Spending on travel and merchandise incentives reached $46.1 billion in 2006, according to a new benchmark study by the Incentive Federation.
Of that, about $32.7 billion was spent on merchandise, or items used as part of an incentive or recognition program targeting employees, sales people, customers, distributors, dealers or consumers, and $13.4 billion on travel in 2006, the study found.
“It’s quite encouraging,” Frank Katusak, president of The Incentive Foundation, said, who also serves as Incentive Federation Board chairman.
Preliminary findings from the report, “United States Incentive Merchandise and Travel Marketplace Study” released this week at the Motivation Show in Chicago, assess the size of the incentive market, the companies that use them and the opinions of end-users about their effectiveness.
Consumer promotions are the most popular type of incentives, representing about 27% or $12.6 billion of all spending in incentive travel and merchandise last year. Non-sales employee recognition with merchandise placed second, accounting for 25% or $11.35 billion in 2006. Sales incentives (travel) made up 14% or $6.6 billion, while business gifts totaled 12% or $5.59 last year.
Other categories include: sales incentives (merchandise) 11% or $5.1 billion, non-sales employee recognition (travel) 7% or $3.3 billion, dealer incentives (travel) $800 million and dealer incentives (merchandise) $750 million last year.
Overall 34% of companies used either travel or incentives last year, the study said. Ten percent used travel while 31% of firms favored merchandise as motivators. Companies earning revenue of more than $100 million are more likely to use travel and merchandise incentives than smaller firms, the report states.
The primary use in the travel category is sales incentives (81%) followed by non-sales employee recognition (58%), consumer promotions (52%), dealer incentives (36%) and business gifts at 20%. In merchandise incentives, non-sales employee recognition (80%), business gifts (66%) and consumer promotions (53%) rounded out the top tier, followed by sales incentives at 34% and dealer incentives at 17%, the study found.
And the market is predicted grow.
More than half of large companies surveyed said their incentive travel budgets have increased over the last two years, and said they believe they would rise during the next two years, according to the survey. In incentive merchandise, 30% of people said their budgets have increased over the last two years and 59% said they expected budget increases over the next two years.
The study, conducted earlier this year, is based on responses from 1,212 U.S. companies handled by GfK, a marketing research organization. The full report will be released next month.
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