U.S. Companies Spend $176B a Year on Incentives, Recognition and Corporate Gifts

U.S. businesses spend $176 billion per year to motivate and recognize their employees, channel partners and customers, according to preliminary findings of the Incentive Federation's Incentive Marketplace Estimate Research Study. The research also revealed that 92 percent of companies with revenues of $5 million or more use at least one form of noncash incentive programs.

The survey of 1,000 business executives responsible for noncash incentive programs in companies with at least $1 million in revenues was conducted in May by Rickard Garlick & Associates Consulting and Market Research Services. The current research —  the first major study conducted by the IFI since 2016 — shows that the noncash incentives market has grown by nearly 50 percent in six years. The full findings of the 2022 study will be released in mid-September.

Among other findings from the preliminary report:

• Sales incentives and employee rewards are the most prevalent forms of noncash incentives;
• More than half of companies have noncash customer-loyalty programs, while 48 percent offer noncash channel/distributor/partner programs;
• Gift cards are the most popular noncash reward, followed by award points for redemption;
• Travel is the most popular reward for sales and channel/distributor incentive programs; and
• Branded/logoed merchandise is the most popular customer gift — used by 75 percent of companies with more than $1 million in revenues.

“This study reaffirms that the use of noncash incentives has been and continues to be an important part of many businesses’ growth strategies. The growth in the use of noncash incentives is an important signal that U.S. businesses value tangible incentives over simply using cash to recognize performance and loyalty,” said Mike Donnelly, IFI chair and president of Hinda Incentives.

“The federation’s [inaugural] research in 1996 revealed that only 26 percent of U.S. businesses were using noncash incentives, and our 2000 research reflected a $27 billion marketplace,” said Steve Slagle, IFI's managing director. “The growth in the marketplace over 25 years is certainly gratifying and a tribute to the excellent work by the industry’s companies to educate businesses about the value of all forms of noncash incentives.”