Premium Grades

As with many other marketing channels this year, flat seems to be the new up for companies surveyed in the 2009 Promo Premiums and Incentives survey.

Promo found that 38.6% of those companies polled in this year's survey said they offer a promotional incentive program to customers or sales prospects. That's down slightly from the 42.1% who said they ran such programs last year.

That slippage was echoed through three of the four industry verticals tracked in the survey. In 2008, 48.6% of goods manufacturers polled said they ran a customer incentive program; this year, only 42.4% of those respondents said the same. (It should be noted that a surprisingly large proportion of respondents in this category — 9% — said they “do not know” if their companies offer such programs.) Retailers offering customer incentives declined to 50% of respondents this year, from 52.9% in the last survey. And marketing agencies offering such programs slid from 34.3% in 2008 to 31.9% this year.

Only providers of branded services showed a slight increase in customer-facing incentives in this year's survey, up to 50% from 47.5% last year.

And those who don't currently offer customer premiums seem mostly determined to keep their non-participant status at quo for the coming year: Six in 10 of those with no current incentive program for customers said they had no plans to offer one in the next year. And the 17% who said they would launch a premium program were outnumbered by those who are undecided (22%).

Interestingly, a vertical look at those who say they'll institute such a program in the coming year shows that goods manufacturers dominate (25%), followed by retailers (21.4%) — two of the verticals that showed declines in programs actually up and running in 2009.

Shifting Money

In budget terms, the largest proportion of respondents to this year's Promo P&I Survey (15.5%) said they expect to spend less than $5,000 on customer promotions this year. That's comparable to last year's result in which 13.6% — again the largest category — said they would keep premium spending below the $5,000 mark.

But this year's survey shows sizable growth among those planning to spend between $5,000 and $100,000 on their customer incentive programs. Where the 2008 P&I Survey found only 6.4% forecasting $5,000 to $24,999 for premiums — fewer than those claiming they would spend nothing — this year the $5,000 to $24,999 category almost doubled to 11.8%.

And those marketers expecting to spend $25,000 to $99,999 more than doubled to 6.4% — equal to the percentage who expect to spend nothing this year. (Results at the far end of the budget scale are highly volatile because one big spender coming in or dropping out of the survey can skew the results heavily.)

Looking at 2009 spending projections by vertical, goods manufacturers appear to be downshifting on their premiums while keeping the programs running. Last year 17.6% of manufacturers surveyed said they expected to spend $100,000 to $249,000 on customer incentives, while 5.9% anticipated spending $25,000 to $99,999. This year only 7.1% of goods makers say they will spend the higher amount, while 14.3% expect to keep their premium spending in the lower bracket. And the number of manufacturers predicting premium spending of less than $5,000 grew from 11.7% in last year's survey to 21.4% this time around.

Retailers and service providers showed the same tendency to ladder down spending into the lower categories in their 2009 projections. For example, last year 15.8% of service providers polled said they would spend $5,000 to $24,999; this year only 9.5% said the same. And the proportion of retailers expecting to keep promotional spending below $5,000 grew from 16.7% in the 2008 poll to 35.7% this year.

It's also worth noting that a very high percentage of respondents — more than 50% — answered that they “do not know” how much their companies will spend on customer incentives this year, higher than the proportion in past surveys who were unable to project spending. That could indicate that marketers are keeping the door open for incentives launched on the fly as needed to stimulate business during the second half of 2009.

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