Although tough economic times are when motivation is most needed, many companies scaled back on incentive programs during the depth of the recession. Now, however, incentive planners say companies are more willing to invest in programs geared to boost the bottom line and stay ahead of the competition.
In a recent SITE Foundation survey of incentive professionals, 62 percent of the respondents said they expected to see an increase in the use of motivational travel over the next six to 12 months, while 84 percent predicted improvement over the next one to three years.
To get some additional perspective, Meetings Focus spoke with several leading incentive experts on what they are experiencing in the current marketplace.
Are you seeing an uptick in incentive business for the year ahead?
Gary Cornwell, COO, Galactic Marketing Incentives, Arlington, Texas: We have seen our group size start to increase again, although we’re still doing the same amount of trips. Our participant counts—and money spent per trip—slipped during the bad economy. It’s now starting to go back up. People are heading back in the right direction. They know that incentives are their way of trumping the competition. Everyone wants to be the first to rev people up.
Adam Lawhorne, president, Meeting Incentive Experts, Chicago: I’ve been a SITE member for 13 years and have seen a lot of cycles in the industry. People are deciding to do incentives again, sometimes at the last minute. Fortune 500 companies are not putting money in the stock market, so they have more money than they’ve had in a while. The incentive budgets are getting better, although not back to where they were in 2003. But we’re seeing some good budgets for last-minute incentive programs. Customers want to spend money on name entertainment and on five-star resorts.
Jeff Broudy, executive vice president, United Incentives, Philadelphia: Our experience is that incentives are on the upswing, with renewed interest and activity from various types of industries to have a program running in 2011. From our standpoint, we’ve seen a tremendous increase in the use of channeled incentives for dealers. We’ve not seen the same increase in programs directed toward the employee sales forces. This is not surprising. As the economy come around, companies want to make sure they keep their best customers, so dealers are their first priority.
And some companies that stopped doing incentives for awhile now see an opportunity to get back into it before their competitors do. Some of the upswing is stems from a competition thing.
Are there any significant trends you’re seeing regarding incentive programs?
Mary MacGregor, president, SITE; vice president of account development, BCD Meetings & Incentives, Minneapolis: In terms of how our business goes to market, shorter term bookings are more prevalent. For a traditional incentive program that is announced a year in advance, we’re still seeing the traditional 15- to18-month window. However, our clients are combining business initiatives into single events, which means more meetings are combined with incentives. That makes the window shorter than with a traditional incentive program.
The trend toward smaller group size and shorter length of programs really became an issue a couple of years ago as companies were looking at budgets and spend. A lot of our clients have already determined to travel with less people and to shorten the event by one or two days. They want to keep people in the field. No significant trend there—that train has already left the station.
Broudy: Some of the changes are in the number of participants rather than increased instances of programs. The size of programs is growing because business is trending upwards, therefore creating more qualifiers. But while programs are increasing in size, it’s coming from a smaller base. They’ve increased from a year or two ago, but are not back to where they were before the recession. There’s cautious optimism out there.
One element that is growing during programs is a greater emphasis on creating a sense of affinity for the company. The business sessions are more involving and engaging—there’s more interested in listening to the audience. Not just someone standing behind a podium. There’s more use of interactive technology where people can respond to how they feel on specific issues.
Andjela Kessler, president, Incentive Travel and Meetings, Atlanta: I’m seeing a lot more integration of incentives with meetings. It used to be very separate, but now it’s much more done in combination. For instance, there’s a trend for an incentive program to be tied in with an annual company meeting, with the incentive segment getting more VIP treatment. There will be a general meeting, but with a separate component for an incentive group.
Cornwell: The core of the incentive has not changed—companies need incentives to increase the bottom line. It’s all about ROI. No one spends a million dollars on an incentive trip without the idea of getting more than that back. Companies who have scaled back have seen that it doesn’t pay off. I’ve seen people who’ve cut back on quality and size of the incentive find that it had a negative impact—lack of growth and on their ability to maintain market share. Incentives are a very viable way to increase business.
What about the types of activities offered during incentive trips?
Nola Conway, president of Global Destinations Marketing, Beverly Hills, Calif.: Clients are coming back to golf and spa, however many are also looking for other types of experiences such as rock climbing or learning about the local history. There’s more interest in participating in something related to the destination.
Cornwell: In my view, I don’t think people ever cut back on golf and spa. Those are huge parts of the program. They have scaled back slightly, but never removed those things entirely. Now there is a greater tendency for things tied in with the local area such as CSR [corporate social responsibility] programs. Putting together bicycles for kids. Not all groups are doing CSR, but many are. There are benefits for the community and company alike.
Broudy: Our clients are doing more with less and trending more toward CSR activities and purpose-built recreation. There’s a much greater focus on what I call reasonableness—achieving the same impact without the excess. Budgets for banquets have diminished, but there is an interest among the earners to really maximize their sense of engagement with the sponsor and with each other. That shows up in CSR. Giving is the new getting.
In fact, we’re even seeing a trend for CSR in non-travel incentives where people have the option of donating their awards to charities. It’s something that makes people feel good.
Are perception issues influencing incentive buying decisions?
MacGregor: All of our clients have a conscious awareness of perception around the properties or brand that they choose to do business with. Making sure it’s in line with their objectives. That the property aligns with that. Luxury and over the top is a challenge for some, but we have clients who still want the five-star brands. It’s a very conscious business decision. If they want to reward their top performers or top customers and it aligns with the business objective, they will use the luxury product. But there is certainly more cautious decision making with regards to perception.
Kessler: I think there is a definite shift in perception, with resorts and luxury properties getting off the black list. With the latest election, there is definitely change in the air. Corporations are not as concerned with image anymore.
Conway: There are still some companies such as pharmaceuticals who would rather not see the words ‘resort,’ ‘spa’ or ‘golf’ mentioned. However, incentives from the technology, medical, real estate and communications sectors are choosing high-end resorts.
Broudy: Value is trumping perception this year. However, the inclusions are more heavily scrutinized. The recent Incentive Research Foundation Pulse Survey indicated a continued sensitivity to perceived luxury and this has shown in the areas of inclusions and room gifts.
People are doing more this year and expect to do more. But they are starting from a new base, not going back to the years of excess. It’s not about how can you top this, but how can I do it better.
