and away, Apple was No. 1. Then came a variety of brands of big-screen TVs. Then came golf equipment. Bicycles were popular - the most popular bike is the Trek FX Highway Bike. Next came [individual incentive] travel stuff - four-day certificates, three-day certificates. The Bose home theater systems were popular items as well.
LOW: Millennials are finding that watches are more acceptable, because it's not acceptable to look at your phone during a speech, during class, or in a meeting. You're going to see a lot of 18- to 24-year-old kids start wearing watches again.
DONNA NARDELLA: I represent the luxury brand market and tabletop industries. We're seeing a great uplift this year. In our crystal awards we saw a 16 percent increase in employee recognition, which is unprecedented. As far as corporate incentive products, we're still seeing people aspiring to own luxury brands. They still want to serve and entertain - barware is very hot right now. Value is important. We have boxed glass sets that are a great value; we offer wine and beer glasses at a retail of $50. That is really doing well for us. We're offering products that are a good value and have a lot of perceived quality.
ZINT: What we're finding for our incentives is the customization opportunity is important. We were just up in Banff [Alberta, Canada], and we did the Nike Experience. You customize the colors of your shoe from the bottom and the laces to the Swoosh. It's all online. What's great about it is, two weeks later, when the incentive participants receive their custom Nikes, it brings them back to that full experience.
SUZANNE SCULLY: I've seen the Bose Experience offered as gifts in a lot of programs - those noise-cancelling headphones are a hot item in the incentive world. But I haven't seen it as often as I've seen Maui Jim Sunglasses.
STOTZ: It's become almost a staple to have some type of merchandise bar in the incentive travel business. It's so well received by participants and it's such a "wow." It is a bigger expense to the program than it used to be with just the little room gift, but it's seen as a part of the overall experience. It's a real opportunity for people with merchandise products that can fit into that arena.
NARDELLA: What we are doing is engraving events on site. If it's a small item, we can hand engrave them on site. We also give them an option to have a display of merchandise on site [for winners to pick from], engrave them at our warehouse, and then drop ship them to their homes.
BOGUE: Some of our clients are asking for an on-site store full of 15 different items. That's something that we're seeing. They want three Michael Kors handbags, a watch, a camera, a Fitbit, etc. They say, 'Give me a store that my [attendees] can walk through.' GIFT CARDS
INCENTIVE: How is the gift card market doing?
HOOD: Gift cards have definitely become a very, very popular way for folks to incentivize people. As the economy came back after 2008-2009, gift cards became deeply entrenched in a lot of incentive programs. It became a groundswell of demand by the participants. They provided choice -- because now I can get a Best Buy card, or a Home Depot card, I have choice of a couple 100 brands -- and once I have that card, I don't just have to shop online. With most retailers you can print out a barcode, and actually have an in-store shopping experience. I can buy something on sale so I get more bang for my buck.
One thing that we're also seeing now is going from plastic to digital. [You can] go to Williams-Sonoma, [see something you want], order a $250 gift card off the platform [on your mobile device], and have it in three seconds.
INCENTIVE: What are the hot gift cards for this year?
HOOD: That's interesting because it's a demographic thing. We represent about 220 different, well-known, national standalone brands. While a gift card does offer a lot of choice, it's to a very specific retailer. So, when you think about, if you're doing a safety program for guys that are out working the lines, you're probably dealing with a lot of Bass Pro Shop, a lot of Cabela's. If you end up running a program [for a consulting firm], you're going to end up with a lot of Best Buy and Amazon.com cards.
Also, there's a wide spectrum of offerings. You're not going to have a $5 Best Buy card; it's probably going to be $50 or more. And you're not going to have a card in a program that's over $50 for Starbucks or iTunes.
STOTZ: [A recent] study on incentive gift cards not only had the top cards but also the median value that is used. They were: Amazon for $75, American Express for $100, iTunes for $12.50, Starbucks for $10, Target for $75, Visa for a $100, and Walmart for $75. That goes back to the lower value for iTunes and Starbucks.
INCENTIVE: How about individual incentive travel awards?
DAMEROW: Since we created an online reward booking engine, as opposed to just giving out [hotel, airline, and cruise] certificates, individual incentive travel has gotten up to about 12 to 14 percent of our entire redemption. And that's at full margins, and nobody ever complains. Let's face it, the [top-redeeming merchandise award is the] iPad; Apple only gives us a 3 percent discount, if we're lucky. Individual travel rewards have become a big deal.
INCENTIVE: What are the most popular incentive travel destinations?
DAVID GABRI: In the U.S., certainly Florida and Las Vegas are huge. And California. We're selling more programs in Hawaii than we have in recent years. And we've got a couple cities in the mix right now in incentive programs, like New York in particular. You can do a very creative program on the incentive side in Las Vegas -- you can go to different Cirque [du Soleil] shows as opposed to a dine-around. And Vegas does have outstanding dining, and lots of options, no matter what [your budget is]. You have good air access. And Las Vegas is still ridiculously inexpensive compared to 2007. On a per-room basis, it's still half price.
ZINT: Domestically, we do a lot of Napa Valley, CA. You can create some really unique experiences up there in that wine country. Another wine region that we're going up to now is Oregon for the Pinot Noir, especially for people who like wine. In the smaller domestic incentive travel programs, we've done a lot of Sedona, AZ -- that area has some really unique places, [like] the Seven Canyons. Outside the U.S., Buenos Aires is fantastic, and Costa Rica has a lot of opportunities. We're also doing a Mediterranean cruise. That's always a favorite; we've gone there about four times, through France and through Barcelona
GABRI: I don't know if it's historically more than they've done before, but the Caribbean, the Bahamas, and Bermuda.
DUCI: At our company, the two fundamentals are: it's got to be near a beach or water, and it's got to be near good golf.
SCULLY: The main reason incentive groups come to the St. Petersburg/Clearwater, FL, area is for the beaches. That's what it's most well-known for. But there's more to it. You can spend time in downtown St. Petersburg and have a cultural aspect to the program. Our new Dalí Museum has the largest collection of [Salvador] Dalí's work outside of Spain -- it's a huge draw. Our price point is probably a third less than you would pay to go to Miami, and we do have high-end hotels. We have great airlift. People don't know that we are a pretty upscale destination. We've created some different types of incentive activities that are outside the normal water sports. We've done scavenger hunts along the St. Pete/Clearwater Craft Beer Trail -- [participants] go on a trolley and they have to stop at all the breweries. We've done it by sailboat, especially with sales teams. It fits their competitive side, but it also builds camaraderie.
PABEN: We see a surge of business going to Mexico now. It has come back from those safety perception [issues], and Los Cabos has come back [after Hurricane Odile]. All of those luxury hotels have reopened. There's good airlift there, the cost is good, and the time zones are good.
ZINT: We've done Asia but, you know, afterward we found out it was just too far and also you almost always have to go there during the off-peak season, because it's so warm and humid. We've gone to Moscow and St. Petersburg [Russia], and just Europe in general -- to Paris.
ANNE-SOPHIE RABREAUD: Europe is doing great, thanks to the strong U.S. dollar. At Atout France [the France Tourism Development Agency], we are seeing a great increase in the number of requests for proposals that we receive.
We can see that people may have already been to Paris and the south of France, so they're looking for new experiences. The new trend is a split program. Usually it's a five-night program, so they would arrive in Paris, but they're ready to explore new destinations like Marseilles, which, a few years ago, nobody had really heard about. But it was European Capital of Culture two years ago. And other destinations in France such as Bordeaux are coming up. Lyons is the second largest city in France after Paris in terms of business, and it's also the capital of gastronomy -- this is where we have all the best chefs. And earlier this summer, Burgundy and Champagne were added to the UNESCO World Heritage List, so now they are part of the 43 different sites in France that are on this list.
When people think about France, they generally think about its gastronomy, its fashion, and its culture, but we have other opportunities for incentive groups to explore, too, such as golf and soccer. Next year, for instance, France will host the European Soccer Cup, which will take place in 10 different cities. In 2018, France will also host the Ryder Cup, which is another opportunity for us for us because usually people don't think about this country as a golf destination, but we have more than 500 golf courses.
PABEN: We're seeing incentive travel program interest in the Middle East, especially in Dubai.
STOTZ: Africa, particularly for safari. It's not so far to Krueger National Park [in South Africa].
INCENTIVE: How about incentive cruises and all-inclusive resorts?
PABEN: They're doing very well for a couple reasons, one of them being the quality of the new product in the cruise market is high, particularly domestically. And there's lots of new cruise product coming on, whether it's traditional ocean cruising, or river cruising. The other reason why cruises are great is they can take you to lots of places without having you pack and unpack in each destination. It's a fixed expense -- it's basically like an all-inclusive resort, which is also popular, but on the water. So we see a high usage.
DAMEROW: All-inclusive resorts make up a large portion of what we do and for the exact same reason. I can say to clients, "Okay you're not going to have to worry about getting add-ons and American Express bills six weeks later." And now, the food's great.