Research reveals that using merchandise and travel to motivate can be highly effective and cost-efficient. In 1999, the Incentive Federation conducted a study, which was designed to determine users’ objectives, practices, costs and results across all levels of American business. The results, published in the August 1999 issues of Incentive and Potentials magazines, include the following key highlights:
All three categories — sales programs, consumer/user programs, and dealer programs –reported over 80 percent success rate in terms of achieving their established goals with their incentive programs.
82 percent of the respondents use merchandise and/or incentive travel as sales incentives.
66 percent of respondents in the consumer/user promotions category use merchandise and/or travel incentives.
61 percent of respondents in the non-sales recognition/motivation category use merchandise and or travel incentives to motivate.
48 percent report using merchandise or travel in dealer incentive programs.
Cost (65 percent) and profitability (62 percent) are the top two key decision factors when designing motivation programs.
Over 65 percent of respondents strongly agree that both “travel and merchandise awards are remembered longer than cash payments” and “you can build a more exciting and memorable program around travel and merchandise than you can with cash.”
Merchandise incentives are used primarily in programs to increase sales or purchases, or, in the case of employees, productivity or quality of performance. The term premium usually refers specifically to merchandise used in an incentive program; the term incentive generally refers to anything that is used in an incentive program. Businesses use incentives to: motivate employees to work toward a common goal; recognize performance; get people to make a purchase they might not otherwise make; reinforce a marketing message. Non-cash awards such as merchandise are used to avoid the pricing or compensation issues raised by the use of cash. Merchandise is also used in consumer promotions, such as gift-with-purchase offers, contests/sweepstakes, self-liquidators, and continuity programs. Nearly half of consumer promotions aim to build customer loyalty.