Non-Cash Incentives Growing in Popularity

December 5, 2003 ( - Employers looking for a quick way to workers' hearts may want to rely more on merchandise like pens, books, and apparel rather than bonuses, a new survey said.

In fact, according to the Incentive Federation survey, nearly seven in 10 executives surveyed said bonuses could actually hurt workforce morale if they are not paid or are not large enough, according to a report in Primedia Business Magazines.

Generally, despite the economic downturn, the survey shows that companies are spending more on incentive merchandise per recipient and including more people in their incentive programs compared to the group’s last survey in 1999.

Companies listed a variety of uses for their incentive merchandise and travel:

  • 82% use them for sales incentives (up from 78%)
  • 77% use them for consumer promotions (compared to 66% in 1999)
  • 67% use them for nonsales employee recognition (up from 61%)
  • 57% use them for dealer incentives (up from 48%).

Individual domestic travel was the most popular choice for consumer promotions, while group domestic travel is the hot item for sales and dealer incentives.

The most popular merchandise awards were:

  • apparel
  • clocks
  • watches
  • desk accessories
  • food and beverage
  • gift certificates
  • plaques and trophies
  • tools
  • writing instruments.

Gift certificates, especially for consumer promotions, and sales andnonsalesincentives are expected to be hot in the future, while, o n the merchandise side, plaques, trophies, and apparel for all uses will be popular. Also, writing instruments are expected to grow faster than any other gift category.

On the travel side, individual incentives to domestic locations are expected to grow fastest, especially for nonsales uses.

Another trend that shows significant growth is the use of the Internet to run incentive programs, according to the survey. Some 15% of respondents said they have used the Internet for programs, up from only 4% in 1999.

Three out of four (76%) said they base their sales improvement quotas on previous sales for the duration of the program and 61% base quotas on sales forecasts. The most common criterion for judging the success of a sales incentive was by total units sold. Other popular criteria included profits on incremental sales, increased market share, and cost as a percentage of incremental sales. The majority of the responding companies run five sales incentives per year and three dealer incentives with such programs running an average of five to six months.

The Incentive Federation study targeted 600 executives in the manufacturing, services, finance, insurance, transportation, and communications industries. For more information, visit .