Achievers, Jeff Cates
Appreciation at Work, Dr. Paul White
Augeo Marketing, Juli Gilbert
Creative Group Inc., Melissa Van Dyke
EGR International, Jenni Smith
Extu, Alli Campofranco
Richard Garlick & Associates, Rick Garlick
HMI, a 360insights company, Lincoln Smith
Incentco, Gerry Wiatrowski
Inspirus, Tatiana Frierson
Luxe Incentives, Jacque Busby
Next Level Performance, Susan Adams
One10, Richelle Suver
Partners for Incentives, Mary Anne Comotto
Worktango, Rob Catalano
Click here for links to RRN Preferred Solution Providers.
The incentive, rewards and recognition industry appears set for another year of growth, based on the latest surveys from the Incentive Research Foundation. RRN reached out to the CEOs of about 50 incentive, rewards, and recognition companies and heard back from these organizations for their views on the state of the market. Based on memberships in industry organizations, web searches, and market reports by various media, there are probably no more than about 100 companies that focus specifically on supplying incentive, recognition reward technologies and programs in the US, as opposed to companies that only supply rewards, and perhaps several thousand independent promotional or human resources advisory firms that bring these solutions to their clients.
Note that this report is based on human intelligence; no artificial intelligence was utilized in this analysis.
Summary of Insights
Here’s a summary of the key insights you’ll find from the companies contributing to this report.
- Employee and channel partner engagement challenges facing many industries remain key market opportunities; election uncertainties and high costs remain potential headwinds.
- Employee reward and technology programs at large companies were affected last year by the same trends that held up other technology investments and may have resulted in more switching than new business opportunities. Sales and channel engagement expenditures appear to have been more robust last year.
- Program design and measurement are increasingly important differentiators amid commoditization of technology and rewards.
- AI will have a significant impact, starting with reward presentation and selection, text prompts or other suggestions, and program analysis and reporting.
- The middle market, especially for channel and sales program, is considered an area ripe for growth and will be a new focus for some companies.
- A big opportunity is to employ an enterprise engagement approach that integrates and aligns the organization’s goals across all platforms, digital, face-to-face, three dimensional.
- The need and challenges of getting and keeping peoples’ attention remain a powerful driver for use of group meetings and incentive travel.
- Individual and personalized experiences have become critical, as has a more tiered approach to recognizing accomplishment that spreads out the impact of rewards to a broader part of the organization.
- Today’s program administrators have far more command of technology and wish to take on more program management functions than in the past.
- Companies and their stakeholders seek a seamless engagement technology solution.
- The industry may be in a period of transition as some hope the current business model making money on rewards will continue as is, while others increasingly wonder about the sustainability of the current approach, and a few take concrete steps to more effectively demonstrate how they create value in new ways.
- Sustainability and reporting are a growing issue with greater demands for detail on practices and metrics coming from large companies and especially those based in Europe.
Achievers, Jeff Cates, CEO
Key insights: The focus is on designing programs with better use of data to provide more frequent positive nudges with employees and managers at all levels, supported by a wide choice of enriching global reward experiences.
Overall, 2023 was a year in which a lot of the industry activity was focused on companies switching providers rather than new growth. It has been more difficult for human resources to get support for investments. The mid-market continues to be strong, and we are seeing more interest in global programs.
Recognition is getting more science behind it to demonstrate to management the power of positive reinforcement. Organizations are starting to think about this more strategically, so much so that we have started putting more analytics into showing the impact on productivity, same store sales, and other goals, and we have data showing the level of attrition relative to recognition frequency. This helps to create the energy necessary to support more managers to engage in recognizing people. We can see when team managers aren’t recognizing people and can use that information to encourage them to get more involved.
Clients today have higher expectations and are looking for ways to make tangible impacts on their goals and objectives. It’s in our own self-interest to get them data. Our focus is on recognition frequency, and we have solid data on the impact. Look at your current data. The data speaks for itself. That’s how we are winning switcher deals. Much of our competition has reward programs with business models still focused on monetizing rewards. We are looking at whether people are using the program; the satisfaction scores of members, and those of administrators. If members are happy and using the program, and if they are focused on goals, you will get the outcomes you are looking for.
Our acquisition of the TemboSocial feedback group took us into the employee voice space. We’re thinking of synergies where our processes of positive reinforcement and nudging can solve other problems, such as hiring, learning and development, and even compliance. How do we take the benefits of positive reinforcement and micro-nudging to other company problems?”
Rewards have a role, but you want to be strategic. Some of our competitors recommend setting aside 2% of payroll for rewards. We don’t say that, and the rewards given on our platform don’t even show up in the social feeds when people give recognition. We believe frequent recognition is a more effective way to keep people engaged. Nonetheless, as a competitive differentiator, reward platforms remain super powerful. If you are a global organization, you need to have an exceptional reward experience around the world with fresh and enriching options.
As much as I think our technology is great and usage is up, the most important factor is the design and implementation of programs. The secret sauce is being able to show clients that the programs are achieving their objectives.
AI will be transformational over the long term. In the meantime, there are practical applications of the technology to help remove the anxiety some people experience when posting recognition comments on social feeds or by warning someone of a post that might be culturally inappropriate.
Appreciation at Work, Dr. Paul White, President
Key insights. CEO commitment to a positive culture, supported with a strategic system and technology, impact measurement, and continuous improvement yield the most sustainable results. Without addressing fundamental culture issues, recognition, points programs, and technology have little chance of making a sustainable impact.
From what I see, the incentive and recognition companies are moving in one of three directions.
1. Stay the course. The companies that make money providing rewards track the Internet for the latest hot topics, such as quiet quitting, burnout, work-life balance, remote work, authenticity etc., and then figure out how to position their services to address those topics.
2. Another group has a sense of confusion about how to proceed. Research shows that whatever is being done in rewards and recognition isn’t helping to improve engagement, but this group of companies isn’t sure what to do and is hoping that everything will just work out.
3. A smaller group realizes that something isn’t working and is beginning to regroup.
In the meantime, senior management, HR professionals and mid-level managers are getting heat from front-line supervisors and employees. They are being told that something must be done, but just doing points, badges, and peer to peer recognition doesn’t alone address the fundamental reasons by people engage or not. Many are still focusing on behaviors and outcomes, but that is insufficient until you focus on employees as people. Until then, there will be more floundering. There is a difference between looking at an issue that technology can help address, such as improving information sharing, versus taking what you are already doing and making it digital. If the program wasn’t working without the technology, what would technology change? The early adopters of peer-to-peer technology are beginning to see that a lot of it is fluff unless more fundamental issues get addressed as part of the overall effort to engage people. Getting a happy face for a good job just isn’t enough.
Success starts with the CEO, who needs to lead the establishment of the vision and core values for the company. It could be something as simple as “We’re going to provide great products and services at a reasonable price and treat all our stakeholders well.” Look at the companies with a clear vision—they generally have a long-term view. If we say we need to do things right and we treat people right, that needs to be verbalized and modeled throughout the organization, not just on the wall with posters. People must know that the organization’s purpose and core values are the guideposts for making key decisions. So, when people interact with their teams, it’s not only about discussing the tasks but also about communicating values, getting to know one another better and gaining a greater understanding of the inter-relationships between processes and stakeholders at work.
Just as importantly is measuring impact. If we are using engagement technology and recognition programs, how are those efforts affecting the organization’s purpose, goals, and objectives? There is every indication that more companies are taking a hard look at the money they are spending on these programs, and anyone confident in their effectiveness should welcome that scrutiny.
Augeo Marketing, Juli Gilbert, Chief Marketing Officer
Key insights. The big opportunity is to understand and develop an engagement eco-system across the enterprise, enhance impact measurement, and to use AI authentically to address inefficiencies and enhance experiences and personalization.
The way we are thinking about incentives, recognition, loyalty, it’s about a central focus on engagement with loyalty, business to business (B2B), and employee programs—we think about it in the context of the entire engagement eco system. The pace of change is speeding up. We see marketing and HR working together to create digital experiences and new communications strategies. Marketing has become more involved with HR to leverage that experience. This is equally true in B2B and the HR space. We’re partnering with data companies, simplifying processes for clients, and meeting people where they are.
We are seeing much more emphasis on measurement of impact. In the past, we have seen people consume data in terms of what is happening today. We are now looking much deeper. Why is it happening? What could happen tomorrow? How is it changing year to year? How are we involving our employees, channel partners, and how does what we’re doing benchmark with other organizations? It’s way more than telling me what’s happening. It’s about asking for those additional insights. There is a greater cross-dimensional approach to data to create something more meaningful so that we can better predict the future or redefine experiences.
With some global organizations going through layoffs, employee stress is higher than ever, and employees are feeling more pressure with fewer resources. As a result, recognition and incentives are more important than ever to retain employees and address productivity, quality, and tenure. We are looking at how to authentically leverage AI to address inefficiencies, enhance experiences, and better correlate information, while also recognizing what is an acceptable use of it.
Within our experiential business, we are leveraging technologies of all forms to create connection and engagement. When someone is walking into an event, how do we create more guided personalization and one-to-one experiences. Because of technology we can now leverage, we are creating a new dynamic about how we approach design and strategy. We are finding more and more ways to make connections.
We are looking at all the ways we can leverage sustainability across all initiatives. If we are planning a program in person, we first ask, why are we in person? Let’s make sure that what they are doing can’t be done virtually or via a hybrid meeting. People’s time is valuable. Make it meaningful.
Disclosures have evolved over time. The questions we’ve been asked about sustainability and DEI (diversity, equity, and including) used to be more broad and less detailed. Over the last 12 months, those questions are getting more detailed. They want to know more about us, our initiatives on DEI and sustainability.
The mid-market is an area ripe for growth but requires a different approach more tailored to the eco-systems of smaller companies.
Creative Group Inc., Melissa Van Dyke, Senior Vice President
Key insights. The need to get and keep attention has become a major challenge. Properly architected, face-to-face experiences not only get attention, they help create content that can be used across platforms to effectively tell an organization’s story to all stakeholders throughout the year.
A lot of factors suggest continued growth this year, but that is tempered certainly by headwinds from costs and potentially election year volatility. Even with a greater chance of a soft landing, there is still some hesitancy. On the other hand, the GDP (gross domestic product) growth is positive, unemployment is low, and at higher income levels, the savings rate is still high. I would expect growth this year. The question will be how much.
On the travel side, last year was a very good year. We didn’t have a Covid virus to affect us that had held over into 2022. I would say it’s almost a full recovery from 2020. We see individual travel as very important for the second-tier achiever, as well as our merchandise and gift card offerings. What I feel especially positive about is not just the rewards themselves but the nudges and structure of the programs that get us there. We are trying to create meaning around the award itself, so that it’s not just considered a driver but an experience. We can never forget the people we are creating the experiences for, especially coming out of the pandemic. There is a greater need than ever to create a culture reinforced through shared experiences and better ways to express appreciation than just compensation. There are so many opportunities for this industry.
Helping organizations build culture and tell their story is getting harder. There is a role for strategy change, more systematically nudging individuals along their performance paths, changing behaviors to support strategic goals. It’s about better utilizing the organization’s content across all platforms, so that the content from a meeting or incentive program extends to all relevant people across the year. How do you get peoples’ attention and keep it? We are in effect attention architects.
As a company that has always had a focus on channel programs, our performance solutions support another growing area, and that is the need to support the distribution eco-system of manufacturers across all their channel partners, wholesalers, retailers, and all their employees.
When you think of a black swan event such as Covid that disrupts a business to its core, that propels companies to think of their activities such as rewards and recognition differently. It’s incumbent on all of us in the industry to use all the research and methodologies to help organizations better calibrate these efforts to achieve their goals. There’s tremendous expertise in our industry and there are more clients interested in how to optimize the use of their assets to achieve their goals. They are more interested in case studies. With this comes potentially a greater willingness to pay for this expertise.
The European Union Corporate Sustainability Reporting law only affects some of our clients, but the need to tell a sustainability story is growing for many others as well.
EGR International, Jenni Smith, Chief Operating Officer
Key insights. Rewards and recognition are being transformed by the need to provide opportunities for people to reset and recharge, with more flexible reward structures and more tiers, with AI providing new opportunities for personalization.
Across industries, the decentralized workforce has highlighted the need for meaningful, individualized incentives and recognition. A person’s mental and physical health has always been a cornerstone of a successful work environment, but the continued de-stigmatization of a focus on personal needs and well-being–coupled with the difficulties of the Covd pandemic and recent inflation hikes–has redefined truly valuable, individualized incentives. Incentive and loyalty programs that provide opportunities to reset and recharge are highly prized. Participants appreciate the chance to customize these opportunities to suit their needs and individual relaxation styles.
Overall, we see a trend of organizations embracing flexible incentive reward structures to meet the diverse needs and preferences of employees and channel partners, whether in the form of personalized gift cards, unique and tailored experiences, or additional paid time off to enjoy individually. Incentive and loyalty program providers should be ready to accommodate a much wider range of client requests and work to stay current on new and exciting experiences available across budget points, to ensure that every client is provided with plenty of options to offer their program participants.
In an ongoing trend, remote and hybrid work continues to create unique challenges and opportunities for companies wishing to recognize the everyday milestones and achievements of employees and channel partners. Technology has enabled companies to continue to recognize and incentivize from a distance. Specifically, post-pandemic advancements in AI have been a boon to organizations wishing to maintain high levels of personalization, segment content intelligently, and provide consistent, individualized content for both learning and recognition. As the nature of work continues to evolve, smart organizations will tap into unique strategies that foster engagement, increase employee morale, and set themselves up for success as we continue forward in the remote and hybrid work landscape, and incentive and reward program providers must be able to meet the changing expectations of these organizations.
Extu, Alli Campofranco, Director of Marketing
Key insights. Gaining market share, navigating complex supply chains, security, and program analytics and measurement will be key factors for channel engagement; reward preferences may begin to shift more toward luxury after a period in which inflation drove interest in gift cards.
In 2023, the recognition business witnessed a notable shift, with a decreased emphasis on merchandise rewards and a growing preference for gift cards. This trend was largely driven by inflation and the escalating cost of goods, compelling people to use their rewards pragmatically to alleviate everyday financial pressures. Rather than indulging in luxury items, there was a necessary turn towards essentials.
Looking ahead to 2024, an election year often heralds greater economic stability and potential improvement. It's anticipated that gift cards will remain popular, but the focus may shift towards more leisure-oriented rewards like travel and unique experiences.
Companies must continue leveraging data to inform their strategies, ensuring that rewards remain appealing and relevant. Creativity in reward options will be key to maintaining engagement and aligning with the changing priorities and lifestyles of participants.
In the landscape of reward and recognition programs, the greatest challenge remains the lack of clarity and visibility within channel activities. This obscurity extends to engagement rates in these programs, which are notably low. A critical question arises: with the saturation of reward programs among resellers, how can a program stand out to retain market share and foster customer loyalty?
A key area of growth lies in differentiation and effective engagement strategies. Programs must be innovative to capture attention in a crowded market. Meanwhile, there's a discernible market weakness in tracking and demonstrating the return on investment and other success metrics. Company executives now demand concrete data to justify continued investment in these programs. Addressing this gap in quantifiable success measurement is essential for the sustainability and growth of incentive programs.
The future success of these programs hinges on their ability to adapt and prove their value in a data-driven business environment.
Some of the key challenges we’ve seen B2B companies face are gaining market share, complex supply chains, and ensuring robust security.
First up, gaining market share. The challenge here is the competition is also offering attractive incentives to maintain reseller loyalty – everyone is aiming to achieve the same goal. Our response? Develop unique, value-driven incentive programs. It's crucial to understand and fulfill reseller needs and foster strong, trust-based relationships. We’ve seen companies seek out our guidance on what they can do differently, how they can stand out amongst their competition, with regards to their own loyalty program, and continue to gain market share.
Next, they face navigating complex supply chains. The ongoing issue is supply chain disruptions affecting product availability for our resellers. Our advice here is to make sure you’re not encouraging resellers to promote a product that they are struggling to keep in stock. Overpromising and under-delivering is not a path to success. Creating promotions that are realistic will earn trust and set your resellers up for success.
Lastly, there's the ever-important issue of ensuring robust security. With growing concerns about data security in the B2B network, we're seeing our clients and prospects take a more vested interest in our security and that of their solution providers. Making sure that we are secure is our top priority, because we know our clients’ (and their participants’) security relies on it. Clients understand that your security is only as strong as your ‘weakest link’, so they are more proactive towards keeping their supply chain strong and secure.
When it comes to the challenges we're seeing, our partners are first and foremost focused on figuring out how to tackle these issues head-on and find their way around them. That's their starting point. Then, naturally, their eyes turn to ROI – it's definitely high up on their list of priorities. What's really interesting, especially in the channel marketplace, is that getting a clear picture of ROI can be pretty tricky. A lot of companies struggle to measure it effectively because they're missing crucial end-user data that shows the real value of what they're doing. This is a common hurdle for channel companies, whose solutions often look like a jigsaw puzzle of different tools, solutions, and data sets. It can get a bit messy.
In the rapidly evolving landscape of technology, especially within B2B companies, there's a notable shift towards integrating diverse tech solutions. This integration is crucial for both sales and non-sales employees, addressing the complexity brought by the vast array of available technologies. Companies are increasingly seeking "one-stop shop" solutions to streamline processes, reduce overheads, and enhance efficiency. And of course, you can’t discuss technological changes without mentioning AI, in all shapes and forms. Everyone’s talking about it, but most people aren’t quite sure how to harness its power.
In 2024, the trends in rewards and travel experiences are poised for a significant shift. With expectations of a more stable financial year, there's anticipated growth in luxury spending and a greater inclination towards novelty rewards. This marks a contrast from 2023, where the increase in gift card redemptions predominantly addressed essential needs, a reflection of the inflationary pressures and rising costs of goods. The coming year is likely to see a resurgence in more indulgent spending, with travel playing a key role. This shift towards frivolous spending suggests a renewed appetite for experiences over material goods, likely driving a renewed interest in unique and memorable travel opportunities.
In the evolving realm of incentive programs, there's a growing demand for specialized services, particularly in communication and engagement strategies.
Companies are recognizing the intricacies of maintaining a robust recognition program and seek expertise in effectively connecting with and consistently engaging their participants. This need mirrors the importance of staying top of mind with customers, extending to resellers amidst competition from programs with extensive reward offerings. Given this trend, a potential model for charging could be structured around these professional services, offering tailored communication and engagement solutions to enhance the impact and visibility of recognition programs.
Richard Garlick & Associates, Rick Garlick, Principal Consultant
Key insights. Demand will continue to grow for meaningful program design, implementation, and measurement, which could become a serious competitive differentiator in the coming years.
There is going to be greater emphasis on program design. Instead of being order takers, or talking about their catalogs or their technologies, incentive and recognition companies are going to have to focus more on meaningful results. It’s all about the evolution of competition. If you are a commodity, and all you sell are widgets and it’s about who’s got the best deal or relationships, that’s not really a sustainable competitive advantage anymore. Every profession needs to evolve this way. Early accounting firms gradually evolved into full-service management consulting companies. Same with market research firms. The same will have to happen with incentive and recognition companies because organizations are going beyond transactional thinking to consider the program design and the actual impact these programs are having.
This is the industry’s new frontier. Helping people design great programs. It’s not just about hitting your sales quota or safety goals. How did you do it? What makes you want to do it and what tools could help you or others continue to achieve those goals?
HMI, a 360insights company—Lincoln Smith, Chief Strategy Officer
Key insights. Customers are looking for greater alignment of strategies and technologies, with more emphasis on ROI impact measurement; personalization, and looking at engagement holistically across all touchpoints.
People are understanding the importance of personalized recognition and engagement more and more. For some programs, the reward may not be as important as the quality of your engagement throughout and how you recognize your audience.
Biggest areas of growth include:
- Creating an ecosystem for customer and partner experience front-to-back. Providing a single digital location for selling, buying, and engagement will be the new marketplace.
- Shrinking budgets in 2024 and beyond. As the economy struggles globally, we might see some people pulling back.
ROI has always been a focus for our organization and has been a struggle for many organizations. However, with heightened reporting capabilities and partnering with performance improvement specialists, you can design and measure programs that produce an ROI.
Over the years, the number of tools and technologies that we use has reached a critical mass. I believe people will start looking to consolidate technology. We’ll eventually move to a more concise technology stack, which puts pressure on that technology to be very powerful.
Hyper-personalization will continue to be important, but the relationship-building aspect will also take center stage. Smaller, less spread-out events and ways to engage will be a good way to keep up relationship touch points between large travel programs.
A hybrid billing model may become more common. For instance, points billing may take a back seat to licensing or service fees. As the technology becomes more robust, it will be important that it meets the new standards that are expected of it. This will cost time, money, and effort.
Incentco, Gerry Wiatrowski, Co-Founder
Key insights: The biggest opportunity is to bring enterprise engagement solutions to the large, overlooked mid-market by providing easy to launch and maintain programs focused on specific goals that can be scaled as organizations see success.
We already know from personal experience that the major untapped market for our mid-market engagement technology are the 200,000 companies or so, not to mention non-governmental organizations, with annual revenues of between $10 million and $1 billion. These companies have the same needs as any large company to engage their employees, customers, distribution partners or other stakeholders in what they are trying to accomplish, whether that be through communications, surveys and feedback, points programs, recognition, or other reinforcements.
Because motivating people can be complex and at the same time many people have little experience in designing incentive programs, we have seen that it’s critical to keep it simple for most mid-size companies. To do that, you focus on specific goals, such as referrals, reviews, or suggestions, or perhaps a sales contest, or a renewal incentive. As people see success in one area, and maybe learn from some mistakes, they venture into other applications, such as promoting safety or wellness, or even getting more people to come into the office more often.
Finally, and maybe most importantly, I think many legacy technology companies are built on the assumption that the customer doesn’t want to have anything to do with managing the software beyond perhaps approving an award and posting a congratulatory comment. With so many young people in the workforce today, more companies want to have more control over the technology in terms of day-to -day communications, surveys, or other administration. Our focus is to make it fast and easy for them to do so.
Inspirus, Tatiana Frierson, CEO
Key insights. The need to address retention and engagement will continue to drive growth, with a growing demand for ROI and impact measurement, as well as a greater emphasis on the employee experience.
We see continued growth in the market. The effects of the Covid hangover is beginning to dissipate and we’re seeing a big shift in organizations that are trying to optimize employee engagement within the modern workforce, while also looking for ways to increase employee retention in a competitive job market. In 2024, the focus on employee experience remains a key priority as reported by Everest.
Employee engagement, retention, and experience solutions/strategies remain the prime opportunities. We are continuing to see retention and engagement challenges in the market as well as employee burnout.
Programs must have a return on investment, an impact on retention, improved engagement, and overall business outcomes. Additionally, there are tougher metrics to measure such as improving organizational culture and employee happiness, all of which have impacts to the bottom line. Inspirus has strategically partnered with The Happiness Index – which unlike the other survey providers – focuses on happiness and its connection to recognition and engagement.
On average, employees could have as many as 80+ apps on their desktop--there is a shift where platforms need to be embedded in the platforms that they do business every day. So integration with Teams or Slack are becoming a top of mind requirement. Additionally, from a recognition standpoint, it’s important to ensure that all recognition feels genuine and meaningful, not prompted or suggested (AI could be negative on this front).
There is greater demand for more gift options as well as experiences and customization; gifts that are tailored to each individual interest or hobby or demand. While there may be more opportunities for professional service fees related to measurement, but HR is a discretionary spend and in tough times gets put on the back burner. Also, many companies expect this service to be baked in.
Luxe Incentives, Jacque Busby, CEO
Key insights. The need to engage sales and non-sales employees and channel partners has never been greater, and mid-size companies are greatly underserved; technology makes it possible to extend the impact of live events throughout the year in multiple ways, and demand for measurement is growing.
After the challenges of Covid, the market looks strong for multiple reasons. The need to retain both employees and distribution partner customers has never been greater, and companies are looking for more measurable ways to do that. Because there are so few companies like ours, there are literally thousands of companies that need the services of experts to better align the interests of all their people.
While most of our competitors focus on the biggest companies, we help mid-size companies by providing them with Fortune 500 services in terms of program design, enterprise engagement technology, and face-to-face experiences, so that we can more seamlessly engage their key stakeholders throughout the year.
With the growing requests from our customers and prospects for more analytics and assistance with program design, an area we began to invest in over 20 years ago, we are well prepared to help the long-overlooked mid-size company market enjoy the benefits of having highly engaged and focused employees and distribution partners.
Key insights. Growth is being driven by the pressing need to engage employees and supply chains tempered only by high costs and some economic uncertainty; there is more use of tiered programs to reach more people and more emphasis on personalized group and individual reward experiences.
The incentive and recognition industry has experienced a period of intense growth and activity over the last 18 months, as client organizations have worked to engage dispersed workforces, re-build after pandemic disruptions, and focus teams on business goals during times of volatility in not only the general economy, but also the supply chain and credit markets. As incentives and recognition have proven to be essential and effective tools, business leaders have deployed programs, including communications and rewards, to keep their teams on track during tumultuous times.
With some notable downward pressures, such as the recent period of high inflation and conflicts in some parts of the world, the industry is experiencing a flattening of demand, but still at a very high level of activity. Programs are often now tiered with both points platforms and incentive travel, allowing clients to more nimbly shift between goals and budgets for each program. As we know from the Incentive Research Foundation’s 2020 Top Performer Study, the most successful organizations use incentive and recognition programs very intentionally to reach a broad, enterprise-wide audience, and we see that playing out today with strong results.
Many teams are now permanently dispersed, with companies hiring the right person for the job, regardless of location. Other companies are faced with large numbers of relatively new hires, having rebuilt their teams after pandemic layoffs or labor shortages. The importance of recognition and engagement programs in the 2024 workforce cannot be overstated. The incentive and recognition industry has a very important role to play in helping these organizations connect people to the company mission, reinforce training, and create social connections across the enterprise.
Organizations are using recognition and incentives to solve many business challenges. Of course, incentives have always been powerful motivators for sales initiatives. Now, we are seeing more programs designed to make sales and operations teams knowledgeable and efficient, as these are important competitive advantages. We are also seeing incentives linked to product knowledge used in meaningful ways to engage channel partners.
We have seen tremendous interest in incentive travel and experiences, both for individuals and for groups. A desire to travel farther and experience new destinations is also evident in the choices made by clients and individuals, although it remains to be seen if this will continue into 2024, given instability in some corners of the world. Recently the Incentive Research Foundation published Attendee Preferences for Incentive Travel, providing new insight into what is most likely to motivate employees and channel partners now. Among other factors, free time to enjoy a destination and a preference for programs that covered all expenses featured prominently, reflecting the on-going interest in all-inclusive properties and destinations with outdoor activity options. Cruises have also made a comeback with program participants, turning up as the third most desirable travel option.
There has also been recent research on Generational Expectations of Incentives that revealed strong preferences for gift cards and travel experiences across generations, with high earners–typically a company’s top performers–reporting “much greater openness to group travel” programs that also support an organization’s messaging and networking goals.
These results also support the growing need for a varied, tiered program, designed to inspire different kinds of people at different stages of their lives and careers. This is consistent with the changing needs of our clients here at Next Level, as we work collaboratively with them to connect company goals to personal interests throughout the career lifecycle.
One10, Richelle Suver, Chief Revenue Officer
Key insights. Despite economic and political uncertainties, the need to engage employees and channel partners promises continued growth; personalization, aided by AI, will be key. The biggest roadblock for many companies is to just getting started: start with a specific need.
Macro-economic factors are still at play in 2023. While supply chains have improved, there are still delays in specific sectors. The looming recession fears and inflation are still an influence on company decisions.
Despite those headwinds, companies in 2024 must continue to sell their goods and services, which makes the importance of a good incentive program a high priority for leading companies. In addition, data shows the employee workforce and culture have been proven to be improved through such recognition programs–including their mental health—and to reduce turnover.
It is critical that executives realize the hard and soft ROI that come as a result. For this reason, I think there will be more incentive and recognition programs in the coming months as a strategy to weather uncertain times.
I think program personalization and the use of AI will be more critical in 2024. First, in terms of personalization, program participants want to be seen. The world we live in today is full of experiences in which the brands we interact with, know who we are and what we like. For this reason, the average person expects this experience to carry over into their business lives also. Personalized programs and rewards are more engaging and successful. AI is a tool to facilitate this.
I don’t see the biggest pain being related to the solutions, but rather with the companies trying to decide on where to begin. Getting started is often the hardest part. It can be tempting to want to “boil the ocean” with an incentive or recognition program. Realistically it becomes much less daunting for the sponsor company and the supplier when they choose to pick a narrow focus and grow from there, as they learn from experience. You should set clear objectives at the start. From there measurement is simple.
With the majority of the US workforce between 25-39 years of age, there are a variety of differences in preferences at each stage of one’s career. Companies should be mindful of this and not have a “one size fits all” approach.
The world is changing at a more rapid pace than ever before. Technology is an enabler but not a silver bullet. Executives and companies must be able to make effective and quick decisions to stay current with market trends. I no longer feel the gap between B2B and B2C is as different as it was 10 or even five years ago. Our work and personal lives have become one in many ways and the B2B space will need to watch what happens in our consumer lives to stay relevant.
Partners for Incentives, Mary Anne Comotto, President
Key insights: The need to engage employees, channel partners, and customers continues to drive growth; promotional products distributors offer key access to the overlooked mid-size market and are expanding into new markets when they get the proper support.
Whatever people may be saying about fears of recession, business was up last year and continues to look positive for 2024. We have more customers, and more volume from current customers. I think the explanation is pretty clear that companies are facing unique competitive challenges not only with employee engagement and retention but also with distribution partners, and that our company's go-to-market strategy gives us access to customers overlooked by the largest industry solution providers. The key is to provide them with complete support, starting with the sales process all the way through billing and collections.
Since we sell almost exclusively through promotional distributors and related companies, we are impressed with their ability to identify opportunities. They are branching out from their traditional focus on employee recognition to bring in many more B2B loyalty programs. We’re seeing activity in all industries, carpeting, roofing, and home improvement where manufacturers are battling for market share.
We are in a different market than most other incentive and recognition company competitors because we only sell through our solution partners. In our case, though, we’re expected to handle everything from initial sales support to program design, implementation, reporting, and feedback, because promotional distributors simply are too busy to take over all these functions.
On the award side, our online travel booking program has been particularly strong and there appears to be an increase in more self-indulgent gifting after a period of people making more practical selections during the period of high inflation.
Key insights: After a slower 2023 in HR tech spending, employee engagement expenditures appear on the upswing, with a focus on ROI, building a more intentional culture with better leaders at all levels becoming critical issues.
The best way I can think about the state of the incentive, rewards, and recognition is cautiously optimistic for growth in 2024. Looking at IRR from an employee experience lens, if 2023 was any indicator of the decline in market growth, then it was one of the more challenging years in history for this space. Coupled with the fact that cuts to expenses were on the radar for many industries this past year, it has been more critical than ever to establish ROI.
That being said, the state of the space I believe is back on the upswing. Companies are starting to smartly refine and redirect spends in not only incentivizing and rewarding and recognizing employee behaviors, but also to achieve critical business results. Some of the trends include:
- Building a more intentional culture of recognition in order to build connections in remote/hybrid work and recognize and engage employees through challenging times where they are in many cases being asked to do more with less (and reinforce purpose and values). WorkTango is working to support companies in ensuring there are positive connections through technology; enabling more peer-to-peer and recognition versus structured and formal programs.
- Using data to make better business decisions. WorkTango is supporting integrated HR technologies to not only measure engagement, but have data in real-time to see influence of recognition, reward and incentive activities to measuring employee sentiment and the impact of these programs (and correlation to business results like customer satisfaction, profitability, etc,)
- Customers are continuing to find ways to engage and enable leaders as critical stakeholders. In uncertain markets and through organizational change, leaders are critical to success. WorkTango is helping by creating leadership tools to create their own incentives that are easy to manage for their teams, or enable recognition and rewards at a team level, as well as using data to nudge leaders with opportunities to engage their team further or amplify recognition of their teams to them they would otherwise not see.
I think that the trend of vendors focusing on mid-market tracks to what happens in challenging economic environments. Especially compared to enterprise, mid-market has more repeatable business, shorter sales cycles, and ability to see impact on sales and marketing investments.
As for channel engagement, that’s another trend. Companies are trying to build pipelines and support sales growth in a downward market when hiring new sales and marketing talent is a challenge. If there's a way to develop new sales channels without the added commitment and cost of bringing on talent, it becomes in many cases a win-win-win situation for channel partners and customers receiving multiple layers of expertise.
How RRN and Brand Media Coalition: Your Partner in Success in Incentives, Rewards, and Recognition
Published by the Enterprise Engagement Alliance at TheEEA.org
- The only weekly news, how-to and resource publication of record for the Incentive, Rewards, and Recognition field.
- The only marketing agency focusing specifically on the IRR and broader engagement marketplace.
- All the industry news, research, announcements, and how-to articles read by over 20,000 end-users in sales, marketing, and human resources; incentive, recognition, loyalty and promotional companies, as well as marketing and human resources agencies, seeking to enhance performance through effectively designed incentive programs.
- Unparalleled business development services for engagement, incentive and incentive travel, recognition firms; brands, gift cards and master fulfillment companies, and technology firms, featuring ROI-based business development strategy design and ongoing digital and social media and e-newsletter communications to help marketers profit in the coming era of cookie-less marketing.
- Unique abilities for solution providers to sponsor authoritative, evergreen content directly related to what they sell through the EEA’s Effective Practices series on articles in our media platforms.
- EEA YouTube Channel with over three dozen how-to and insight videos and growing with nearly 100 expert guests.
- Access to new technologies from EEA preferred solution providers enabling brands to create their own points-based or transactional redemption site.
- Unparalleled expertise in program design, return on investment measurement, reporting, and prescriptive analytics.