. 2020 Incentive Industry Predictions | Northstar Meetings Group

2020 Incentive Industry Predictions

Experts eye key trends that will shape motivation in the new decade.

What will drive motivation, recognition and rewards in the new year and beyond? Incentive tapped a roundtable of industry thought leaders -- Tina Gunn Weede, CITP, CIS, CRP, president and CEO, Peerless Performance; Jesse Wolfersberger, chief data officer, Maritz Motivation; Jeffrey Brenner, director, special markets, Seiko Watch of America; Brett Hatch, senior director of global corporate gifts, Maui Jim; Mike McWilliams, vice president, client and product strategy, MotivAction; Bill Warshauer, vice president of sales, Hawk Incentives; Rob Adams, president and CEO, Bishop-McCann; and Casey Eply, director of reward experience, Maritz Motivation -- to share their insights.

What is the biggest incentive trend you foresee?

Tina Gunn Weede: The purpose for incentives is broadening. We are now including associates outside of sales channels, and executives are realizing incentives play a positive role in promoting a culture aligned with well-defined core values. We call this "next generation" incentives: The goal is to create an emotional connection with those who represent your brand. Financial gain is not the driving force.

Jesse Wolfersberger: Data collaboration. Right now, there are often walls between brands and incentive companies sharing data, but they mostly exist out of habit. I think these are beginning to come down. Incentive programs work better with more data, and the data that incentive programs generate has value to the brand.

Jeffrey Brenner: Having the right reward mix of noncash options is critical to a successful program. Consumers are much more informed these days — they can find the latest on-trend, direct-to-consumer brands, especially in accessories (jewelry, watches, etc.) and luggage. Because the consumer has access to these things, the mix of what's offered needs to be relevant, updated and speak to the audience it's going to reach. If a program has a bunch of old, stodgy offerings, the company is defeating its incentive purpose. If it's going to be a coffeemaker, it has to be brand-new, high-tech and of keen interest to people.

Brett Hatch: Personalized experiences. People want more tailored, memorable experiences, whether it's picking out their own glasses or choosing their own activities. They're saying, "I want to have memories the way I want my memories." You've heard about "engagement" for years; now it's "personal experience."

Mike McWilliams, vice president, marketing and client strategy, MotivAction

Mike McWilliams: We see stronger integration between incentive programs — both points-based catalog incentives and travel programs — with the rest of an organization's human-capital-management practice.  This is the concept of enterprise engagement. How do you create one approach for all of the things that impact employee, customer and other stakeholder behavior — for universal engagement?
Clients are starting to recognize the importance of having all areas of their organization singing off the same song sheet — and rewarding their people consistently — and they're asking about this more often.

Bill Warshauer: We'll largely see a continuation of the growing trend of immediacy and accessibility of rewards. Over the past few years, we've seen a shift to more digital and real-time reward opportunities, tapping into new technology for smartphones and smart watches, to allow consumers access to easy spending and redemption on the go. We're continuing to make rewards and incentives a useable tender almost immediately, meeting the customers where they want to be met, and continuing on that journey to make payments and redemption seamless and accessible from anywhere.

Do you expect more focus on ROI and other measurements?

Jesse Wolfersberger, chief data officer, Maritz Motivation
Jesse Wolfersberger, chief data officer, Maritz Motivation

Wolfersberger: Yes, ROI will continue to dominate every discussion. Anything else is like reading a newspaper with all the headlines blank. I think the measurement of ROI will continue to get more complex and interesting. Sales lift is still the heart of ROI (at least for sales-performance programs), but there are second-order effects that often go unmeasured. For example, a good program should increase retention. Better retention lowers costs of hiring and training, and having more successful veteran employees around has all kinds of beneficial effects that go beyond sales. If you aren't measuring the second-order effects, you are missing some major contributions to ROI.

Rob Adams: Clients are measuring employee performance, and they are looking to measure the retention of their top performers. One of our clients describes its incentive trip as an opportunity to re-recruit annually.

Weede: We are predicting and experiencing the desire to focus more on ROI and ROO [return on objective], as well as soft variables in our measurement. We want to get to how the overall well-being of participants is impacted in a positive way, resulting in a positive impact for the company running the program.
On the topic of ROI, the SITE Foundation and Dr. Jack Phillips, chairman of the ROI Institute, will be publishing a book that demonstrates a clear ROI methodology for incentives that will include both soft variables and hard-dollar ROI measurements. 

Warshauer: Yes, brands, merchants and providers are looking to optimize their spend, and continue to dial things in further. The way in which we're now able to view data points like response rates and impact in a more real-time output has had a strong effect, and provided some key takeaways about how we can best engage with consumers on their terms.

"Lifetime value is about to become a critical measurable, helping brands track repeat-customer interest, their own sale and engagement cycles, and how to best build loyalty with consumers for years to come."
—Bill Warshauer, Hawk Incentives, a Blackhawk Network Business

The investment moving forward is likely to focus on longer-term data like lifetime retention and consumer engagement, versus a quick spark or easy, one-off impact. Lifetime value is about to become a critical measurable, helping brands track repeat-customer interest, their own sale and engagement cycles, and how to best build loyalty with consumers for years to come.

McWilliams: I think a lot of that depends on what happens from an economic standpoint. ROI is increasingly important not only to our clients, but also to our focus on advancing the industry and growing our business. But getting our hands on the data that can establish true ROI remains a consistent industry challenge. If we see enhanced scrutiny with respect to visibility of programs in the industry, it will become an extremely high priority.

Are budgets increasing or decreasing? 

Weede: For incentive travel, yes budgets are increasing, but not at a rate to compensate for costs increasing. The latest Incentive Travel Industry Index demonstrated that hotel, food and beverage, and air costs continue to rise at a higher rate than reflected in the budget increases, which is driving interest in all-inclusive resorts. Rising costs in other areas requires third parties and DMCs to continue to show enhanced value.

Jeffrey Brenner, director, special markets division, Seiko Watch of America, and president; Incentive Manufacturers and Representatives Alliance
Jeffrey Brenner, director, special markets division, Seiko Watch of America, and president; Incentive Manufacturers and Representatives Alliance

Brenner: Budgets have been showing an increase, but something we need to be cognizant of in 2020 are the concerns and challenges over tariffs and it being an election year. The economy will play a significant role in the second half of 2020.

Warshauer: What we see from a trend perspective is an increase in spend in customer acquisition, especially around loyalty. Looking towards 2020, we see some strong opportunities for rewards, including factors beyond purchase behavior. Load denominations at a smaller level, including spot rewards and incremental gift offerings, are providing more and more value to marketers as a way to gain a touch point with consumers in a simple, low-barrier way.

Has there been any changes in the kind of behaviors clients are looking to motivate?

Tina Gunn Weede, CITP, CIS, CRP, president & CEO, Peerless Performance
Tina Gunn Weede, CITP, CIS, CRP, president & CEO, Peerless Performance

Weede: We are opening up the incentives to high-potential, high-performing associates and channel-partner staff, not just sales and dealer relationships, understanding that the workforce today is looking for purpose, a way to make a difference in the world. They want solid mutual relationships, and this is great because we are learning that having only a financial relationship with those who represent our brand is very short-lived.

Adams: To attract and retain key talent in today's competitive landscape, it will continue to be critical to invest in incentive programs. Regardless of how a business is performing, we are seeing clients that are interested in incentive trips in order to invest in their most critical asset: their people.

Are these objectives reflected in incentive-travel program offerings?

Weede: Attendees are looking to explore and discover but also to give back. Over the past few years we have seen a big increase in the use of all-inclusive resorts and cruise options as a way to manage costs.

Brett Hatch, senior director of global corporate gifts, Maui Jim
Brett Hatch, senior director of global corporate gifts, Maui Jim

Hatch: It's about personal experiences. Millennials want memories, and they want to feel appreciated. When I go on an incentive trip, I'd have a nice dinner. Millennials want to go have a beer on top of a mountain or something — and show it to everyone. 

Casey Epley: Sustainable travel and Instagram-worthy destinations will influence program design in 2020.

McWilliams: More CSR events that allow participants to immerse themselves are on-trend.  The entire give-back concept keeps resurfacing, not with the typical "build a bike" events, but with opportunities to interact with locals at schools, churches and communities to help rebuild areas and provide amenities that are needed.

Which merchandise rewards will be hot in 2020?

Casey Epley, director, reward experience, Maritz Motivation
Casey Epley, director, reward experience, Maritz Motivation

Epley: Even though merchandise is traditionally a tangible reward, it's important to focus on the moments and emotions connected with winners' favorite things, and how "stuff" can actually help create personal and memorable experiences.

Memberships and subscriptions to companies like HelloFresh, Dollar Shave Club, BarkBox or Audible; DNA test kits; technology or other products that can improve sleep quality; gifts from brands that do good; diverse and inclusive toys; and full-circle wellness (physical, emotional, financial) gifts are all on-trend.

Hatch: Products that address anything wellness-related are getting interest. We're coming out with an eyewear product that protects against blue light (the type people are exposed to when sitting in front of their computer screen). 

People don't just want freebies. They want something that benefits them and is truly useful, that they picked out and used to create their own personal experience.

Rob Adams, president and CEO, Bishop-McCann
Rob Adams, president and CEO, Bishop-McCann

Adams: The hottest products are anything personal and customizable (such as shoes and perfume bars). There is also a rise in community give-back gifts, particularly among Millennials.

Brenner: I see movement, though slow, toward direct-to-consumer brands that are entering into the incentive, recognition and corporate gift space. There are many new, relevant trending brands in the travel and accessory category, as well as outdoor and recreational gear.

What shifts do you expect to see in how programs are marketed and rewards delivered?

Hatch: Millennials expect a lot these days. And you can't fool them: They want to know the backstory of whatever you are giving them. I have to be able to answer a technical question and tell a story. We were doing an event with Google, and a guy walked up and asked a thousand questions. It was like he'd done two days of research. He was asking, "Why are these lenses good? What makes them different?" You have to walk the walk at these events.

Bill Warshauer, vice president of sales, Hawk Incentives, a Blackhawk Network Business
Bill Warshauer, vice president of sales, Hawk Incentives, a Blackhawk Network Business

Warshauer: We've seen it more and more this year, but certainly expect to see further focus and shift on targeting specific generational groups. We've seen the emergence of many different mediums and avenues to reach specific audiences, and each interact and engage in different ways with brands and commerce. It's really all about finding the right way to reach them.

A big part of that will continue to be the shift away from physical payment and reward touch points, and toward digital reward and payment integrations.

Brenner: Digital, digital, digital. Utilization of a variety of social media tools alongside immediate gratification requirements for delivery are the key drivers for marketing a program and delivering the reward.

Will tech tools such as AI or automation play a bigger role in rewards and recognition? 

McWilliams: AI can certainly help us better understand performance, prediction and our people in general. We see the value and there are off-the-shelf tools that can help us better do that. Advancing analytics is a formally scoped component of our product roadmap in 2020, and we're weighing the pros and cons of building more robust predictive capabilities in-house, or partnering with outside AI expertise to address our growing client performance-management needs.

Warshauer: All the growth in tech in our space is tied to data mining, and the actionable nature of that data. Specifically, I see AI and location-based data starting to come together in a more meaningful way to better tell a story of consumer habits and trends. This could have a big impact for marketers in 2020 and beyond. For us, it's about the focus on ease-of-use for consumers and how technology can continue to make engaging with brands and products a seamless, enjoyable experience.

Wolfersberger: AI will continue to integrate into this space the same way it is across every business vertical in the world. Most of the AI innovation will be below the surface at first — automating processes, operational efficiency, etc. — but the brands that will stand out are those who use AI to rethink their business altogether. What kind of incentive program would AI design? That's the question that my team will be working on in 2020.