Our recent interview with Eric Anderson, Sales Director for the PMC incentive division of Almo reminded us of a serious challenge that we, the associations and our fellow media in the rewards and recognition business, should all remember: This is still an unknown business.

Despite Incentive Federation research indicating U.S. companies spend over $50 billion on rewards, almost no one I’ve met outside of our business has ever heard of it. In our interview, Anderson points out that it amazes him how many businesses buy rewards bulk at retail simply because they don’t know any better. He said he has seen situations where one department in a company is buying through the special markets channel while others shop at retail. Even if in some cases retail is price competitive with the special markets channel, he said that the extra services and convenience far outweigh the benefits of using most retail solutions for merchandise rewards. In that same interview, Anderson made another unrelated comment that might help explain how this remains the case: this is a much smaller industry than we think.

Working for one of the largest wholesale distributors active in the incentive business, carrying a large percentage of the leading brands and only selling through intermediaries, Anderson suspects his company does business with most of the leading incentive, recognition, loyalty and related companies in the marketplace. So how many serious volume resellers are there really, we asked? His answer: probably under 500 companies. Compare that with the advertising industry, in which there are estimated to be at least 8,000 firms, or the promotional products business, with over 20,000.

Over the years, some of our industry organizations and trade magazines have undertaken various efforts to make businesses aware of our marketplace, usually focusing on the importance of using incentive programs, and they should be supported whenever possible.

Perhaps it’s time to undertake an effort with an even simpler message: Businesses can get better price and service for most reward programs through the special markets channel than they can through retail.

After all, everybody likes a deal.

In a recent Rewards Recognition Network (RRN) article, we quoted recognition innovator Cheston Elton, who has now become a major proponent of the broader field of engagement, as saying: “When someone hits their five-year anniversary and a company sends them a link to a catalog, the real message is ‘We don’t know you at all. Hopefully there is something in the 500 things in the catalog that will make you happy.’ When you know someone, you don’t give them a catalog.”  

Elton’s instincts have been confirmed by a new study produced for the Incentive Marketing Association (IMA) by the Incentive Research Foundation (IRF), which found that the manner in which rewards are given is almost as important as what we actually give. It turns out that the true impact of rewards is based on the sincerity with which they are selected and given.

This research, produced by Megg Withinton with Intellective Group, confirms the concept of “engaging rewards” that is the foundation of www.RewardsRecognitionNetwork.com. The study was based on in-depth questions asked of over 450 program participants of different demographics and job titles, finding that the intrinsic elements of award selection and presentation are as important as the extrinsic elements.

Selecting awards is as much of a science as media selection in advertising – maybe more so – since it demands a careful understanding of the company’s brand, the message it wishes to convey, the recipient, his or her significant other and family, and the company as a whole. And because this reward is presumably being given to someone important to the organization, selection and presentation are even more critical.

Based on almost all of the research we know of, rewards, when used properly, have nothing to do with compensation; they are a means of expressing personal gratitude for the loyalty and performance of people in a way that resonates throughout his or her community of loved ones and the organization as a whole.

The science of the proper use of rewards & recognition is as much in its infancy as the field of engagement, and once more we have the Incentive Research Foundation and its industry sponsors to thank for providing the necessary evidence.

We can certainly understand what it feels like for Brett Hatch, having probably been the first about 15 years ago create a product around “merchandise experiences” and now having to watch as other brands start launching their own “experiential” offerings (see Maui Jim: What It Feels Like to Create a Trend) That’s the price innovators pay, and Hatch’s warning to the marketplace has merit: “Let’s not kill the Golden Goose.

Hatch asserts that in the rush to “product-ize” merchandise experiences, his competitors risk destroying the category with slap-dash programs that overlook the critical human elements required to maximize the experience. These events, he says, aren’t about creating more sales for the brand, or even about the brand itself, but about the brand experience. “It gets down to the details of each event and the employees managing the experience knowing how to make participants feel like winners,” he argues.

A lot is on the line with these experiences. “They almost always involve an organization’s top performers and its executives, and the reputation not only of the event planner but the corporation’s reputation is at stake,” says Hatch.

RRN believes this new category of merchandise experiences is potentially too powerful in the new era of engaging rewards for the malpractice of a few to kill the concept. That said, it’s the mission of RRN to highlight effective practices in all areas of engaging rewards so that practitioners have the tools to make the best decisions for their organizations or their clients.

Let’s face it, the brand of the rewards and recognition industry has rarely received the respect it deserves. First of all, what is the name of this business? Is it the incentive business, the recognition business, the loyalty business? Chances are, the typical executive barely knows such a field exists. When the recession hit, many of the major brands outsourced special markets to third-party incentive fulfillment companies – again, what are they called? – and one has to credit the incredible industriousness of the incentive companies and incentive representatives who have helped keep this industry alive during the toughest of times. All too often, the corporate decision-maker has no training in rewards and recognition, program design, or the dozens of significant research reports available on the subject, and makes decisions based on hunches or the need for a quick fix.

Call me an optimistic, but there are significant signs that if this industry seriously utilizes the research created by the Incentive Research Foundation, the Incentive Federation and others reported on the Rewards+Recognition Network (RRN), properly trains its sales and program design teams, and most of all has the courage to push back against uninformed corporate practitioners with practical research, there’s a reasonable chance that corporations will gain a new respect for the power of recognizing people correctly – i.e., in a manner tailored specifically to each person that addresses both intrinsic and extrinsic needs and, when appropriate, also involves the family or significant others.

Companies invest millions in media buying services to deliver their ads and other messages to the right audience, usually knowing that even the best ad campaign amounts to “carpet-bomb marketing,” while rarely applying any science to the rewards going to the people most important to their organization – loyal or engaged customers, distribution partners, sales and non-sales employees, etc. The moments when people receive an award and their interaction with it sometimes for years and years afterwards deserve much more focus than the typical corporation or planner believes is warranted.

As David Roberts, President of Power Sales Inc., a leading whole distributor, noted recently, there’s growth in the customization of branded awards and personalization, “but the growth in personalization hasn’t happened as quickly as I would have expected so far, because it’s such a logical thing to personalize an award.”

Why is the engagement movement so important to the rewards and recognition business? Because when companies do wake up to the science, they will make the appropriate investment in ensuring these programs are done right, and that in turn will help “de-commoditize” the industry with a new respect for the expertise required to select precisely the right award and award experience for each person, whether it be merchandise, a gift card, travel, cash, or whatever.

While the publishers of RRN stand behind the science that incentive programs get the best results when they address all of the areas of engagement, we understand that many organizations simply don’t have time for the planning and collaboration within their organization to implement engagement to achieve a short-term strategy. This is why many people turn to reward programs, especially in the sales or other business areas with very clear return-on-investment measures in terms of bottom-line benefits, to achieve short-term results.

And there’s another reason: Properly selected rewards can help spark performance in the short term if properly selected.

RRN recently published an article that outlines 10 questions you should answer to make sure your reward selection gets the best results.