Spending On Incentives Hits $46 Billion!

Spending on travel and merchandise incentives reached $46.1 billion in 2006, according to a new benchmark study by the Incentive Federation. The study, conducted earlier this year, is based on responses from 1,212 U.S. companies handled by GfK, a marketing research organization. The full report will be released next month.

Of that, about $32.7 billion was spent on merchandise, or items used as part of an incentive or recognition program targeting employees, sales people, customers, distributors, dealers or consumers, and the study found $13.4 billion was spent on travel.

Consumer promotions were the most popular type of incentives, representing about 27% or $12.6 billion of all spending in incentive travel and merchandise last year. Non-sales employee recognition with merchandise placed second, accounting for 25% or $11.35 billion. Sales incentives (using travel) made up 14% or $6.6 billion, while business gifts totaled 12% or $5.59 billion.

Other categories included: sales incentives (merchandise) 11% or $5.1 billion, non-sales employee recognition (travel) 7% or $3.3 billion, dealer incentives (travel) $800 million, and dealer incentives (merchandise) $750 million.

Overall 34% of companies used either travel or incentives last year. Of those, 10% used travel while 31% favored merchandise as motivators. Companies earning revenue of more than $100 million were more likely to use travel and merchandise incentives than smaller firms.

The primary use in the travel category was sales incentives (81%) followed by non-sales employee recognition (58%), consumer promotions (52%), dealer incentives (36%), and business gifts at 20%. In merchandise incentives the breakdown was non-sales employee recognition (80%), business gifts (66%), consumer promotions (53%) sales incentives (34%), and dealer incentives (17%).