IRR Market Report Part I: What’s Ahead for 2025

 Melissa Van Dyke, Senior Vice President, Creative Group Inc., Appleton, WI. Founded 1970. 

 Leif Baradoy, President, Giftbit, Victoria, BC, Canada. Founded 2011. 

 Ree Wysong, President, GGI Luxury Brand Names,  St. Louis, Founded 1993 

 Mike Donnelly, President, Hinda Incentives, Chicago. Founded 1970 

Looking ahead, Donnelly sees “continued but more gradual growth of employee recognition; more focus on sales and channel programs; greater emphasis on communications and measurement; continued price pressures, and consolidation in the gifting arena.
  
Looking back, he points out that “sales and channel incentives saw a precipitous decline from early 2020 throughout 2021 and even into 2022. Broken supply chains and limited production were major contributors, along with fears of travel at the time. The last two years, however, have seen a surge in travel incentives for top performers. That’s because sponsors were desperately trying to retain these valuable human assets. At this point, supply chains have normalized and the skyrocketing inflation in the early pandemic period is easing. However, inflation has caused consumers to be more cautious in spending. This combination of ready supply and somewhat weakened demand will encourage program sponsors once more to target gaining market share from competitors. So, we are anticipating more interest in sales and channel programs. We are also expecting to see sponsors rewarding their organizations deeper to drive greater sales. Look for sales and channel programs to grow much faster than they have at any time in recent years.”
 
On the employee engagement front, he says, “Our experience shows the job market is stabilizing, with medium and large businesses finding it less difficult to fill positions than in the past two years. This will likely reduce the sense of urgency for employers to implement new recognition programs. This leads us to believe there will be continued growth in employee recognition, but much less dramatic compared to recent years”
 
As for consumer loyalty programs, they are evolving, he says. “For several years loyalty programs experienced explosive growth as more and more organizations launched new programs. But today these programs are stabilizing and looking at enhancing technologies, adding new co-sponsor partnerships and offering a wider array of award options. This will shift the business mix for suppliers in the future. For example, we expect to see considerable growth in experiential awards. This growth will be realized as consumers shift their redemption from more traditional catalog merchandise and gift cards. We anticipate steady and moderate growth for these programs moving forward.”
 
For more on Donnelly’s views, see RRN: Hinda President Weighs in on State of Incentives, Rewards, and Recognition.

 Stephanie Harris, Incentive Research Foundation, Washington DC. Founded 1987. 

 
Overall, she is optimistic for the incentive travel business for 2025. “The Incentive Travel Index shows that in 2025, 55% of respondents indicated programs were either keeping up with inflation or exceeding it. That number grows to 59% in 2026. However, that means that nearly half of the programs operating in 2025 are facing difficult choices as budgets fall behind inflation. Additionally, in North America, we see that the category facing the biggest reduction in spending is agency fees, dropping 36% in our study year over year, followed by ground expenses. This is likely driven by programs with budgets that are not keeping up with inflation.”
 
For programs using merchandise, gift cards, and experiential rewards, she continues, “the economic outlook is positive for 2025 among program owners and third parties, and there was a significant drop in those anticipating program discontinuations. That good news was balanced slightly by a slight decrease in average per-person spend to $902 from $1,090 in 2023. The $201 - $500 category accounts for 45% of total spend in 2024, which is up from 2023, marking a continued increase in mid-range spending frequency. This continued growth in mid-range spending is consistent with more individuals across an enterprise participating in non-cash reward and recognition programs as organizations work to drive engagement and affinity across the enterprise.”
 
When it comes to travel, “Attendees and planners continue to show strong preference for destinations not used before, as a new destination can inspire increased effort to earn the reward. However, we also see indication of desire for destinations closer to home. From a North American standpoint, this could mean more US and Canada-based destinations being used, as well as new cities and resorts across Mexico and the Caribbean.”
 
She continues, “The intent to use free time within programs is growing among third parties, rising to match the demand for free time that we have seen across our attendee preferences studies for the last three years. This could signal some relief for program budgets, and increased satisfaction among program participants. Personalization continues to be top of mind, with program owners looking for ways to increase the amount of choice within program agendas, gifting, and more. We encourage program owners to include questions like ‘What would make this program over the top for you?’ or ‘Are you celebrating anything while you’re with us?’ to help identify opportunities to deliver hyper-personalized experiences during the program.”
 
For additional insights from Harris, see RRN: Stephanie Harris on 2025 Incentive Market. 

 Tatiana Frierson, President, Inspirus, Fort Worth, TX. Founded 1893. 

“The employee recognition and engagement platform market is experiencing significant growth,” Frierson says, “driven by shifting workplace dynamics and technological advancements. The increased demand in employee recognition and engagement platforms is beginning to become a more integral part of the conversation as companies look to improve retention, culture, and overall employee productivity, particularly in response to hybrid and remote work models. However, the budget for these programs is still lacking and though organizations understand and acknowledge the need for these platforms, it is difficult to obtain buy in at a more rapid pace. The more we are able to rely on data, program analytics and usage, employee alignment, productivity, and retention and begin to highlight how recognition is an additive to overall compensation and benefits, the more the market will grow.”  
 
She observes that “organizations are increasingly focused on leveraging their recognition solutions to maximize return on investment (ROI) and strategic outcomes.”  This includes more:

1. Demand for benchmarking, analytics, and expertise. “Clients are looking for more than just software; they seek true partnerships with solution providers who can offer strategic insights through benchmarking data and analytics. Organizations want to ensure their platforms are not only used but optimized through tailored recommendations and expertise. This involves both analyzing engagement patterns and providing targeted interventions to meet business goals, such as improved retention and productivity.” 

2. Integrated and scalable solutions with flexibility. “Cloud-based solutions are becoming the preferred choice due to their scalability and easy integration with tools like Slack and Microsoft Teams. Companies want platforms that fit seamlessly into existing workflows, enabling real-time feedback and recognition across remote or hybrid teams.  We recently integrated with Slack and planned for a Teams integration by end of year on our Connects platform.

3. Focus on ROI and cost-effectiveness. Organizations are placing a strong emphasis on measuring ROI by tracking engagement levels and correlating them with business outcomes. They expect their platform providers to offer detailed analytics that help identify high-impact areas of recognition.

4. Growing demand for personalized employee experiences. Organizations are moving away from traditional, one-size-fits-all recognition programs toward more personalized, meaningful experiences. This shift is driven by the recognition that diverse workforces require customizable rewards and recognition mechanisms, aligned with employee preferences and regional nuances.

5. AI and predictive analytics for proactive engagement. The use of AI-powered analytics to predict employee behavior and provide real-time insights is top of mind for many clients – they are actually not sure how to engage with AI but it is becoming more of a topic of discussion.

Overall, “organizations we are engaging with are not just investing in platforms but seeking long-term partnerships with us giving us the opportunity to demonstrate expertise, guide program implementation, and align recognition strategies with business outcomes. This focus on maximizing ROI, backed by analytics and strategic recommendations, is shaping the future of the employee recognition market.”
 
Frierson says “we are seeing some expansion into incentives, blurring the lines between recognition, rewards, and broader employee engagement strategies. This shift reflects a strategic pivot to meet evolving employee expectations and maximizing the impact of recognition programs. While there is some value to these features, we believe it is part of a larger conversation in tying recognition into the overall landscape of compensation, benefits, and performance evaluations, total rewards, and the employee experience. As recognition platforms continue to evolve from simple acknowledgment tools into comprehensive solutions that incorporate financial and non-financial incentives, catering to the complex motivations of today’s workforce and the employees overall compensation. This shift enables companies to foster long-term engagement and align employee efforts more closely with strategic objectives, improving both satisfaction and retention outcomes.” 

 Karen McClenny, President, KMC Incentives, San Antonio, TX. Founded 2000. 

 
“Overall, I would characterize market growth as moderate – as companies continue to face challenges such as inflation, recruiting, retention, and employee engagement,” McClenny projects.
 
A significant area of growth in her organization has been organic, she adds, as clients with existing programs have expanded them through additional KPIs (key performance indicators) and business units within the organization.
 
As companies wrestle with generational transition, retention, and challenges associated with engaging remote and hybrid workers while effectively recognizing and rewarding on-campus employees, structured recognition programs are more important than ever, she believes.
 
To her, the key factors in providing effective solutions to these challenges are: 1) structuring strategies that are built around each client’s needs and culture, 2) designing a program that motivates, inspires, and results in measurable outcomes, and 3) delivering ROI program metrics.
 
“I believe organizations are seeking third-party solution providers to tap into experience, expertise, and their ability to design, implement, and administer programs effectively and efficiently. Overall program pricing is important – as economic buyers can be focused on the cost of incentives without an understanding of the overall return. Program cost is directly related to the success of the solution, and demonstrating ROI is critical.”
 
She sees a lot of tech companies moving into the market with platforms that offer packages companies can choose from for their recognition needs.  “However, there is a noticeable trend of integration between recognition and incentive programs. The convergence, she asserts, reflects the growing demand for cohesive approaches that not only reward performance but also sustain employee engagement and motivation through continuous recognition systems.” She believes organizations are looking for a holistic approach to employee engagement. “By combining these strategies, companies hope to foster long-term employee motivation and strengthen organizational culture.”
 
The emphasis next year, she says, “will be on leveraging technology, including AI, to drive efficiency and enhance the impact of programs by aligning incentive efforts with workforce values, such as flexibility, sustainability, and authenticity, ensuring programs remain relevant and impactful as workforce demographics continue to shift.”

 Scott Kooken, President, Links Unlimited, Cincinnati, OH. Founded 1996. 

 
Moderate growth will continue, Kooken believes, resulting in part from mergers and acquisitions in the market, continued expansion of promotional distributors in the market, and the continued need to engage customers, distribution partners, and employees.
 
The big change in merchandise fulfillment, he projects, is the growing demand in the IRR market for a retail-like experience in terms of same-day shipping, instead of the traditional days or even weeks acceptable in the incentive business. He also sees continued demand for personalization and customization and is investing in technology to support on-demand imprinting of select items. Creating a retail experience for participants requires levels of service increasingly difficult for small players to manage. This includes “having the resources to do a quality check on every inbound product received and outbound shipment processed.”
 
Aligning promotional product strategies with retail practices, he says, also involves maintaining up-to-date product offerings, implementing consistent return policies to satisfy consumer expectations, and having high levels of shipping reliability and customer service.
 
Growth this coming year, he says, is coming from new types of online gifting platforms, from more distributors getting involved with incentives, recognition, and gifting, and some incentive or recognition companies expanding their services to address different audiences.
 
Many promotional distributors remain resistant to the IRR marketplace, but Kooken sees the resistance gradually fading due to demand from their customers. “We are creating more and more redemption web sites each year,” he says. These support companies that wish to ensure that people keep and enjoy their gifts by offering brand-name products redeemable through transactional web sites so that people select only what they want. “We still have more work to do educating distributors on this marketplace and the economics.” He points out that while the margins with brands are lower, the program budgets tend to be larger and require less labor, because of the growing number of online transactional sites. 

 Jacque Busby, CEO, Luxe Incentives, Founded 1983 

 
The year ahead looks like continued growth for the company’s traditional incentive travel business focused primarily on sales and channel incentive travel programs as well as on digital channel loyalty programs.  On the travel side, she sees increased demand for personalization of experiences and more free time, being weighed against continued cost pressures. On the channel engagement side of her business, she sees an opportunity to bring greater program design expertise to business-to-business programs, because of the large amount of points breakage she sees, suggesting ineffective outcomes. “With the value created by technology and the growing ability to measure the effectiveness of programs, growth will come from helping companies deploy more effective programs, better measure the outcomes, and significantly reduce points breakage.”

 David Peckinpaugh, President and CEO, Maritz, St. Louis. Founded 1894. 
 

“We're observing a steady, sustainable growth in the incentive and recognition market, but with notable acceleration in areas emphasizing measurable impact and customized program design,” says Peckinpaugh. “Although the overall growth rate may not match the rapid pace of previous years, it's driven by a deeper understanding of the impact of these programs on business outcomes. Organizations are increasingly recognizing the power of strategic programs to drive performance, boost morale and ultimately achieve and accelerate business results.”
 
This, coupled with the evolution of technology and data analytics, is contributing to the market's continued growth, he continues. “The pressure on organizations to retain talent, grow revenues, and enhance loyalty in a competitive economy further fuels this demand, especially among high-growth sectors. Some companies may be prioritizing strategies like digital transformation or sustainability, but employee experience remains a top priority.”
 
Several key trends are shaping the incentive and recognition market, from the point of view of Maritz.

• Personalization: Clients are seeking highly personalized programs that cater to individual preferences and motivations; we’re seeing heightened interest in behavioral science as companies seek ways to ensure that incentives drive meaningful behavior change, especially in sales roles.

• Data-driven insights: Organizations are increasingly relying on data analytics to measure the impact of their programs and optimize their strategies. Clients are placing a greater emphasis on measuring the ROI of their incentive programs, but focused on long-term returns rather than short-term profits.

• Program design: Clients are seeking partners with proven expertise who can advise on optimizing program structures rather than just administering rewards.

• Experiential rewards: Unique experiences and opportunities are gaining popularity as powerful incentives.

• Generational differences: Over the next few years, we will see large changes in the workforce due to Baby Boomers retiring and the influx of Gen Z. Organizations will need to adapt programs to cater to the values and preferences of this younger workforce (more personal, more digital, more connected to purpose).

• Sustainability: A growing number of organizations are incorporating environmental strategies into their incentive programs, aligning with broader corporate social responsibility (ESG) goals. This is a passion point for Maritz. 

For more on Peckinpaugh’s views, see RRN: Maritz CEO—Steady Growth, Personalization, Data-Driven Insights, Program Design Lead Key Trends

 Susan Adams, Vice President, Engagement Strategy, Next Level Performance, New Brunswick, NJ. Founded 1976. 

 
“While there have certainly been headwinds over the past few years – pandemic, inflation, industry-specific economic challenges, elections – we have seen generally strong demand for recognition, engagement and incentives,” Adams reports. “Corporate clients are clearly showing that they value the results these programs can deliver, reducing turnover, increasing mindshare, and driving the bottom line, among many other benefits. Most business leaders are unwilling to sacrifice these important programs for short-term savings, knowing that they might risk results or dampen productivity. As the North American market moves past the election, with stabilized inflation and lower interest rates, we anticipate a time of steady continued growth.”
 
She observes that “Clients are cost-conscious in this economic environment, but also very aware of the importance of capturing the attention of their audiences. Programs must always deliver ROI, but they must also earn the best efforts of every participant with creativity, innovation, and desirability.  The search for new destinations with adequate infrastructure is key for travel programs, as is creativity in appealing to a broader range of generations and participant types. On the platform side, making virtual recognition meaningful is a constant focus, as is creating a participant experience that connects with everyone’s aspirations and personal interests. Clients are often working with budgets set during or prior to the inflation we have experienced, driving many to re-think program structure or the number of winners. This has led to more tiered programs, allowing reach to remain broad, while bringing more control to spending.”
 
“It is important to keep in mind that all programs are recognition programs, just with different program owners within the company and different goals. A sales incentive program – even in the channel – recognizes the efforts of the sales force or customers. As the Incentive Research Foundation found in the 2019 Voice of the Market report, “US businesses take an expansive view of incentives, rewards, and recognition. Program owners utilize a wide variety of tools in the pursuit of people-driven results, tailoring their strategy based on the business objectives and the audience.” This remains true today and the products and services of recognition and incentive companies can reflect that fluid approach.”
 
Of technology, she says, “In the coming years we are committed to leveraging AI and technology to drive innovation and efficiency in our recognition, incentives, and loyalty programs. We recognize their transformative potential, but we also understand the importance of responsible deployment. By balancing the benefits of AI and technology with stringent governance practices, we aim to create value-driven, secure, and personalized experiences for our clients and their participants.”
 
For her complete views, see RRN: Susan Adams of Next Level Performance on What’s Ahead for the Industry

 Mary Anne Comotto, President, Partners for Incentives, Cleveland. Founded 1951

Comotto sees continued growth for her company next year based on increased interest from promotional products distributors in selling incentives, recognition, online gifting platforms and more. With what she feels is little new competition in the types of low-cost sales, channel, recognition, incentive, and gifting technologies her company offers, she expects additional growth from companies trying to lower costs by combining more different types of engagement tactics on one low-cost platform.

Comotto sees the increased interest from organizations in program design and measurement as an opportunity for her company, since it employs five full-time program design professionals to support the company’s distributor partners.  “We are happy to let the big incentive and technologies battle it out for the Fortune 1000 companies, when there are so many smaller company divisions or small-to-medium size enterprises crying out for better ways to engage their people.”

 Ryan DeGrand, Principal,  Pro Am Golf, St. Louis; founded 1975

 
According to DeGrand, Pro Am is benefiting from increased participation in the golf game following the industry’s surprise turnaround during Covid. The number of golfers has been rising, with the United States Golf Association (USGA) reporting over 3 million players with official handicaps for the first time in its history.  The sport is also broadening its demographics to include more women and people of color and is experiencing a boon in technological advancements in terms of advanced sensors, wearable devices, AI coaching programs, not to mention virtual reality simulators enabling people to play courses around the world, including at an increasing number of retail outlets.
 
This, says DeGrand, is driving more demand not only for golf products in incentives, rewards and recognition, but also more growth in golf experiences, such as personal fittings at the leading club manufacturers or at organizational events.

 Marc Matthews, Founder, CEO, Pulse Experiential Travel, Charlottesville, VA. Founded 1980. 

The increasing focus on personalization, cost-sensitivity, flexibility, experiential travel, and sustainability continue to benefit Pulse Experiential Travel, explains Matthews.
 
“All the research I see is that more people are looking for unique, authentic experiences, and more free time in incentive travel. With companies mindful of costs, individual travel enables organizations to reward the very top performers with travel without breaking the bank, especially when they know the cost of our certificates is guaranteed for two years from issuance.“
 
Unlike with many other reward options, “we see very little breakage,” he points out. “People use their Pulse Experiential Travel certificates.”  The ROI is easy to measure, in many cases, because “the travel certificates are not issued until someone has achieved the required goal.”
 
He also sees continued increased demand for small group experiences, often in conjunction with major sporting or entertainment events.  “It appears that companies are spending some of the money they are saving on real estate with work-from-home options” on hosting high impact team-building experiences.
 
Individual travel also helps organizations meet their sustainability goals, he adds, not only by reducing the number of airline flights in group trips but also because “our company offers offsets in the form of contributions to specific ecological objectives with every travel certificate issued.”

 Annette Gregg, President, SITE, Chicago, Founded 1973  

 
Since Covid, Gregg reports, “the incentive travel industry has experienced a strong rebound, with pent-up demand driving increased bookings as organizations use travel as a key motivator for rewarding but also retaining top talent. However, challenges such as fluctuating airfare costs, geopolitical uncertainties, and tightening budgets due to economic pressures are creating an environment in which careful planning and ROI-focused programs are essential.”
 
Sustainability is also becoming a non-negotiable element of program design, particularly outside of the United States, where it still remains for many a mere curiosity, she notes.
 
Key trends cited by Gregg:
 
Customer demands. “We are seeing a shift towards more personalized, unique experiences. Travelers are seeking immersive and transformative journeys rather than traditional luxury. Programs that emphasize wellness, cultural connection, and sustainability are gaining traction.” US buyers have also highlighted a massive increase in the incidence of free time as a key program component, reflecting both the underlying budgetary issues and a new zeitgeist amongst qualifiers.”
 
New types of customers. “Emerging industries such as tech startups and remote-first companies are leveraging incentive travel to foster team cohesion and engagement. These companies often look for creative, unconventional destinations and formats. These programs reflect new workplace practices like work from home and are not classic incentives in that they often involve the entire organization, not only those who qualify. “
 
New services. The adoption of technology continues to shape the sector, with tools for real-time program management, attendee personalization, and hybrid components playing a significant role, she says. “Also, there’s a growing demand for diversity, equity, inclusion, and belonging (DEIB)-oriented programs that reflect organizational values.”
 
Regional fragmentation. Greater and more dramatic differences are being reported across global regions, starting with overall economic performance, she reports. While in the US growth remains good, in Great Britain and many key EU countries, business appears to be flat. Parts of Asia are still in recovery mode and haven’t yet regained 2019 economic levels.
 
From a program design perspective, the fragmentation continues, with US programs favoring free time, eschewing sustainability and CSR (corporate social responsibility) and opting for resorts and, in particular, all-inclusive resorts. Programs in the EU and Asia value sustainability and factor it into program design.

 Rob Catalano, Chief Engagement Officer Co-Founder, WorkTango, Toronto. Founded 2015.  

 
Catalano is "cautiously optimistic for growth in 2024.  Looking at the IRR field from an employee experience lens, if 2023 was any indicator of the decline in market growth, then it was one of the more challenging years in the history for this space.  Coupled with the fact that cuts to expenses were on the radar for many industries this past year, it has been more critical than ever to establish ROI.”
 
He adds, “That all being said, the state of the space I believe is back on the incline. Companies are starting to smartly refine and redirect spends in not only incentivizing and rewarding and recognizing employee behaviors, but also in promoting critical business results.”
 
Some of the trends he sees include:

• “Building a more intentional culture of recognition in order to build connections in remote/hybrid work and recognize and engage employees through challenging times where they are in many cases being asked to do more with less (and reinforce purpose and values). WorkTango is working to support companies in ensuring there are positive connections through technology: Enabling more peer-to-peer and always on recognition versus structured and formal programs.”

• Data to make better business decisions. “WorkTango is supporting integrated HR (human resources) technologies to not only measure engagement, but have data in real-time to see the influence of recognition, reward and incentive activities to measuring employee sentiment and the impact of these programs (and correlation to business results, such as customer satisfaction, profitability, etc.)”

• His company’s customers, he says, “are continuing to find ways to engage and enable leaders as a critical stakeholder. In uncertain markets and through organizational change, leaders are critical to success.  WorkTango is helping by creating leadership tools to create their own incentives that are easy to manage for their teams, or enable recognition and rewards at a team level, as well as using data to nudge leaders with opportunities to engage their team further or amplify recognition of their teams to them they would otherwise not see.”

 Growth, he expects will company from the many organizations “that are still in the infancy stage when it comes to robust recognition and reward strategies. Even with the economic climate, many companies can save time and money by leveraging technology to streamline, add efficiency, and add value by building a culture of recognition and see impact from consolidating all disparate incentive and reward programs onto a single platform.  Given that, there is huge growth opportunity.”

 

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