Recently, the Incentive Research Foundation (IRF) released new findings about the industry’s outlook for 2020. Overall, the IRF was optimistic about online retail gift cards and brand-name merchandise. Event gifting is also expected to have a positive year during 2020. The IRF is looking forward to a strong year for the incentive industry with bullish forecasts for a number of different products and services.
The IRF Survey Gets Feedback From Hundreds of Industry Professionals
In the survey, the IRF gathered responses from 377 professionals who work in the incentive industry. These professionals included people from the supplier, corporate and third-party segments. After getting all of their answers, the IRF tallied up the survey’s results.
The IRF’s Outlook for 2020 report discovered that 85 percent of respondents in the survey believe that their company will enjoy a strong financial performance during 2020. To get this result, the IRF used something they call the Net Optimism Index. This index tracks the percentage of people who hold a negative view of the economy. Then, they subtract this figure from the percentage of people who have a positive view of the economy.
In fall 2019, the Net Optimism Index was at 41 percent. Back in 2018, it was slightly higher at a rate of 43 percent. While this year’s Net Optimism Index was technically lower than the year before, it is still double the 2017 rate. Back when the IRF conducted the survey in Fall 2017, the Net Optimism Index was at just 22 percent.
What Incentive Professionals Are Looking Forward to
During the upcoming year, the survey’s respondents are looking forward to more investments in their incentive programs. Right now, 50 percent of respondents expect that there will be an increase in the number of program participants who get a reward in 2020. In 2019, this number was at just 38 percent.
A total of 42 percent of respondents believe there will be a growth in their overall budget during 2020. This is an increase from last year when only 38 percent of people thought that their budget would increase. In addition, 34 percent of participants believe that there will be an increase in the amount people spend on merchandise. This is also an increase from the previous year. Last year, only 29 percent of participants thought that there would be an uptick in merchandise spending.
There is also positive news in terms of communications and administrative budgets. In 2020, respondents expect that there will be a 31 percent increase in their communications budgets. Last year, only 27 percent of participants thought that their communications budget would increase. An estimated 23 percent of respondents also believe their administrative budget will increase. This is higher than last year when only 17 percent of people had an optimistic outlook for their administrative budget.
Industry Professionals Are Working to Establish Their Program’s Value
Professionals in the incentive industry are also working to add to the value of their programs. Stephanie Harris serves as the president of the IRF. According to Harris, the rise in budgets and participation is causing expectations to grow for these incentive programs. During the last year, the level of reporting and analysis has risen significantly. Now, professionals are focusing on participant satisfaction as one of their key metrics.
Right now, the average merchandise reward value is holding steady at $160. This figure was at the exact same level in 2019. Overall, brand-name merchandise was the most popular reward type. Ranked from most to least popular, the following segments were the most popular kinds of merchandise rewards in 2020.
- Sunglasses (69 percent)
- Brand-name merchandise (76 percent)
- Electronics (67 percent)
- Clothing and apparel (64 percent)
- Sporting and golf items (51 percent)
- Watches and jewelry (50 percent)
While brand-name merchandise with a logo was clearly the leading reward, sunglasses, electronics and clothing items still did surprisingly well. Sports and golf items were only at 51 percent. Meanwhile, jewelry and watches are last on the list of the most popular items.
Compared to last year, the biggest decline in popularity for specific merchandise rewards was for food gifts. The popularity of this category fell from 52 percent to 38 percent. Interestingly, this drop was consistent for third-party providers and corporate respondents. For third-party providers, sunglasses and electronics were the most popular merchandise rewards.
The Popularity of Gift Cards as Incentives Is Increasing
The IRF survey also looked at the popularity of gift cards as incentives. The median amount for gift cards is currently at $100. This is similar to where it was in 2019. While exclusively online retailers like Amazon were the most popular, coffee and big-box stores were also top options. The least popular options for gift cards were for clothing items and home improvement.
- Exclusively online retailers like Amazon (65 percent)
- Coffee (61 percent)
- Big-box stores (58 percent)
- Department stores (54 percent)
- Dining (49 percent)
- Electronics (45 percent)
- Home improvement (43 percent)
- Clothing and apparel (42 percent)
Interestingly, vouchers are starting to grow in popularity as well. In 2019, only 24 percent of respondents used vouchers. Now, the number of respondents using vouchers has increased to 32 percent.
The IRF Also Found Some Negative Results
For most survey items, the IRF found generally positive news. Unfortunately, this was not true for every survey item. The IRF also asked respondents about the number of programs they had to cancel during 2019 and compared it to the year before. During 2019, 28 percent of respondents or their clients had to discontinue a program. In 2018, only 18 percent of respondents had to cancel a program.
Event gifting has become quite popular in the last year. While event gifting was used by 43 percent of respondents in 2018, an estimated 58 percent of respondents used it in 2019. The study’s participants believed that event gifting was an engaging, experiential option. An estimated half of corporate audiences used some type of marketplace experience for gifting. Meanwhile, 70 percent of third parties offered the same kind of experience.
The Outlook for 2020 includes more information about expectations for the incentive industry during the upcoming year. To find the IRF’s report and get more information, visit this site.