PROMO’S 2009 P&I Survey Finds Signs of Change in Customer Incentives

Cards Up, Cash Down
2009 saw an interesting reapportionment of the types of premiums and incentives brands prefer to offer to their customers and prospects. Among the established premium categories in the Promo P&I questionnaire, gift cards rank as the top giveaway among almost one-fourth of respondents—about the same proportion as in 2008. But this year dining and entertainment vouchers and certificates turned out to be the second most popular reward format, with just more than one in 10 respondents naming them as their preferred form of customer incentive.

At the same time, hard cash dropped far down in popularity as a premium.  This year only 10% of those polled said they chose to dole out money as an incentive; that’s off sharply from the 15.4% who opted for dollars in 2008.

Other categories—gift certificates, travel, and stored value cards that customers can fill up again once they’ve spent them down—remained fairly steady.

The venue for distributing these customer gifts has also changed over the last year, to judge from the survey results. Last year, 44% of respondents said that they hand out premiums at events or on marketing tour campaigns. This year only a quarter of those brands polled said they distribute premiums in that way, and events/marketing tours fell steeply from the top-ranked distribution channel in 2008 to number four this year.

The apparent pullback from live events as distribution channels plays out across the vertical segments in this year’s poll. Goods manufacturers said last year that 41.2% of them handed out premiums at these events; this year, that proportion is only 28.6%. Service providers handing out premiums through events and tours dropped from 52.6% last year to 28.6% this time. And retailers using events and tours to incentivize customers fell from 38.9% in 2008 to 14.3% in this year’s study. Marketing agencies were off more than half, declining to 23.3% this year from 54.2% in 2008.

All the other distribution channels declined between two to four percentage points in this year’s survey, with the exception of premiums handed out at retail, which saw an increase of almost five percentage points. This seems due to a big increase in the number of retailers themselves who say they’re using the channel to get premiums out to their customers: 21.4% of respondents in this survey, compared to only 11.1% of retailers polled in 2008.

Do Premiums Work?
Asked how they measure the return on investment from their customer incentive programs, 51.8% of respondents cited incremental sales, the largest category. But that was off from the 60.4% last year who looked to sales growth to validate their premium spending.

The question is, what measure takes the place of incremental sales? Long-term or lifetime value increased in popularity for this year’s poll, rising slightly to 27.3%.
But the 10-percentage-point increase in those who said they “don’t know” their premiums’ ROI may spell trouble for the incentive industry.

For Employee Incentives, a Downsizing Year
Voluntary pay cuts.  Compulsory furloughs. “Doing more with less.” You’d think that this would be a banner year for employee incentive programs. 

But the 2009 Promo P&I Survey found that it’s business very much as usual for programs aimed at rewarding employees and building workplace morale. If anything, the number of marketers polled who report incentive programs within their own companies has dropped from about one-quarter last year to one-fifth this time. And only about 10% of the holdouts say they plan to launch a workplace rewards program in the coming year.

Cash payouts rank first among employee rewards at the companies who grant them. That makes sense, since companies with incentive programs say they most often aim them at sales reps (75%), although 66.1% say they include non-sales employees. 

Not surprisingly, then, respondents who offer employee incentives most commonly said they measured the ROI of those programs by tracking incremental sales (47.5%), although the proportion using sales as a metric of effectiveness is off somewhat from last year’s 53.7%.

Notably, more marketers say their companies are using incremental productivity and employee attitude surveys as gauges for the impact of their internal incentive programs. Year over year, employee retention has actually slipped five percentage points as an ROI metric to 20.3%—perhaps simply indicating that employees have more reasons to stay in a job these days than a restaurant gift card.

Methodology:
The 2009 Promo P&I Survey is based on surveys mailed on June 4, 2009, to companies and agencies involved in marketing, including manufacturers of brand goods, providers of brand services, retailers, marketing agencies, suppliers and distributors of premiums. Results are based on 285 completed replies.