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Making the Right Choice Insight Into Trends That Impact Incentive Merchandise Selection By Catherine Eberlein Pfister
 It's a condition in which the total effect is greater than the sum of the individual effects. That's what the process of developing a successful reward and recognition program is all about. Each of the important, individual pieces interact with one another and produce something far greater than they could on their own.
One of those important, individual pieces is the selection of incentive merchandise—the items you choose to support these programs and to make them work well. What trends are happening that might affect your decisions? We've taken a wise tip from John Naisbitt, who said "Trends, like horses, are easier to ride in the direction they're going."
With that in mind, the intention of this trend brief is to provide some insight into the directions of different "horses" impacting the reward and recognition industry and how they translate into the types of incentive merchandise that will support program success.
Trend Direction: Promoting Health
If you haven't developed a wellness program at your organization yet, you need to get up to speed quickly. There has been a rapid rise in the number of employers offering wellness programs that are aimed at getting employees to better manage their health. What's more, these programs are expected to jump sharply in 2009, according to Watson Wyatt Worldwide, a global consulting firm, and the National Business Group on Health, a national nonprofit association of large employers.
Wellness programs came into being as a way to reduce staggering health care costs, and they are already showing returns in that area, along with increasing employee retention. This also falls in line with government programs aimed at ending nationwide obesity in both adults and kids.
"Employers view this as a big picture. They realize the broad power of targeted incentives in building a healthier and more productive workforce," said Tedd Nussbaum, Watson Wyatt's director of group and health care consulting in North America. "Financial incentives can be a valuable investment that provides that essential push. And the payoff from improved workforce health and productivity cannot be overstated."
Bruce Kelley, senior group and health care consultant at Watson Wyatt agrees. "Companies are targeting specific results with incentives that align their business goals and matter most to their employees," he said. "For these types of rewards to be effective, it's a matter of tailoring the incentive to the desired behavior and ensuring that employees are more involved in the process."
According to StayWell Health Management, incentives are successfully being used in health management programs in the following ways: Incentives are used to reward for completing a health assessment and used as a reward for completing related follow-up activities to the assessment. They are used in health behavior change programs such as in point systems that are tied to a menu of program activities. Incentives also are used to reward healthy behaviors, like attending classes, rather than reward health outcomes, such as weight loss.
Experts in this area said it's important to offer merchandise and other rewards that keep people motivated in the long term, because behavior cannot be changed in one day. Promotional items are kind of expected, but are a good idea to include.
Trend Direction: Talent Shortage
Corporations are facing a serious shortage of employee and management talent that could create knowledge gaps and derail growth strategies. Studies bear this out, but also point to the fact that companies aren't doing much about it. A 2008 study by Stanton Chase International reported that 94 percent of the 37,000 surveyed executives and managers believe there is a talent shortage, and 79 percent believe there is a moderate to significant gap between retiring baby boomers and younger generations when it comes to qualified leadership talent. Yet just 18 percent said their company had a plan in place.
"Companies are losing leaders at a much faster pace than they are producing them. More than 30 million managers and leaders will be retiring within the next five years," said Douglas R. Ready and Jay A. Conger in an MIT Sloan report. "To meet the challenge," their report added, "companies must rethink how they hire, train and reward their employees, placing those tasks at the heart of their business plans. In doing so, they have an opportunity to address all these separate problems with a unified plan, rather than waste time and resources attacking each of the issues individually."
A variety of sources point to the fact that strategic reward and recognition programs help companies to recruit, engage and retain qualified talent. Programs that recognize and reward both new and older employees on a frequent and consistent basis also correlate to stronger customer relationships and satisfaction, higher productivity and profits.
Trend Direction: Improving Safety
Recognition and merchandise rewards often are used to reinforce company workplace safety programs, which include a company's safety goals and initiatives. And according to the Occupational Safety & Health Administration (OSHA), rewards and recognition are a proven method for breaking through to employees to make sure that safety remains top-of-mind. OSHA finds that recognition establishes a culture in which employees themselves help to promote safety procedures while on the job. Recognizing safe working behavior among employees results in a more safety-conscious workforce.
Estimates of the economic impact of job-related injuries and illnesses—$150 billion per year—reflect the huge expenditure that can cripple businesses' operations and profitability.
Trend Direction: Green Is Good
Everyone—businesses, consumers and employees alike—is concerned about environmental issues. And savvy business leaders are responding with incentives that meet these concerns.
This can range from eco-friendly incentives that people can feel good about to working with brands/companies that have eco-friendly or green products, or use eco-friendly materials or practices.
"Global warming is obviously another topic that's in the news and because of that we are seeing more interest in environmentally friendly products and production methods." said Paul Cernohous, director of sales for Coleman Company Inc. "Many companies are committed to being environmentally responsible corporate citizens, looking for systems, ways to encourage conservation and reduce their impact on the environment."
"Eight in ten people believe it's important to buy from green companies and will spend more to do that," said Dana Slockbower, director of marketing for Rymax Marketing Services. Many of Rymax's corporate gifts and rewards clients are directly asking for help in this area to find green brands and green products. "A lot of event planners also want green products or eco-friendly gifts to give at meetings," Slockbower said. While gen X and gen Y seem to be the demographic groups most motivated by green messages, she said that such programs also reach across age groups and demographic boundaries to motivate people from all walks of life.
Trend Direction: Corporate Responsibility
"Many indicators point to the fact the corporate social responsibility (CSR) is a wise business strategy," said authors of "The Herman Trend Alert" and strategic business futurists, Roger Herman and Joyce Gioia. They expect corporate social responsibility to increase in importance, helping wise employers to recruit, engage, develop and retain employees.
In their book, How to Become an Employer of Choice, they discussed why people want to work for companies that are good corporate citizens. "We know that when employers give their people opportunities to make a difference that their workers feel more bonded to the organization."
Employers around the world are expressing their support for social causes and the environment. A recent study of managers in Fortune 500 companies conducted by Deloitte Service LLP in the United States found that 91 percent are looking at their pro bono community outreach to nonprofits and small businesses as a way to develop their employees' skills. According to Evan Hochberg, Deloitte's national director of community involvement, $100 billion is spent nationally on training and development every year, thus making volunteerism an attractive and less costly alternative.
As an incentive buyer you may be seeking ways to promote your own company's actions or to associate your company with others that do. Either way, the impact of the rewards chosen for your program can extend a bit further to benefit local or national causes. For example, you might choose to work with incentive merchandise suppliers that support or contribute to causes that are in keeping with your corporate responsibility objectives or that augment them in some way.
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Branded Merchandise Raises
Expectations and Value
Ultimately, whichever brands or products you choose for your program, know that branded merchandise serves to elevate both the recipients' expectations and the program's value.
"Branding in 21st century America is painfully obvious. As the incentive, corporate gifting and promotional product marketplaces evolve, the emergence of the brand becomes more and more important," said Mike Landry, director of special markets for Tumi. "In fact, brand often can be in a position to trump category and price point considerations."
He added, "In the branded world in which we live, the power of a brand to ratchet up a consumer's (or salesperson's, channel partner's or employee's) expectation level is indisputable. Brands have spent, in some cases, billions of dollars in advertising, trade promotion and retail presence to build their mind and market share in the public domain. This offers an opportunity for program planners to leverage that mind share equity."
"Brands play a clear role in the engagement, rewards and communication process, with a high perceived value," added Terry Markwart, Canon U.S.A. Inc. Program planners want to associate their company with good quality merchandise that has trophy value. Brand merchandise functions as a symbol of the recipient's success."
"There must be a good fit between the demographic of the program participant and the demographic of the brand being selected for the program," said Pete Mitchell, Samsonite Corp. "This doesn't mean it has to be a perfect fit but the recipient must be able to see the product as something that fits their lifestyle and something that they aspire to own."
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Trend Direction: Diversity
While it's not necessarily a new direction, companies are rather new to effectively addressing it. There's a new learning curve going on, and companies can't afford lots of trial and error.
The United States, in particular, is a melting pot like never before. This means teams composed of professionals from four generations and from many different cultural backgrounds. Many companies now face challenges to effectively motivate a workforce that spans the globe, telecommutes or is in the office just a couple of days a week.
"With four generations in the marketplace now, a well-structured award catalog should include items that will resonate with each generation and be culturally sensitive for a diverse audience as well," explained Michelle M. Smith, CPIM, CRP, vice president of business development for O.C. Tanner. "Traditionalists appreciate formal recognition programs that reflect the value of their extensive experience and lifetime of contributions to the organization. Baby boomers love awards that will indicate to peers that they are successful and have achieved status. Gen Xers value career training and innovative technology products. Finally, millennials like unique and hard-to-find items—especially if the product is altruistic in nature or reduces the stress in their lives."
Trend Direction: Work-Life Balance
Employees—especially those from younger generations—are looking for more balance. This supports people's desire to have opportunities to stay connected with family and friends—issues that are important to many employees, managers and consumers alike. Having time together is a strong element for families. Having a life away from work is important, too, especially to younger workers.
Interestingly enough, while workers want more work-life balance, recent studies show that they aren't taking vacations—that important time to relax, alleviate stress, connect with family and to return to work reenergized. While many now are taking "stay-cations" and doing day trips closer to home, a study by Expedia.com found that a third of employed Americans don't even take all of the vacation days they've been granted. Expedia said sometimes that's due to fears about leaving their jobs for a while and sometimes it's due to their own economic concerns. A Conference Board survey last April asked workers whether they planned to take a vacation over the recent summer months, and only 36 percent said they had such plans, the lowest figure since 1978.
Program planners need to look for incentives that provide opportunities to create or enhance the development of important friend and family connections, as well as incentives that encourage employees to take time off. Those incentives could range from items useful for making a great stay-cation—such as providing a gourmet dinner they can cook at home to customized apparel for the family that sports their stay-cation theme to outdoor and recreation items they can use close to home.
Trend Direction: Focus on the Individual
Reward and recognition programs are moving beyond one-size-fits-everyone-in-the-company approaches. Incentives need to have meaning for the individual recipient as well as tie into business strategy and reflect the corporate message. Studies have shown that receiving rewards and recognition that are not personally meaningful is no better than receiving none at all.
This makes it critical to know what individual employees want and to understand that their expectations are constantly evolving. Personalization has an impact. Paul Kiewiet, MAS, president of BrandKiwi, LLC put it this way: "Today it's not about what the actual product does—features and benefits—but what the product means. How it interacts with the recipient and how it reinforces their individuality and lifestyle."
"A common reward misstep is for buyers to select items that they like, regardless of how appropriate or how motivating the items will be for the program participants. As more managers are made responsible for employees of another generation or culture, this challenge will be with us for some time," added Smith of O.C. Tanner. "Planners need to ensure that their awards are meaningful for all program participants."
To that end, program planners need to ask suppliers about what tools they provide to help with selection—such as employee surveys and analysis—to uncover the right mix of recognition options for the right people. This helps you find out what will motivate individuals and how to make your programs more meaningful to a larger portion of participants. In addition, many merchandise and service suppliers offer Web-based tools for implementing, tracking, communicating, fulfilling and analyzing program results.
Evaluating Merchandise: What Makes a Good Fit?
Obviously there are lots of incentive merchandise categories from which to choose. Thousands of program planners and buyers (hopefully including you) will be investigating merchandise options and benefiting from educational sessions later this month when they attend the Chicago Motivation Show, September 23 to 25. Online information provided by the show's management, Hall Erickson, on its Motivation 365 Web site indicates that attendees are responsible for developing employee recognition and awards; business and corporate gifts; dealer or sales incentives; and consumer promotions.
The types of products they will be looking for include: merchandise incentives and awards; promotional products and ad specialties; meeting services and sites; travel incentives; apparel; gift cards and debit cards; event marketing and services; electronics; awards and trophies; giftware; leather goods; writing instruments; golf facilities and products; cameras; luggage; watches; food and beverage; clocks; sporting goods; recreation and leisure products; and more.
Within these categories you'll find prices to meet every program budget and products that range from the practical to the luxurious. Here's a brief look at just a few product categories to give you ideas on selecting incentives that offer the right fit for the type of program you're doing, the participants you want to reach and their demographics.
Recreation, Outdoor & Sporting Goods
Merchandise in this category covers a broad range including everything from golf, camping gear, recreational gear, sporting goods, indoor recreation, bicycles, scooters and skateboarding, to sports balls, football, tailgating, skiing (downhill or cross-country), skating, fishing, kayaking, snowboarding, snowshoeing and even safety products.
"A well-designed incentive program offers sporting goods and recreational fun for everyone," said Paul Cernohous, Coleman Company Inc. But keep in mind that when it comes to enjoying the outdoors, not everyone is out there for the same reason, added Norma Jean Knollenberg, CEO of Top Brands. Some are there for sports or to stay healthy. "Others are simply looking for a little recreation and relaxation."
Within this category, industry experts have cited growth in the following areas:
- The development of more packages and themed packages that appeal to a group of people or just one person looking for a specific type of outdoor solution
- More emphasis on combining fun with fitness
- More people taking up (or getting back to) cycling—be they baby boomers or new moms and dads
- Options for exercise that transfer easily from outdoor to indoor use.
But that's not all.
"Green products are definitely a trend," according to Sue Kuiper, special markets manager for Johnson Outdoors Inc. The company recently developed kayak hulls that are made from 100 percent past-industrial plastic scrap—its own as well as others.
There also is a trend toward integrating electronic technology into outdoors products. For example, Top Brands' SwissGear sleeping bags now include iPod holders. Johnson Outdoor's Eureka!N!ergy Tents and accessories are pre-wired for powering accessories like a reading light, a fan/light combination and a small wet/dry vac.
Safety and home preparedness products also are becoming popular, added Cernohous. He attributes this to hurricanes, tornadoes, wildfires and other natural disasters in the news that have caused people to be more concerned about being safe and prepared for the unexpected.
With respect to generations, manufacturers see hiking poles, air beds, RV travel, yoga and fitness walking becoming popular with the aging baby boomer population. Younger participants are into water sports, snowshoeing and trail running. Camping is also still very popular among families as well as extremists who enjoy hiking in the mountains for more than a day. Some activities, such as fishing and camping, appeal to young and old winners alike, and can actually unite generations.
Apparel
While the National Retail Federation shows that U.S. apparel sales have fallen, that hasn't translated to the corporate market, which in some cases is seeing growth. Apparel is another huge category that offers everything from golf shirts and fleece to sportswear and luxury attire, and it appeals to a multitude of age groups.
Wearables Magazine, a publication covering this industry, notes the following trends:
- Fringe on clothing is a decorative detail popping up on both apparel and accessories such as hats and bags.
- The color orange is hot for fall which might appeal to younger employees or consumers at promotional events, or out-of-the-ordinary customers.
- Texture that provides dimension is in, as are multimedia designs and eco-friendly materials.
Gourmet Food
Here is another category that provides a range of desirable, attractive rewards that cross lots of industry, age and cultural boundaries.
"Consumers are more well traveled and being exposed to more foods through media. This, in addition to the growing Hispanic population, draws attention to the need for expansion in ethnic food categories," said Bob Henthorne, Omaha Steaks.
People also are looking for products that satisfy their gourmet palates yet contribute to healthy lifestyles, he added. "Flavor without compromise is important within this trend. Products that fit portion (control) and calorie counts are meeting with great success in the marketplace."
The green trend is also impacting this area.
"We're finding an underlying current in the industry about going green, in terms of all natural products. Buyers want to know more about healthy products," explained Dan Vorland, vice president for corporate sales at LaCense Beef. "It gets back to sending the message that your company cares about its employees, its customers and their families."
High-Tech Gear & Cameras
High-tech gear that reflects a participant's personal interests and hobbies works well for a variety of programs. With many employees working at home or globally, the latest gadgets also can help them keep connected, organized and reduce stress. Latest innovations include next-generation digital TV, new multimedia phones and ultra mobile PCs.
Many companies also promote environmentally friendly product features.
To learn more about high-tech trends, turn to page 34 and read "All Fun and Games (Almost)."
Closely related to high-tech, digital cameras and photography products are available in the incentive market from Canon, Fuji, Nikon, Olympus and Sony. Ranging from compact to high zoom to digital SLRs, there is a camera to meet every type of recipient's needs and uses, as well as every incentive budget. The biggest trends noted in 2008 are the introduction of cameras in colors that haven't been seen before, as well as new technologies that make it ever easier for recipients to snap perfect pictures every time.
"Cameras collect a participant's memories and allow them to be interactive," said Terry Markwart, Canon's director and assistant general manager of special account sales.
Watches & Clocks
There are watches for outdoor enthusiasts. There are watches for techies. There are even green designs for environmentally conscious recipients.
"Younger buyers are selecting products from well known, brand-named products, which represent high perceived value," said Adrienne Forest, assistant vice president for special markets at Bulova Corp. "They want the latest and greatest—what's newest."
"Watches are very lifestyle-driven item today," added Joe Zanone, senior vice president of special markets for Movado Group Inc. "Besides having a function, they have style, accent a recipient's wardrobe, and they are also an immediate status identifier."
"A watch has a function, it can be fashionable and it can be an heirloom. There are very few products that can fit all those criteria" said Jim Keenan, senior vice president for Citizen Watch Company.
Gift Cards
There are roughly 40 or so companies that offer a wide range of gift cards for use in a variety of engagement programs: to recruit employees or recognize an employee's contribution, to reward safety, to motivate dealers, to get customers to spend their money on specific brands. Bill Wehrman, director of marketing and corporate communications for American Express Incentive Services (AEIS) explained that there are three basic categories of gift cards available for incentive program planners: There are "single merchant" reward cards: individual cards that retail brands offer, such as Lowes or Best Buy. There are "network-branded universal" cards, such as those from Visa, MasterCard and American Express, which are good anywhere these cards are accepted.
There also is a "generic category": A multiple merchant card, which puts multiple merchants on a single platform, but the platform has limits—for example a gas card designated to only be accepted at gas stations. Another example is AEIS' Be My Guest card, which allows the recipient to dine at the restaurant of his or her choice. One benefit of this approach, said Wehrman, is that it's broad enough to give the recipient a choice, but not so broad as to become the equivalent of cash, which has long been frowned upon as an ineffective motivator.
According to a study from First Data Corp., which offers e-commerce and payment services, the use of gift cards as consumer incentives is a growing trend. "Our research indicated that gift cards continue to be a powerful tool for merchants to attract consumers and incent them to buy," said Mark Herrington, president of First Data Prepaid Services. "From large discount stores to fast casual restaurants, many verticals are now utilizing incentive gift cards to retain current customers as well as acquire new customers through partnerships with non-competing brands."
"Reward cards have always been popular because they're convenient and appeal to multiple employee (and consumer) segments," said Darryl Hutson, chief executive officer, American Express Incentive Services. "One trend that has remained strong is personalization. Whether it's adding your brand to the card face or full integration into an existing program, reward cards are adaptable and that is very attractive to buyers. Effective personalization helps create a card that is personally meaningful to the recipient and that's key to driving behavior. Savvy buyers should seek out every opportunity to link the reward with the behavior they want to reinforce."
Hutson added that smart buyers should also be mindful of their reward investment. "In today's economy, reward cards are a smart, strategic and meaningful incentive solution. Who wouldn't be motivated by a gas or shopping card?" he asked. "Reward cards can be a rare 'guilt-free' chance to splurge, and it's an opportunity recipients will anticipate. While they are savoring that opportunity, they'll be reminded of the connection between their behavior and the positive outcome. Reward cards have the ability to motivate long after the behavior has passed."
Luggage
Luggage makers have to face the challenge of building products that can stand up to manhandling at airports, so newer bags include tougher ballistic nylon, retractable handles and wheels like those used on in-line skates. They also include unique looking bags that stand out. (Travel insiders say that baggage handlers are known to be gentler with unusual bags, perhaps because they view them as more expensive and thus more costly to repair.)
There are obviously many types of luggage from which to choose: luggage designed for the business traveler; luggage built for the recreational traveler; luggage for the upscale market; luggage for young travelers; luggage that is eco-conscious. There are plenty of options in several niches. For example, for women some manufacturers show bags made of floral upholstery fabric have appeal or bags with lots of compartments to hold all the travel items women need, including jewelry, cosmetics, toiletries, etc. For men there are all sorts of practical organizational ideas, such as special packing "envelopes." They house shirts or pants that are folded around a plastic board. Other suppliers provide juvenile luggage in every color of the rainbow, some with special accessories like a buckle strap that blinks on and off (making it easy for parents to spot their kids in a crowd).
"We see a strong preference for practical products that provide value," said Pete Mitchell, Samsonite Corp.'s director of business to business sales. "In particular, we are frequently selected by participants in employee reward and recognition programs because we offer a strong value proposition at any given level of attainment."
An example of that value proposition is the company's new Corsica nested luggage set. "It shows our value proposition in a relatively simple way—the participant receives multiple pieces of Samsonite product at a given level of redemption," Mitchell said.
He added that that the types of merchandise selected for programs is still focused on function rather than being based on business or social interests such as going green, social responsibility or cause-related, wellness initiatives. "The fit between our product and the program planner's goals and demographic is still the most significant factor influencing the selection of merchandise for an employee program," he explained.
Awards
To find out what's happening in awards, we went to R.S. Owens & Company, the pros known for producing the Oscars each year.
"There are many trends that we see occurring in awards right now, and these would much more be considered sustainable trends versus short-term fads," said Larry Maloney, vice president marketing and sales, R.S. Owens & Company. These sustainable trends in awards offer a greater variety of ways to recognize performance and include:
Greater use of color, regardless of price point: While R.S. Owens is seeing greater use of color in awards, particularly in higher end creations, Maloney explained that there's also lots of interest in lower-price-point commemoratives with bright colors. "This includes full-color digital printing on plaques. Not only does the use of color in an award add to its appeal and beauty, it is also a great way to show a company logo."
Maloney said that one of the fastest-growing areas of R.S. Owens' awards business is "Art as Awards," which includes vibrant, iridescent colors in the form of plates, bowls or vases. "Art as Awards are beautiful, dramatic ways to recognize an accomplishment, and they look great on a corporate credenza or in someone's home; they not only recognize a moment in time but they can add to a lifestyle office or home décor.
Custom awards specific to company equities: Custom awards continue to grow, said Maloney. "These are the best kind of award programs because the company receives an award that is specific to their business, a one-of-a-kind recognition for its employees. Custom programs usually include company equities that make them easily identifiable and relatable for the company or industry, such as specific products, brand images, icons or logos.
Maloney cited several examples of how these company equities can be incorporated into custom-created awards, often using new materials or old materials in a completely new way. To create an award for a gaming contest in which Mountain Dew was a sponsor, "we modified one of our resin formulas and created an eight-inch tall 'crystal' that matched the color of the Mountain Dew product; we even included lights in the base to make the award truly shine," Maloney said. "A lot of custom awards incorporate brand images or even icons. We were charged with replicating the icon of AMC Entertainment, which is an animated 'film strip' character, and we created a realistic etched cutout to bring the character to life. Another recent program was for an auto dealership, and we created an award of shiny black nickel metal and sandblasted, thick Starfire glass which perfectly fit the decor of the showrooms where they were displayed."
Increased use of recognition occasions. "A third major trend that we see is a little different from award types or materials, and that is an ever-increasing use of recognition occasions within companies of all sizes," said Maloney. He added that the company does offer eco-friendly "Lyptus" recognition line of awards.
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