Corporate Objectives Focus More on Engagement than Sales

Merchandise IQ Report 

An interesting fact was noted by the recent Incentive Magazine “2017 Merchandise IQ” research study.  9% of companies responded that they had decreased their budgets for brand named merchandise over the prior year.  In combination with a corresponding decrease of 5.3% last year, there has been almost a 15% decrease in this budget item over two years. 

Frankly, that is very disturbing to incentive merchandise manufacturers as this category of award has been the backbone of the industry for decades, and they have spent millions in advertising and promoting it.  By design it was also the single highest profit category of any award in the industry and if this trend continues, the manufacturers, their wholesalers, distributors and incentive companies will have to look for other ways to shore up their profits. 

So why is this happening?  Some feel that it is because of the shift of award budgets from growing sales to improving employee performance and building employee loyalty.  In addition, the emphasis that the human resource professionals have placed on employee engagement is starting to pay off.  Most believe (without much empirical evidence to support the conclusion) that improved employee engagement does result in incremental revenue and profit.

Unfortunately for some, the predominate award category in employee recognition efforts is gift cards…which for incentive companies are also the single lowest profit award category in the industry.  Correspondingly you can expect an increased effort on various pricing schemes for gift cards to improve their profitability. The ubiquitous “points” programs will be the most dominate scheme, so caution is advised to closely analyze the “points needed” for any gift card…usually an easy calculation as with gift cards the value is readily apparent.

Some questions and data from the “Merchandise IQ” that supports some of these conclusions are:

Audience	2016	2016
Consumers	52.6%	44.1%
Salespeople	50.2%	51.8%
Non Sales Personnel	37.7%	30.8%
Distributors/Dealers	14.5%	15.4%
Other	7.45%	14.7%

What Are the Top Five Objectives You Set for Using Awards?

Objective	2016	2015
Employee Recognition	58.0%	56.3%
Employee/Client Gifts	51.0%	35.9%
Employee Satisfaction	43.1%	36.6%
Build Customer Loyalty	40.1%	42.3%
Increase Sales	38.8%	47.2%

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