Incentive Industry 2017 Outlook
Trends Survey Fall 2016
theIRF.org
1
Survey Overview
The Incentive Research Foundation (IRF) sponsors regular trends surveys covering topics of current interest to those in the incentive industry. incentive providers, suppliers to the industry, and corporate incentive merchandise and travel buyers. This report summarizes findings from data collected between October 27 and November 9, 2016.
@
2,929 industry professionals invited to participate in survey
248 surveys completed
19%
Corporate (e.g., Buyer, Planner, Sales, HR)
27%
Supplier (e.g. Hotel, Airline, DMC, Merch)
54%
Third Party (e.g., Incentive Company, Travel Agency, Consultant) 2
Methodology Considerations
Audience
Timing
The IRF Pulse/Outlook survey is distributed to the IRF database - a list of largely U.S.-based incentive industry stakeholders. As such, results represent the outlook of industry professionals for the U.S. market
This report summarizes input collected from industry stakeholders just prior to the 2016 U.S. Presidential election, and therefore prior to the election results being known and the transition to the new administration. Outlooks for the economy and the impact of the regulatory environment are a snapshot of that pre-election period.
theIRF.org
3
Considerations for Non-Cash Program Design Internal factors, such as financial forecast and opinions held by indirect stakeholders, are much stronger considerations for program managers than external factors, such as public perception and competitive activity. 93% 86% 84% 75% 64%
75%
73%
63%
77% 61%
85%
81% 64%
69% 64%
74% 64%
52%
47% 45%
40%
39%
43%
42%
68% 61% 49% 41%
74% 62%
55% 44%
49%
85%
75% 68% 59%
56%
51%
45%
57%
52%
38%
48%
31%
87%
83%
26%
40% 18%
35%
29%
34%
24%
24% 20%
9% Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
My company's financial forecast influences the design and implementation of incentive programs Our competitors' programs directly impact the design of our incentive program(s). Perception of the public significantly influences the design of our incentive program(s). * Perception of internal (non-incentive) stakeholders significantly influences the design of our incentive program(s).
Please indicate the level of your agreement or disagreement with the following statements as they relate to your most recent incentive program. Base: Corporate respondents * Prior version: Sensitive to perceptions of program extravagance to the extent that it would impact the type of company program awards and inclusions ** Prior to Oct-16: Competitors’ reactions to programs impact the products and services included in company incentive programs
4
Introducing the Net Optimism Score
The IRF has created a simplified metric to track the economic outlook for the incentives industry. The IRF Net Optimism Score is the percentage of people providing a positive rating, adjusted by subtracting the percent giving a negative rating. A higher positive score indicates optimism in industry.
theIRF.org
5
Incentive Travel Programs Total completed surveys: • Corporate: • Suppliers: • Third Party:
170 30 50 90
theIRF.org
6
TRAVEL
Impact of Economy on Programs - Detail After recovering from the poor economic conditions in 2009, the incentive travel industry has been largely stable, with the exception of a dip in Fall 2011. The industry assessment in Fall 2016 shows more negativity than has been seen in several years – possibly due to the uncertainty posed by the impending U.S. Presidential election. Strongly Positive
Somewhat Positive
Have No Impact
Somewhat Negative
Strongly Negative
DK/NA
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16 7
In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The economy
TRAVEL
Net Optimism Score – Impact of Economy on Programs
26%
Fall 2016 IRF Net Optimism Score - Travel 52%
47%
-24%
51%52%
50%
37%
Percentage Points Down from Fall 2015
29%
26%
26%
24% 7%
-20%
The IRF Net Optimism Score for Incentive Travel in Fall 2016 is 26% - the incentive travel industry is moderately optimistic about the economy and its impact on the industry. This is down from a recent high trend in the 50’s that began Fall 2013, but continues to outperform the extreme dips seen in 2009 and 2011.
-39%
-45%
-79% MAR-09
SEP-09
MAR-10
SEP-10
MAR-11
SEP-11
MAR-12
SEP-12
MAR-13
SEP-13
MAR-14
SEP-14
MAR-15
SEP-15
MAR-16
SEP-16
8 In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The economy
TRAVEL
Incentive Travel Net Optimism & U.S. GDP Growth 80%
6%
60%
40%
20%
2%
0% 0% -20%
-40%
GDP Growth
In late 2011, industry optimism showed a dramatic dip – perhaps in anticipation of the economic decline that began shortly after.
4%
Net Positive
Optimism within the incentive travel industry tracks closely with overall U.S. economic performance, with the occasional exception.
-2%
-60% -4% -80%
-100% Mar-09
-6% Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
IRF Net Optimism Score
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
GDP Growth
9 In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The economy
TRAVEL
Net Optimism Score - Air Transportation Environment
1%
Fall 2016 Optimism Index
24%
Percentage Points Up from Fall 2015
1%
The assessment of the air transportation environment and its likely impact on the incentive travel industry continues its steady improvement from the low point in Spring 2012. For the first time, the Net Optimism Score is above zero, indicating a neutral outlook within the industry.
-26%
-30% -37%
-23% -32%
-54% -63% MAR-12
SEP-12
MAR-13
SEP-13
MAR-14
SEP-14
MAR-15
SEP-15
MAR-16
SEP-16
10 In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The current air transportation environment
TRAVEL
Net Optimism Score by Audience
The overall sentiment within the incentive travel industry is most optimistic for the economy, mixed on air transportation, and most negative for the regulatory environment. (This is a new topic as of Fall 2016 – trending data not yet available.)
Total
Supplier
Third Party
32% 28%
26%
25%
17% 5%
Suppliers are the most optimistic of the industry stakeholders, with third party service providers the least optimistic regarding the air transportation and regulatory environments. Corporate stakeholders are moderately optimistic about the economy, neutral about air transportation, and moderately concerned about the regulatory environment. NOTE: Results represent sentiment pre-2016 U.S. Presidential election
Corporate
1% 0%
-10% -15%
-15%
-29% E CONO MY
C URR E N T AIR TR AN SP OR TATION E N VIR ON M EN T
RE G UL ATORY EN V IR ON M E N T
11 In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution? (Strongly positive to Strongly negative)
TRAVEL
Net Optimism Score Compared to Prior Year by Audience The Economy Fall 2015
Fall 2016 61%
59% 50%
The incentive travel industry is less optimistic about the environment than this time last year, driven by considerable declines among suppliers and third parties. Corporate stakeholders show a more modest decline in economic optimism.
26%
TOTAL
32% 23%
28%
17%
COR POR ATE
SUP PL IE R
TH IRD PAR T Y
Air Transportation Environment 25%
Confidence is climbing for the air transportation environment, but has not yet achieved a level of optimism. Suppliers and third parties are showing improved outlooks, although the latter group remains moderately pessimistic despite a significant upswing.
1%
0% 0%
-4% -15%
-23%
TOTAL
COR POR ATE
SUP PL IE R
-42% TH IRD PAR T Y 12
In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution?
TRAVEL
Transportation Inclusions Outlook 59% 53% 60%
ONLY TICKETS WILL BE PROVIDED
54% 50% 55%
ALL AIR TRANSPORTATION-RELATED COSTS WILL BE INCLUDED (BAG FEES, ETC.) 28% 30% 28%
NON-AIR OPTIONS (TRAIN, BUS, DRIVING ALLOWANCES) WILL BE OFFERED
The incentive travel industry most typically provides only air travel tickets, or conversely pays for all air transportation-related costs. Less than a third of the industry offers non-air options, and only one in five includes seating upgrades. These findings are consistent across the different stakeholder groups.
20% 17% 21%
SEATING UPGRADES WILL BE INCLUDED
AIRLINE CLUB PASSES WILL BE INCLUDED
7% 7% 8%
NONE OF THE ABOVE
3% 7% 1%
Total Corporate (i.e. Buyer, Planner, Sales, HR) Third Party (i.e. Incentive Company, Travel Agency, Consultant) 13 With regard to the transportation portion of your/your clients’ group incentive travel programs, what techniques will be used in the coming year? Check all that apply.
TRAVEL
Transportation Inclusions Change over Time
59%
56% 52%
53%
There is a strong upswing in the prevalence of the tickets-only approach in Fall 2016, following a large dip in Fall 2015. The inclusion of all air transportation costs continues the moderate but steady climb that began in Spring 2014.
55%
46%
45% 45% 51%
38%
54%
40% 43%
36%
39%
37%
30%
OCT-11
31%
APR-12
OCT-12
APR-13
Only tickets will be provided
OCT-13
APR-14
OCT-14
APR-15
OCT-15
APR-16
OCT-16
All costs for air transportation-related expenses will be included
14 With regard to the transportation portion of your/your clients’ group incentive travel programs, what techniques will be used in the coming year? Check all that apply.
TRAVEL
Anticipated Destination Changes by Audience 58% NO CHANGES ANTICIPATED
73% 53% 18% 17% 19%
FROM DOMESTIC TO INTERNATIONAL
17% FROM INTERNATIONAL TO DOMESTIC
Most corporate and half of third parties anticipate no changes in the types of destinations they select for their incentive travel programs. Comparable proportions of third parties are moving between international and domestic or vice versa, while corporate stakeholders are more likely to be moving from domestic to international.
3% 22% 14%
WILL PICK LOCATIONS CLOSER TO "HOME"
3% 18% 11%
FROM LAND TO CRUISE
3% 13%
OTHER CHANGE (PLEASE DESCRIBE)
FROM CRUISE TO LAND
Total
7% 3% 8% 4% 3% 4% Corporate
Third Party
15 In the coming year, do you/your clients anticipate any of the following changes will be made with regard to selection of group incentive travel destinations? Check all that apply.
TRAVEL
Budget Shifts by Audience
65% NONE OF THESE
75% 61% 21% 21% 21%
ADDING BUDGET TO OFFER MORE GROUP TRIPS
Incentive travel stakeholders are unlikely to be shifting their budgets between individual and group travel. A moderate proportion (one in five) does expect to add budget to offer more group travel.
12%
ADDING BUDGET TO OFFER MORE INDIVIDUAL TRAVEL PACKAGES
4% 15%
REDUCING SPEND ON INDIVIDUAL TRAVEL PACKAGES TO OFFER MORE GROUP TRIPS
6% 4% 7%
REDUCING SPEND ON GROUP TRIPS TO OFFER MORE INDIVIDUAL TRAVEL PACKAGES
4% 0% 6%
Total
Corporate
Third Party
16 Which of the below best describes your/your clients’ incentive travel programs in the next year?
TRAVEL
Outlook for Travel Programs - Net Increase There is a strong positive outlook for budget increases in incentive travel programs – overall and for F&B and rooms. Stakeholders also expect an increase in the number of rooms (but not nights) and the number of participants earning a trip. Wellness and all-inclusive pricing are common. The industry also expects much more involvement of procurement, but not of third-party service providers.
BUDGETS FOR INCENTIVE TRAVEL PROGRAMS
BUDGET FOR F&B
29%
NUMBER OF PARTICIPANTS EARNING A TRIP
25%
BUDGET FOR ROOMS
BUDGET FOR ON-SITE GIFTS
30%
TOTAL NUMBER OF ROOMS
7%
NUMBER OF ROOM UPGRADES
TOTAL NUMBER OF DAYS/NIGHTS
22%
INCLUSION OF WELLNESS/WELLBEING COMPONENTS
42%
"ALL INCLUSIVE" PRICING OPTIONS
INVOLVEMENT OF PROCUREMENT OR PURCHASING
36%
37%
14%
11%
3%
ON-SITE INCLUSIONS PER PARTICIPANT
19%
SPONSORED (PAID BY YOUR COMPANY) NON-MEAL COMPONENTS
19%
PER DIEM CASH ALLOWANCES
What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
6%
THIRD-PARTY PLANNER/ INCENTIVE COMPANY FEES
-4%
THIRD-PARTY PLANNER/ INCENTIVE COMPANY INVOLVEMENT
0%
17
TRAVEL
Outlook for Budget by Audience – Net Increase 30% 17%
BUDGETS FOR INCENTIVE TRAVEL PROGRAMS
The incentive travel industry is anticipating net increases overall and for all budget categories, with the most optimism for F&B and rooms.
31% 33% 29% 28% 25% 32%
BUDGET FOR F&B
Corporate stakeholders not quite as optimistic as suppliers and third parties for increases in overall incentive travel budgets, but are more likely to expect increases in room budgets than the other groups.
25% 35% 19% 26%
BUDGET FOR ROOMS
BUDGET FOR ON-SITE GIFTS
Total What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
Corporate
7% 4% 4% 9% Supplier
Third Party 18
TRAVEL
Outlook for Inclusions by Audience – Net Increase 42% INCLUSION OF WELLNESS/WELL-BEING COMPONENTS
24% 43% 48% 37% 28%
"ALL INCLUSIVE" PRICING OPTIONS
49% 33%
There are strong increases evident across several categories and stakeholder types. All groups are increasing wellness components in their programs, as well as all-inclusive options and, to a lesser degree, onsite inclusions.
19% ON-SITE INCLUSIONS PER PARTICIPANT
7% 37% 14% 19%
SPONSORED (PAID BY YOUR COMPANY) NONMEAL COMPONENTS
7% 0% 23% 6%
PER DIEM CASH ALLOWANCES
Total What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
Corporate
17% 6% 2% Supplier
Third Party 19
TRAVEL
Outlook for Housing by Audience – Net Increase 22% TOTAL NUMBER OF ROOMS
28% 20% 14%
NUMBER OF PARTICIPANTS EARNING A TRIP
Incentive travel stakeholders expect the total number of rooms to increase, and third party service providers anticipate increase numbers of participants earning spots on incentive travel programs.
3% 21% 11%
NUMBER OF ROOM UPGRADES
10% 11% 3% 14%
TOTAL NUMBER OF DAYS/NIGHTS 0%
Total What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
Corporate
Third Party
20
TRAVEL
Outlook for Partners by Audience – Net Increase 36% 10%
INVOLVEMENT OF PROCUREMENT OR PURCHASING
49% 37%
Incentive travel stakeholders are expecting increased involvement from procurement or purchasing – this expectation is most pronounced among those on the supply side.
0% THIRD-PARTY PLANNER/INCENTIVE COMPANY INVOLVEMENT
Those on the corporate side do not anticipate increased involvement or fees from third party service providers.
0%
-4% THIRD-PARTY PLANNER/INCENTIVE COMPANY FEES
Total What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
Corporate
-4%
Supplier
Third Party 21
TRAVEL
Budget vs. Cost Outlook by Audience 39%
COSTS ARE INCREASING MORE THAN BUDGETS
16%
BUDGETS AND COSTS ARE STAYING ABOUT THE SAME - NOT INCREASING
DON'T KNOW/DOESN'T APPLY
12% 14% 6% 4% 1%
BUDGETS ARE INCREASING MORE THAN COSTS
NONE OF THE ABOVE
51%
65%
18% 21% 20% 15%
COSTS AND BUDGETS ARE INCREASING ABOUT EQUALLY
All audiences in the industry agree that costs are increasing more than budgets – placing all stakeholders in a difficult position. More than a quarter of corporate respondents indicate budgets and costs are flat, and about 20% of stakeholders feel budgets and costs are increasing at equal rates.
56%
29%
14%
3% 4% 2% 4% 1% 4% 1%
Total
Corporate
Supplier
Third Party
Thinking about the costs for your incentive travel programs, such as F&B, activities, wi-fi, room rates, etc., which of the below best describes your experience with corresponding changes to program budgets?
22
TRAVEL
Qualification by Audience Goal-based Trip Qualification 99%
Typical Qualifying Period of 12 Mos 100%
96% 89% 83%
81%
Nearly all stakeholders use goals and objectives to determine eligibility for incentive travel awards. A vast majority of the industry uses 12 months as the standard qualification period.
TOTA L Do you/your clients generally use achievement of specific goals/objectives to determine if a participant earns a trip? What is the typical qualifying period for your/your clients’ incentive travel programs?
CORP OR ATE
TH IRD PAR T Y 23
TRAVEL
Average Per-Person Spend $1,000 or less $1,001 to $2,000 $2,001 to $3,000 $3,001 to $4,000 $4,001 to $5,000 Over $5,000
As of Fall 2016, per-person incentive travel budgets are most commonly between $3,000 and $4,000, although about 40% of the industry spends more than that.
Average= $3,755
Average per-person spend has increased by 5% annually since Fall 2014. The current average spend is $3,755.
$3,405
30%29%
36% 31%
36%
16%
22%
19%20%
1%
7%
6% 1%
0% FAL L 201 6
14%12%
14%
7%
What is the average per-person spend on your/your clients’ incentive travel programs?
$3,590
FA LL 2 0 1 5
FAL L 2 0 1 4
24
TRAVEL
Destinations for 2017 by Audience USA CARIBBEAN MEXICO EUROPE
43%
CANADA
The most commonly-selected destinations for incentive group travel are the USA, Caribbean, Mexico, and Europe. Canada is also popular, with about half of third party service providers operating at least one program there in the coming year.
CENTRAL AMERICA ASIA SOUTH AMERICA AFRICA DON'T KNOW/NOT APPLICABLE MIDDLE EAST
82% 86% 75% 75% 76% 69% 57% 73% 64% 71% 68%
29%
44% 49%
27% 33% 21% 7% 26% 17% 14% 17% 14% 7% 16% 4% 0% 5% 3% 4% 2% 11%
Total
Corporate
Third Party 25
In the coming year, please indicate which geographic regions you/your clients will choose as destinations for incentive travel program(s). Check all that apply.
TRAVEL
Typical Lead Time Fall 2015
Typical lead times range between 7 and 24 months, with a small proportion of stakeholders reporting 6 months or less to plan and operate a trip. Compared to Fall 2015, planners are more likely to have between 13 and 24 months lead time.
41% 38%
Fall 2016
43% 31%
14%
13%12%
4%
0% 1% 1 MO NTH O R LES S What is the typical lead time for booking your/your clients’ incentive travel programs?
2 -6 M ON TH S 7 - 1 2 MON TH S
13-24 M ON TH S
OV ER 2 4 M ON TH S
2% D O N ' T KN O W/ N OT APP LIC ABL E 26
TRAVEL
Use of Partners (Direct Working Relationship)
Most corporate incentive travel stakeholders work directly with suppliers, either independently (39%) or in conjunction with a third party service provider (43%). Only 18% of corporate respondents work exclusively with a third party service provider.
Supplier (i.e. Hotel, Airline, DMC, Merchandise) 39%
Both 43%
Third Party (i.e. Incentive Company, Travel Agency, Consultant) 18% For your incentive travel programs, do you work directly with… Base: Corporate buyers
27
Incentive Merchandise/Gift Card Programs Total completed surveys: • Corporate: • Suppliers: • Third Party:
112 20 17 75
theIRF.org
28
MERCH
Net Optimism Score – Impact of Economy on Programs 100%
14%
Fall 2016 IRF Net Optimism Score - Merch 80%
-21%
Percentage Points from Fall 2015
60%
42%
43% 40% 36%
36%
40%
35%
28%
Incentive merchandise and gift card programs are expected to continue enjoying positive benefits from the economy, but the degree of optimism has diminished considerably over the past year.
22% 19%
17%
20%
14%
1% 0% -8%
-20% Nov-09
May-10
Nov-10
May-11
Nov-11
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
29 In the coming year, what impact will the factors below have on your/your clients’ non-cash reward and recognition program planning and execution: The economy
MERCH
Net Optimism Score by Audience
Total
Corporate
Supplier
Third Party
35%
Suppliers are the most bullish about the economic environment and its impact on noncash reward programs, while corporate stakeholders are neutral about the outlook for the coming year. Stakeholders agree that the regulatory environment will have a negative impact on the incentives industry, with corporate stakeholders the most concerned in that regard.
14%
13%
0%
-18%
-21%
NOTE: Results represent sentiment pre-2016 U.S. Presidential election
-24% -30% ECON O MY
R EG U L ATORY E N VI R ON ME N T 30
In the coming year, what impact will the factors below have on your/your clients’ non-cash reward and recognition program planning and execution?
MERCH
Net Optimism Score Compared to Prior Year by Audience The Economy Fall 2015
Fall 2016
86%
Suppliers are more optimistic regarding the outlook for the economy than are third parties and corporate stakeholders.
43% 35%
35%
14%
13% 0%
TOTAL
0%
COR POR ATE
In the coming year, what impact will the factors below have on your/your clients’ non-cash reward and recognition program planning and execution?
SUP PL IE R
TH IRD PAR T Y
31
MERCH
Merchandise Prevalence by Audience ELECTRONICS
60% 67% 64%
CLOTHING/APPAREL
Electronics are the most prevalent rewards with third party service providers, while clothing/apparel is most common with the corporate audience. Open gift cards have considerable presence and are much more prevalent than closedloop cards.
OPEN GIFT CARD (CAN BE USED ANYWHERE - LIKE A VISA, MASTERCARD, OR AMERICAN EXPRESS CARD) GOLF ITEMS
60% 57% 61%
45%
JEWELRY/WATCHES
75%
65% 66%
56% 59%
45%
55% 57%
LUGGAGE HOUSEWARES
50% 50% 54%
35%
CLOSED GIFT CARD (CARD IS ONLY REDEEMED BY ONE RETAILER, ONE RESTAURANT, ETC.)
40%
49% 51%
47% 43%
PLAQUES/TROPHIES
46%
RESTRICTED GIFT CARD (CARD IS RESTRICTED, I.E., ANY STORE AT A MALL, ANY HOTEL AT A HOTEL CHAIN, ETC.)
30%
60%
50%
40% 41%
FOOD GIFTS (E.G. FRUIT BASKETS, OMAHA STEAKS - DOES NOT INCLUDE GIFT CARDS) OFFICE ACCESSORIES FLOWERS
75% 79%
30% 15%
35% 38% 39%
22% 24%
32 What types of merchandise and gift cards are used within your/your clients’ reward and recognition program(s)? Check all that apply.
MERCH
Program Design
Nearly all incentives industry stakeholders use goals or objectives to determine non-cash reward earnings.
A little more than half the industry uses pointsbased non-cash rewards programs.
90%
55%
Do your/your clients typically use achievement of specific goals/objectives to determine reward payouts? Do your/your clients typically use a points-based system for your non-cash reward and recognition program(s)?
33
MERCH
Outlook for Rewards Budgets – Net Increase Total 63%
There is a strong positive outlook for budget increases in the coming year, with the increases distributed across program technology, awards, communications, and to a lesser extent, administration.
Corporate
Supplier
Third Party
63%
63%
37%
35% 35% 29%
28%
25%25% 17%
31%
25% 20%
30% 20% 18%
The industry also expects the number of participants earning rewards to increase. BUDGETS FOR REWARD AWARDS (MERCHANDISE, AND RECOGNITION GIFT CARDS, ETC.) PROGRAMS BUDGET
COMMUNICATIONS BUDGET
In the coming year, do your/your clients generally anticipate the following program elements will increase, decrease, or remain unchanged? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
40%
63%
41%
40%
30%
15%
ADMINISTRATION BUDGET
BUDGET FOR PROGRAM NUMBER OF TECHNOLOGY (E.G. PARTICIPANTS EARNING PLATFORM, MOBILE A REWARD APPS, ETC.)
34
MERCH
Outlook for Rewards Partners – Net Increase Total
Corporate
Supplier
Third Party 63%
There is a strong expectation among suppliers and third parties that the involvement of procurement or purchasing will increase in 2017. Corporate stakeholders are more moderate in their expectation of procurement involvement, and do not expect third party involvement or fees to increase.
36%
35%
10% 0% 0%
-10% -10% THIRD-PARTY PLANNER/INCENTIVE COMPANY INVOLVEMENT
THIRD-PARTY PLANNER/INCENTIVE COMPANY FEES
In the coming year, do your/your clients generally anticipate the following program elements will increase, decrease, or remain unchanged? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
INVOLVEMENT OF PROCUREMENT/ PURCHASING
35
MERCH
Net Increase in Use of Rewards by Audience Total
Suppliers and third party service providers anticipate increased emphasis on experiential rewards in the coming year, while the attention of the corporate audience is on gift cards. There is across-the-board optimism, with expectations of increased usage in every award category with each audience.
Corporate
Supplier
Third Party
63% 56%
36%
37% 32%
26%
22%
15%
MER CHANDI SE
18%
21%
21%
13% 10%
IN D IV ID UA L TR AVE L PACK AG E S
In the coming year, do you generally anticipate your/your clients’ use of the following reward types will increase, decrease, or remain unchanged? (Significant increase + Moderate increase) LESS (Significant + Moderate decrease)
38% 33%
10%
E XP E RIE N TIAL RE WAR DS
G IFT C A RD S 36
MERCH
Average Per-Person Spend 0-$50
Almost half of the incentives industry has an average per-person non-cash reward spend of $250 or less. This is consistent with the results from Fall 2014 but a decrease from Fall 2015.
$51-100
$101-200
$201-250
$251-500
$501-1000
$1001-5000
Over $5000
$1-$250 = 47%
57%
48%
Average = $420
$600
$525
The average per-person spend for Fall 2016 is $420, a decrease from $600 in 2015.
26%
23% 12%
17%15% 10% 9%
3%
23%23%
22% 19%
11% 1%
FA LL 2016 What is the average per-person rewards spend for your/your clients’ non-cash reward and recognition programs?
16% 12%
12% 3%
1% FA LL 2 0 1 5
22%
6% 2%
1% FAL L 2 0 1 4
37
MERCH
Programs Include Non-U.S. Participants 82%
Three-quarters of the incentives industry includes international participants in the non-cash rewards programs they operate. On the corporate side, more than half of program managers have an international audience. Canada and Mexico are the most common regions on the corporate side, with Europe and Asia also prevalent on the provider side. All regions are at least moderately represented in the industry.
CANADA 78%
Total
75%
55%
59% 55%
45% 46% 37%
SOUTH AMERICA
27% 23%
CENTRAL AMERICA
Supplier
81%
CARIBBEAN
18%
38% 34% 33%
MIDDLE EAST
84%
AFRICA
15%
15%
Total
Do your/your clients’ reward and recognition programs include participants outside of the U.S.? Please indicate which geographic regions your/your clients’ non-U.S. participants are in. Check all that apply.
57% 55%
69% 69%
59%
45%
36% 33% 33%
Third Party
62%
MEXICO
ASIA
Corporate
63%
36%
EUROPE
91% 92%
46%
23% 27% 24% 22% 27% 22% Corporate
Supplier
Third Party
38
MERCH
Use of Partners (Direct Working Relationship)
None 10% Supplier (i.e. for branded merchandise, gift cards) 40%
Corporate buyers are frequently working directly with suppliers, either independently (40%) or in partnership with a third party provider (40%). Both 40%
For your non-cash reward and recognition programs, do you work directly with… Base: Corporate buyers
Third Party (i.e. incentive company, agency, consultant) 10%
39
General Program Outlook
theIRF.org
40
GENERAL
Program Enhancements 47%
SOCIAL MEDIA TO COMMUNICATE PROGRAM BEFORE/DURING/AFTER
Social media as a communication platform is the most prevalent enhancement used by corporate buyers. Mobile apps have a strong presence across the industry, but have not reached critical mass at the buyer level. CSR components are also common, particularly on the provider side.
26%
MOBILE APP
32%
CORPORATE SOCIAL RESPONSIBILITY COMPONENTS
SOCIAL RECOGNITION
21% 26% 27%
GAMING OR GAMIFICATION TECHNIQUES
INTEGRATION WITH SALES MANAGEMENT TOOLS (SALESFORCE.COM)
Social recognition, gamification, and CRM integration are less common but are still established enhancements, while virtual has a very low uptake in the market.
OTHER VIRTUAL ELEMENTS
VIRTUAL REALITY
NONE OF THE ABOVE
Total
Corporate
Supplier
Are you/your clients using any of the following as part of your incentive travel and non-cash reward and recognition programs(s)? Check all that apply.
62% 66% 62% 60% 61% 67% 56% 61% 58%
39% 43% 40% 38% 47%
34% 21% 30% 38% 7% 5% 9% 6% 6% 5% 4% 7% 7% 16% 4% 7% Third Party
41
GENERAL
Typical Length of Travel/Merch Program
The most common length of an incentive travel or merchandise program is 12 months. However, more than a third of the industry (39%) reports typical programs are 6 months or less, with 17% indicating programs are most commonly 1 month or less.
94%
100%
44% 39% 28% 17% 11% 11%
6%
11%
11%
6%
50%
6%
Less than 1 month
1 month
3 months
6 months
9 months
12 months
Longer than 18 months
Percent theIRF.org
What is the typical program length for your/your clients’ incentive travel or non-cash reward and recognition program(s)?
Cumulative 42
GENERAL
Program Measurement 71% 68% 72%
PROGRAM-SPECIFIC PARTICIPANT FEEDBACK (SURVEYS, FOCUS GROUPS, ETC.)
62% 47%
FINANCIAL ASSESSMENT (ROI, ETC.)
65%
All corporate buyers and the vast majority of third party providers measure the success of their incentive travel and non-cash rewards programs. Most commonly-used, particularly on the corporate side, is participant research. All of the methods queried have strong use in the marketplace.
60% 53% 62%
GENERAL MORALE AND ENTHUSIASM
58% 32%
TOP-LINE SALES
63% 55% 42%
ACHIEVING PROGRAM BUDGET
58% OTHER
4% 5% 4%
DON'T MEASURE PROGRAMS
4% 0% 5%
Total Which of the below are generally used to measure the success of your/your clients’ program(s)? Choose all that apply.
Corporate
Third Party 43
GENERAL
Analysis and Adjustment Frequency Results Analyzed
50%
Program analysis is most typically done monthly (50%), with 22% of the industry reporting that the most common analysis cadence is annual.
11% EVERY WEEK
Despite the prevalence of monthly analysis, adjustments to program design based on the results of that analysis happen less frequently, most typically on an annual basis (50%).
22%
17%
EVERY MONTH
EVERY QUARTER
ANNUALLY
Adjust Design Based on Analysis
50% 33% 6% EVERY MONTH
EVERY QUARTER
ANNUALLY
During your/your clients’ most typical incentive travel or non-cash reward and recognition program, how often are results analyzed and reviewed?
6%
6%
ONLY AS REQUESTED BY MANAGEMENT
NEVER
44
GENERAL
Cancelled a Travel/Merch Program Past 12 Mos.
DK/NA 23%
DK/NA 11%
DK/NA 14%
DK/NA 45%
About 1 in 10 corporate buyers and 1 in 4 providers has had to cancel an incentive travel or merchandise program in the past year.
No 52%
No 60%
No 79% No 29%
Yes 25%
TOTA L In the past year, have you/your clients discontinued any incentive travel or merchandise/gift card program(s)?
Yes 27%
Yes 26%
SU PPL IE R
TH IRD PAR T Y
Yes 11% COR POR ATE
45
GENERAL
Top Reason Program Discontinued 37% 50%
NO BUDGET
The most common cause of cancellation on the supplier side is lack of budget, while third party service providers indicate that loss of executive support is the key reason for discontinuing a program.
30% 28% LOST EXECUTIVE SUPPORT
41%
Within the “other” responses, several pointed to DOL or regulatory challenges, as well as restructuring or M&A activity.
*The sample size for the corporate audience is not sufficient to report.
OTHER
14% 14% 15%
LACK OF RESULTS
14% 7% 15%
PROGRAM ACHIEVED OBJECTIVES AND IS NO LONGER NEEDED
Total
What is the top reason for discontinuing the program?
7%
Supplier
2% 7% 0%
Third Party 46
GENERAL
Overall Outlook 76% 83%
MY COMPANY WILL HAVE STRONG FINANCIAL PERFORMANCE NEXT YEAR.
80%
Industry stakeholders expect the financial performance of their own firms to be strong in the coming year, despite a somewhat less-optimistic outlook for the economy. The regulatory environment makes it challenging to be knowledgeable about requirements that impact their incentives programs. Industry stakeholders are more concerned about overall design considerations and somewhat less so about speed to launch or change programs.
65% 47% 61% 54%
U.S. ECONOMIC OUTLOOK IS STRONG.
41% 68% 53%
IT IS DIFFICULT TO STAY INFORMED ABOUT ALL OF THE FEDERAL, STATE, AND INDUSTRY REGULATIONS THAT IMPACT OUR PROGRAMS.
67% 71% 47% 42%
THE REGULATORY ENVIRONMENT MAKES IT DIFFICULT TO QUICKLY LAUNCH OR MAKE CHANGES TO PROGRAMS.
56% 44% 58% 53%
GOVERNMENT REGULATIONS ARE MAKING IT MORE DIFFICULT TO DESIGN REWARD AND RECOGNITION PROGRAMS.
NOTE: Results represent sentiment pre-2016 U.S. Presidential election
Looking ahead to the next year, to what extent do you agree with the statements below?
67% 55%
Total
Corporate
Supplier
Third Party 47
