Special Report - Is the IRR Field One of the Biggest, Unknown Industries?

Yes, is the unanimous answer of executives at a diverse group of companies in the field. Almost no one outside the world’s largest companies that use incentive or recognition companies are aware that there is a formal field estimated to have sales of close to $90 billion annually or formal practices related to process design and return-on-investment measurement. The big question is: what to do about it. The Enterprise Engagement Alliance and its BrandMediaCoalition.com outreach program held a live town hall meeting on the subject on May 10 at 1 pm ET. Click here for a recording and summary of the show. 

 

Mike Donnelly, President of Chicago-based Hinda Incentives, a leading incentive company, and before that President of Maritz Motivation, is blunt. “No,” he says, management in the business world is generally not aware that there is a formal industry focused specifically on incentives, rewards, recognition, gifting, and motivational events in the same way they are aware of the existence of advertising or travel agencies.” 

 

Yes, he believes “there’s a benefit to trying to educate general management at SMBs (small- to mid-size businesses) and larger companies on the existence of and services of this business.”

 

How to address this issue? “We are an industry that loves to talk to each other (good thing), and we are an industry of professional practitioners providing value-added, ROI-based solutions built on the art and science of our industry. While we pull together as an industry to educate each other (good thing), we have not been able to pull together successfully as an industry (a bad thing) through corporate outreach and education in a common and united voice to educate the business world. The industry associations have strategically positioned corporate outreach as a vehicle to promote and provide data and resources for the industry, but until the industry comes together to invest money and resources in a unified campaign (think tourism, travel, Got Milk), industry-wide success will be limited.”

 

He concludes, “The industry must adopt a ‘collective success’ campaign approach that educates and enables the business world to find/use industry expert resources that will help businesses to successfully run incentive, reward, recognition, motivational event, and gifting programs.”

 

Two industry veterans are equally blunt. Mary Anne Comotto, Partner of Cleveland, OH-based Partners for Incentives, a leading incentive company that sells exclusively through promotional distributors, incentive, recognition, and loyalty companies, says, “I do not believe most businesses know there is a formal industry that focuses on incentives, rewards, recognition, and motivational events, and I do believe there is a benefit to educating general management. As this type of marketing isn’t my area of expertise, I wouldn’t know how to do it.”

 

Barb Hendrickson, an incentive industry veteran, who started as an incentive representative, served on many association boards and committees, and who was a long-time owner of an incentive and fulfillment company, observes, “The industry remains as unknown as it always has. Yes, we could benefit if companies knew about us, but I have no idea of how that could be accomplished.” 

 

No one really knows the percentage of businesspeople who have heard of the IRR business, as there are no precise independent surveys, says Richard Garlick, Chief Research Advisor for the Incentive Research Foundation and Principal Consultant for Richard Garlick & Associations research. Therefore “it’s difficult to assign a percentage of companies that are aware of incentive companies, although we know the overall business is doing well. IRF studies indicating both the intent to use incentive partners and projected 2022 budgets for these partnerships suggest growth in this industry. However, there are still those who choose to buy incentives directly from retailers. For example, two-thirds have consistently indicated they will go down to their local retailer to buy gift cards rather than use a third-party gift card consolidator even though it would be far easier to do so. There is still education to do regarding industry awareness.”

 

From the perspective of Jeff Dalton, CEO and founder of Paramax, a Red Bank, NJ engagement technology company that was one of the first in the market still in business today, “The very large companies are aware of this business as they get a lot of attention from the big incentive and recognition companies. Beyond this group, there is no awareness of a formal industry. Part of the problem is the suppliers’ dependance on incentive representatives or other third parties, who concentrate on the big customers and who for the most part don’t have time to assist either a smaller end-user client or a distributor.”

 

As a result, he thinks the focus of any outreach effort should be on the small- to mid-size companies perhaps funded by a coalition of distributors or other interested parties. 

 

The state of industry awareness “is a mixed bag,” agrees Kimberly Biggs, Sales Manager for Corporate Sales at United States Luggage, makers of Briggs & Riley and Solo brands.  “Management at most big companies are the ones aware of the field.” She believes these professionals “are very attuned to the industry and know whom to call and how to talk about customization and personalization and know how to negotiate.” On the other hand, she believes there are many more professionals just now learning about this field because of the “great resignation.” As more companies face the challenges of attracting and retaining people, “the more people will stumble upon this business.” That said, “any type of corporate outreach effort could help the entire industry.”

 

Anne Jetter, a veteran of the gift card business, is Principal of AM Jetter Business Solutions; New Business sales executive for Stoner Bunting, a gift card consolidator, and currently a member of the Incentive Gift Card Council of the Incentive Marketing Association. Of general awareness of the IRR field, she says, “I would say that we’ve been trying to chip away at it, but there’s a lot more outreach necessary to make our industry known. I think we have made some progress over the years, but not much.”

 

She believes that businesses are losing as much as is the industry because “they are missing out on expertise and value. The buyers don’t know what they don’t know, so they often are not getting access to different customization, personalization, or drop-shipping opportunities nor taking advantage of discounts available to volume corporate users. Many still don’t know that they don’t have to go down to the local retailer to buy gift cards and pick, pack, and send them on their own.” 

 

A corporate sales executive for a leading restaurant chain, who for company policy reasons cannot speak publicly, agrees “that unless you’re in human resources, I don’t think you would have heard of this industry. Yes, more needs to be done to promote the incentive and recognition category to make people more aware of the services we provide.” 

 

From the perspective of Links Unlimited, Corey Wolfe, Director of Sales, observes that the level of awareness “depends of the department or division of the company.  I believe most marketing professionals do know but many in human resources and sales management, for example, do not.”  Of industry outreach he adds, “Of course it would be of value. All departments of a company should be made aware that there are avenues to attain products/services outside of the retail channel that can be used for incentives, rewards, recognition and motivational events. There are major dollars being spent on these products through other divisions outside of marketing in major corporations but those dollars flow into retail and should be directed to the corporate channel. In the case of a company like Links Unlimited, we are constantly educating our reseller partners to make sure their sales professionals are not just talking to their marketing contacts but also meeting with the other departments to see what their needs are when it comes to using products as incentives, rewards, recognition and within motivational events.  The reseller needs to let those department heads know they are a source for all use cases.”

 

To George Cassius, President of Earthgear, a long-time supplier of travel gear, bags, and accessories to the corporate market, the industry remains largely unknown and can benefit from an outreach effort. He wonders whether it’s time for someone to recreate the New York or Chicago incentive shows from the 2010s or whether more effort should go into supporting regional events produced in incentive representatives.  

 

Peter Goldberger, Founder and CEO of the Incentive Team, an Atlanta-based channel incentive company, believes “the majority of management does not understand the science behind what we do. This becomes most obvious when chatting about how to budget for a program and how to calculate the return on investment. This is the point of the meeting when I begin to see people begin to take notes.” He elaborates: “Imagine purchasing a house without a home inspection. You would never know if the structure is sound or if there are so many issues it is going to become a money pit. In our industry, the structure of the program is everything. Is the budget and strategy adequate to make the audience change their behavior? Are we focusing on the sales process (if it is a sales incentive)? How do we keep the audience engaged in the program?  Do we have everyone in the channel focused on the same initiative at the same time?  How do we move our B customers to A customers?  How do we protect our A customers?  When management and larger companies do not lean on professionals to help structure their programs, the results typically are not favorable. This, of course, hurts our industry, as now leaders may ‘Oh yes, we implemented an incentive program, it didn't work.’ Often, this isn’t the case. The truth is, if the company's product and value are competitive, it was the structure and implementation that didn't work.”

 

Goldberger “loves the idea of promoting education in our industry. I have earned my IP (Incentive Professional) designation, which means I understand and utilize the principles of results-based incentive programs and can apply the science in designing programs. Professionals in our industry must lead with strategy, structure, and results.”  

Concurs Mike May, President of Bright Spot Incentives & Events, “The IRR industry is a narrow niche that sadly is unknown to many business executives. When I was 40 years of age, I went through a career change and used my personal ‘halftime’ to explore other industries. I was introduced to this IRR industry that had been unknown to me for a 20-year career in multiple leadership roles across multiple industries in big and small companies.” He believes “this wonderful field is likely known to sales operations executives (who function as the administrative arm to the vice president of sales), but the thousands and thousands of sales reps and sales managers are likely in the dark on this resource in their sales toolkit. Certain segments of the marketing department might know, such as event managers or channel marketing leaders, but those in advertising, marketing communications, and digital marketing would be in the dark. Human resources would be the one discipline with knowledge, but even that would be narrowly focused on recognition. Many disciplines would have no clue, such as finance, engineering, manufacturing, operations, etc.” 

 

As for education, “It’s very difficult for B-to-B services to ever approach the awareness of B-to-C services such as advertising agencies or travel agencies.  B-to-B marketing is laser-focused on targeted audiences, which inherently limits wider awareness.” 

So what does corporate management need to know about the IRR business? He suggests, “Where I think incentive companies can better serve their clients is helping them understand and use incentives to motivate performance more strategically. The research strongly shows that one size no longer fits all but rather flexibility and personalization of awards is becoming more critical, particularly with younger participants. You can no longer just go in with a merchandise catalog without some ideas to strategically position your products to provide maximum motivation to employees, the sales force, and channel partners.” 

Paul Hebert, an industry consultant who has held numerous management positions in the IRR field over his career and who is one of its first bloggers, has a slightly different view than the others interviewed. “Yes, most managers and executives know there are specific fulfillment companies related to travel support and gift card and merchandise fulfillment. But, no, they don’t know there are design experts that can help them understand the components of behavior influence, help determine the structure, recommend communication strategies, suggest effective rewards (if needed), help recommend or even create measurement processes, build effective reporting dashboards, conduct real return-on-investment analysis, etc. - basically, all the things that would make the initiative successful. To me, it is like going to the pharmacy to buy pills for different ailments we ‘think’ we have but don’t realize there are doctors (experts) who can provide advice and caution on which pills will work versus those that will cause a bigger problem. Program malpractice is the bane of the industry, and why we have had had to fight a negative reputation for years.” 

 

Hebert believes in the benefit of an outreach effort but that the focus must be on design, measurement, and effectiveness, “so that companies don’t end up creating ongoing entitlements or create unintended consequences from their initiatives.” He sees the need for more case studies on actual program design and interviews with businesspeople who took the intelligent step of consulting with a design professional before launching an initiative. Therefore, funding should come from organizations that have a stake in promoting effective process design, rather than from those who just wish to sell rewards, he believes. 

 

Observes Richard Blabolil, President of Des Plaines, IL-based Marketing Innovators, “it would be more powerful and effective for corporations, if there was an industry with a collective message (i.e. Got Milk) about IRR and the overall benefits. Too often the messaging from industry partners is about why one product or solution is inferior to another – which creates confusion and discord in the market – making it difficult to agree on a common message.” 

 

Blabolil “believes promoting the benefits of IRR initiatives is critical. There is a ton of data and research that shows such benefits to a company and its employees. This road leads to the industry of providers who are devoted to assisting in such initiatives from full solution design and platforms to award fulfillment. We need to emphasize the commonality of industry providers and then let each go to market with its own value proposition and differentiation.”

 

“I don’t believe that management in the general business world are aware of the existence of a formal industry focused on recognition and incentives, and what little awareness that might have on our sector is based on the erroneous assumption that motivational events have no clear objectives and certainly no measurement,” says Patrick Delaney, Managing Partner of Soolnua, a Dublin-based destination marketing firm; past owner and/or executive with leading destination management firms for decades, and a board member of leading associations over the course of his career.

 

He ”absolutely” believes in outreach because organizations  “are leaving a very effective management tool untested and unused.” He suggests the effort needs to begin through “a clear demonstration of the power of motivational programs to effect real measurable change in behavior with comprehensive case studies. We also need to collaborate with credible academic partners to initiate and deliver comprehensive reviews of our work. Who is going to be first to test the effectiveness of their programs?” 

 

 

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