Internal branding is driving the creation of major budgets earmarked to market the company’s benefits, products and services to its employees just as vigorously as it does to its customers. The effort helps ensure that employees are engaged and happy. Recent studies have found a direct link between employee satisfaction — including those that have no direct contact with customers — customer satisfaction and improved financial performance.
“Companies are realizing that their bottom line is impacted by how satisfied and productive their employees are,” says Karen Renk, executive director of the Incentive Marketing Association (IMA). “Though organizations have said that our most important asset is our people, that isn’t necessarily the way they responded to budget demands. Now we see corporations really investing in their employees. So, rather than being seen as cost centers, there is a paradigm shift where employees are being seen as the profit centers. If an employee is engaged and productive and invested in the company’s success, they are going to in turn ensure customer satisfaction.”
That focus is bolstered by a 2005 study by Fortune magazine that found that the stocks of companies on its annual list of the “100 best places to work” collectively beat the broader market by more than 300%. Those companies earned 176% compared with the Russell 3000’s 42% return and the S&P 500’s 39%, the study found.
Internal branding has become a major component in employee incentive and recognition programs, rewarding employees for a job well done and enticing top talent to stay on board.
The IMA projected that spending on products and services used for incentive programs reached $28 billion last year, up from $26 billion in 2000.
Distributor as consultant
Promotional products distributors no longer want to focus solely on the niche of selling products, but want to expand their businesses by offering additional services to clients. As a result, the standard role and title of the promotional products sales person is undergoing a sea change. At the PPAI Expo held last January in Las Vegas, the official title of the promotional products supplier was unveiled as the professional promotional consultant. In addition to selling promotional products, the new role brings a host of new responsibilities, including providing ideas, solutions and services to help buyers understand how they can most successfully and effectively use a promotional product.
“As opposed to just coming in and saying we can get you some pens, we are thinking about marketing solutions,” says Carol Aastad, VP-general manager at promotional products distributor Forrester-Smith, and a past chairman of the board for the PPAI. “We’re going that extra mile to provide greater service and creative ideas as opposed to products.”
To aide the transition, the PPAI held a number of educational sessions at the Expo aimed at educating members on transitioning to professional promotional consultants. In addition, PPAI launched a new magazine last month, Promotional Consultant, to further educate and offer related content to its 7,200 supplier and distributor members. And a daily e-mail, the E-Promotional Consultant, offers a “little quick idea”, Aastad says.
Clients, as well as other organizations, are embracing the change.
“Clients are looking for a one-stop solution, and as a promotional products distributor it’s just a natural evolution to be able to provide these services,” Lisa Leitch, president of Teneo, said during the ASI Show in Orlando last February. “And if they don’t, someone else will.”
Leitch said that 69% of distributors can grow their businesses by getting referrals from existing clients. Some 42% increased their business by asking clients about upcoming events, 24% boosted sales by asking for referrals to other departments or divisions within the client company, 15.4% increased their business by showcasing new product ideas from suppliers and another 9% bumped sales by showcasing new ideas used by other clients. Another 8% increased business by finding ways to show how promotional products produce a positive ROI.
Spending on promotional products grew 5.9% to $17.3 billion in 2004, the second largest figure in the history of the industry. The jump puts the annual sales figures close to the record $17.8 billion in 2000. Sales in 2001 and 2002 saw the first decline in more than 20 years. Sales rebounded in 2003 to $15.3 billion, according to the latest figures available from PPAI.
The largest category continues to be wearables at 30% of expenditures, a slight uptick from 29.5% in 2003. Wearables, including T-shirts, golf-shirts, caps, jackets, footwear and other items, was followed by writing instruments (10.6%) and calendars at 7.5%.
The number of small companies (less than $2.5 million) joining the industry rose to 20,249 in 2004 from 20,150. The number of companies with sales of $2.5 million or more also increased from 815 to 919. Small companies brought in a total $9.4 billion in sales compared to the larger companies, which rang up $7.9 billion in sales.
Business gifts drove the largest percentage of sales by program category (17.8%), followed by trade shows (12.1%), brand awareness (9.7%) and employee relations and events (8.8%).
“Corporate buyers are realizing the impact that a promotional product has as a branding tool, as a thank you, as an incentive,” Aastad says. “They’re realizing the dramatic impact that has and that advertising dollars are better spent in a targeted promotion than they are in broad media promotions and print advertising.”
SNAPSHOT 2005
Internal branding takes high priority
Employees with no direct customer contact effect bottom line
Spending on promotional products grew 5.9% to $17.3 billion in 2004
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