$90 Billion Spent Annually on Non-Cash Incentives

Businesses in the U.S. spend $90 billion a year on non-cash incentives, up 17 percent from 2013, according to new industry research.

That is the finding of the Incentive Federation's 2016 "Incentive Marketplace Estimate Research Study" -- often called the "market size survey" -- which also found that 84 percent of U.S. businesses use some form of non-cash incentive awards, which includes incentive travel, merchandise, gift cards, and award points. The study took place in December 2015, and measured that year's spending. 

It found that $14.4 billion was spent on incentive travel and $75.6 billion on awards points, merchandise, and gift cards in programs targeting four groups: sales staff, channel partners, all-employee programs, and customers. 

"The Federation's research in 1996 revealed that only 26 percent of U.S. businesses were using non-cash incentives, and our 2000 research reflected a $27 billion marketplace," said Steve Slagle, managing director of the Incentive Federation, in a statement. "The growth in the marketplace over 20 years is certainly gratifying and a tribute to the excellent work the industry's companies have done to educate businesses about the value of all forms of non-cash incentives."

That said, fully one third of the money spent on non-cash incentives -- $29 billion a year -- is by businesses with revenue of no more than $10 million per year, a group that incentive firms have not traditionally pursued heavily. Another $46 billion is spent by companies with revenue of $10 million to $100 million. 

The most commonly used award program types were employee rewards (72 percent), corporate gifts (72 percent), sales rewards (60 percent), customer rewards (45 percent), and channel partner rewards (41 percent). 

An interesting finding was that the dramatic increase in the number of companies giving corporate gifts comes despite a $5 billion drop in the actual dollars spent on these gifts -- to $10.5 billion in 2015 -- by those companies. 

The 2015 spending in the other award program types was $23.0 billion on sales rewards, 22.9 billion on employee rewards, 17.4 billion on channel rewards, and 16.1 billion on customer loyalty rewards.

The study, conducted in partnership with the St. Louis--based Intellective Group, is based on responses from 1,392 businesspeople. Of that group, 400 were qualified to take an extended survey based on their "role in managing an incentive or non-cash rewards program," which the Incentive Federation said means "this sample size provides a 95 percent confidence level." 

Funding was provided by the Incentive Marketing Association, the Incentive Research Foundation, the Promotional Products Association International, and the Society for Incentive Travel Excellence.