Impact of Low Customer and Employee Engagement
New EU CSRD Disclosure Laws
End of Third-Party Cookies
Demand for ESG Reporting
More Scrutiny of Program Design Capabilities and Thought Leadership
Personalization Grows, Event Gifting Is Back, More Focus on Experiences
Lack of Awareness Is Hurting the IRR Industry
The Rise of Bleisure
A Return to the Same Old in Meeting Formats
Rise of Enterprise Engagement Technology
Potential Impact of AI
By Bruce Bolger
For a little-known field, the IRR field abounds with opportunities. Here’s a snapshot of key trends half way through the year in all aspects of the business as 350 representatives from gift card; incentive and recognition company, master fulfillment companies, convene in Boston for the Incentive Marketing Association annual summit.
Summary of key trends. There is a growing strategic focus on people across the enterprise due to unprecedented low levels of customer satisfaction and employee engagement around the world. New stakeholder disclosure rules coming from the European Union EU Corporate Sustainability Reporting Directive will require large companies to publish unprecedented details on employee turnover, health, and safety, and customer engagement starting in 2025 for 2024. A growing need for permission marketing is coming based on the end of third-party cookies, creating more demand for incentives. More RFPs (requests for proposals) for incentive and recognition companies are seeking information on an organization’s ESG (environmental, social, and governance) practices and thought leadership, program design and return-on-investment measures. Enterprise Engagement technology is on the rise, and AI will surely have an impact on the IRR field as well.
Other trends. There remains continued growth of brands in the promotional market. The supply chain issue is essentially history (barring a UPS strike). Personalization continues to grow in gifting experiences. Event gifting has come back with travel, and “bleisure” travel (vacations tacked on to travel) appear to be on the rise. The one prediction made by RRN that so far is notably wrong: that companies would blow up traditional face-to-face meeting formats to make them much more interactive. So far, a continuing review of program formats shows almost no change post-pandemic, with decreasing hybrid elements. Here are more details on the above trends.
For better or worse, companies turn to incentives to motivate customers and employees and cut back when they are happy with demand or when they need to cut costs. Of course, there are many types of incentives other than those offered by the IRR industry, but the master fulfillment and incentive and recognition companies that specialize in the IRR market continue to report brisk demand as companies of all sizes continue to battle the engagement and loyalty war.
The yet little known “anti-greenwashing” Corporate Sustainability Reporting Directive will directly require at least 3,000 US companies and many of their suppliers and distributors to report detailed metrics on the management of employees and independent contractors, and employees in the supply and distribution chain, as well as customers and communities. Disclosures and metrics include employee turnover; pay equity; diversity; health and safety; employee voice; performance review practices, discrimination lawsuits and more. Because the organization’s practices and metrics will be on full display in a free, publicly available database, and require an audit from an independent authorized firm, these reports are expected to get the full attention of the entire C-suite on overall employee and customer engagement. Attorneys say the law will have even greater impact in the US than the EU General Data Protection Regulation (GDPR), which has transformed data management in the US.
As reported recently in RRN, marketers can no longer rely on using advertising networks to display their ads across multiple web sites without one's direct consent, because the major web browsers no longer support the third-party cookies that make this possible. Marketing experts all agree that this will require companies to use more incentives, promotions, as well as content, services, and other devices to build their own permission-based databases based on "first party data." The potential benefit is huge: the ability to target market to people who are truly engaged. Organizations traditionally have relied on sweepstakes, contests, events, and other promotions to get people to sign up, all positive news for the IRR industry. The big challenge: many marketers still don’t know how to use permission to build relationships through compelling strategies and tactics.
As an advisor to dozens of companies in the engagement space, we hear about what organizations are requesting in their proposals for incentive, reward, and recognition programs. Even before the implementation of the new EU CSRD, just now taking effect, large companies increasingly are asking specifically for ESG reports and even information on independent ratings. While smaller companies are not expected to provide the same level of detail, it’s impossible to leave this section blank. This may explain why more organizations such as the Promotional Products Association International are seeking to hire managers of Corporate Social Responsibility.
Another increasingly seen request on the RFPs I hear about is information on how solution providers design and measure the programs, including return on investment. Increasingly, organizations seek demonstrated thought leadership; i.e. research published by reputable third parties.
The increasing interest in tangible impact is demonstrated by the growth in customization and personalization reported by leading industry players such as Links Unlimited, Power Sales, and 1-800FLOWERS.com. RNN has reported on the return of sustainable physical gift cards in Europe to tap the tangible benefits of “wallet” power.
On the travel side, Incentive Research Foundation surveys indicate a continued growth in interest in authentic, experiential travel experiences.
As indicated in a recent IRF study and this town hall meeting the Enterprise Engagement Alliance conducted via Zoom last year, this remains a little-known field that cannot be good for anyone. With little to no knowledge or training, most people planning incentives shoot from the hip, based on their own assumptions, and buy through consumer retail (rather than business divisions) because they don’t know better. While there are about 14,000 marketing and advertising agencies in the US, there are only several dozen serious incentive, recognition, and loyalty companies and perhaps 1,000 or so distributors when there are over 200,000 companies with sales of $10 million or more. Most buy at retail or increasingly through highly marketed gifting and recognition programs like Awardco, Blueboard, Gifted, etc. that mostly use Amazon or other retail sources, many bypassing our industry altogether. It’s safe to say that while promotional distributors are an important and growing distribution channel, most are too successful selling promotional products to get involved with selling performance improvement programs that have longer sales cycles and perceived lower margins.
People have always extended business trips with vacation time depending on the location. This trend has only accelerated post-pandemic, based on multiple surveys. A big driver will be the need for companies to meet the growing demand for reducing carbon impact: enabling employees to overlay vacation time is a simple way to reduce air travel while facilitating a valuable employee perk, especially for the road warriors whose travel can put a significant strain on families and significant others. Hint to conference producers: arrange for special pre- or post-event “bleisure” deals if you aren’t already doing so.
RRN predicted that the ability to access high-quality panel discussion content on demand via recorded video, proven during the pandemic, would lead to a new approach to meeting planning by associations and corporations. People spoke of turning the traditional format on its head to be 80% interactive learning and sharing versus 20% of keynotes and panel discussions. Instead, a consistent review of meeting formats shows little change: 80% of the time remains devoted to keynotes and panel discussions.
Since the 2000s, engagement technology has tended to be siloed in the same way as sales, marketing, and human resources organizations, with different technologies for different stakeholders. The increasing need for aligning stakeholder interests, the realization that all audiences need the same types of engagement tools, i.e., surveys and feedback, referrals, communications and social walls, learning, rewards and recognition, etc., and the general desire of organizations to create a seamless digital experience is creating demand for enterprise engagement technologies to engage all audiences.
In a recently published report for the Incentive Research Foundation by Allan Schweyer, the organization’s Co-Chief Research Advisor, “Generative AI for Personalized Incentives, Rewards, and Recognition,” Schweyer writes: “By integrating AI-fueled performance management tools with a robust reward system, organizations will shift from a generalized to a more individualized approach to IRR. AI and machine learning will monitor and analyze employee performance in real-time, identifying achievements and accomplishments that merit recognition, thus ensuring timely feedback and appreciation. This might include awarding points based on accomplishments such as learning, achieving sales quotas or other objectives, exhibiting behaviors aligned with values, or sharing knowledge with colleagues. AI applications could integrate learning and performance management systems with recognition platforms to enable dynamic recognition and feedback, bolstering employee motivation and engagement, potentially enhancing the organization’s employer brand.”
He continues: “The promise of generative and large language model AI tools, such as chatbots, co-working robots, and collaborative platforms, is that they will enable organizations to tap into deep data pools to design meaningful, personalized recognition and rewards for every employee. Yet only the largest firms and those that have been most active in amassing workforce data will have the necessary ‘deep data pools’ at their disposal. Moreover, predictive tools can’t work on newly hired employees until the system collects sufficient data on their preferences, which could take many months.”
Other applications for AI in IRR:
- Designing programs based on a better analysis of past programs and outcomes.
- Using past outcomes to better design future programs.
- Creating first drafts of copy for marketing and other communications.
- Coming up with ideas for itineraries based on audience interests and logistical issues.
- Conducting basic research for a business proposal and writing first drafts.
- Brainstorming ideas for promotional campaigns.
- Selecting products for a promotion.
For More Information
Bruce Bolger, Founder
Enterprise Engagement Alliance at TheEEA.org
914-591-7600, ext. 230
RRN: Your Partner in Success in Incentives, Rewards, and RecognitionPublished by the Enterprise Engagement Alliance at TheEEA.org
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RRN: Your Partner in Success in Incentives, Rewards, and Recognition
Contact Bruce Bolger at 914-591-7600, ext. 230 or email Bolger@TheEEA.org when you want to get to know or get known in this growing $1.76 billion marketplace.