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7 If you want to run a successful incentive reward program, incorporate these top retail trends
NOT TO BE IGNOREDIncentive Program Tips
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3 Foreword
4Peer-to-peer recognition
4Personalization
is prized
6Diversify your product
offering
7Brand collaboration
7In-Person and Online Platforms are Merging
8Experience is King
8Speed Wins Hearts
and Minds
9BONUS FEATURE: Taxes and Rewards
ForewordAccording to IHL Group, a global research firm for the retail industry, consumers are evolving when it comes to how, why, and when they shop. As all incentive program participants are also consumers, this evolution directly affects what types of rewards they will find motivating — and how they want them presented. So, as professionals charged with the responsibility of motivating consumers, employees, and B2B partners, it’s important to be up to speed on the changing shopping habits of consumers, the key trends and shifts of the retail industry, and how they apply to business rewards and recognition.
Here are seven current retail trends to pay attention to in order to create effective reward programs.
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Personalization Is Prized
In 2018, retailers have awakened to the idea that the consumer’s primary problem is no longer the scarcity of products but rather the scarcity of genuine, human, social connection. Retailers are going to great lengths to create a sense of community to bring their customers together, and the same is true for incentive rewards.
In the workplace when employees feel valued, they are inspired and motivated to continue working hard. Peer-to-peer recognition is another way to cultivate an environment where employees feel appreciated not only by their managers but also their colleagues. Encouragement from peers can go a long way, even if it’s as simple as saying “thanks” on a more public platform. This is why more organizations are turning to technology to manage spot awards and peer-to-peer recognition programs. These kinds of social recognition programs, combined with rewards, offer employees the opportunity to not only receive acknowledgement, but also give it to others.
By clearly communicating common goals with employees, effectively explaining how each team member plays a role in the company’s overall success, and giving colleagues a place to recognize each other’s efforts, community will grow, which ultimately increases your company’s bottom line.
2017 saw the rise of retailers focused on personalization and curation, especially with the rise of subscriber‐based services like those that deliver personalized packages of pre-assorted, curated clothing on a monthly basis. Once consumers get a taste of what can be, they expect the incentive programs that target them to deliver the same personal VIP treatment. Many may think customizing a reward consists only of engraving the recipient’s name, but creating the customization that consumers crave starts at the very beginning with the product selection offered.
But before choosing the selection, it is important to know the preferences of your audience and their past gift history. Understand your anticipated audience in terms of gender, demographics, and geography to inform your choice of rewards.Keep track of how many participants are repeat earners from prior programs. Rotate the rewards offered in the program’s online catalog each year so you’re not repeating the same products and causing recipient fatigue. Keep the mix of electronics, sports equipment, watches, handbags, etc. constantly changing to maintain interest in the program.
Demographics also play a key role in the reward selection. While categorizing an audience based on their designated generation (such as Baby Boomers and Millennials) is helpful in knowing the types of rewards they value and expect, it is also important to look at different life stages represented by your audience.
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Peer-to-Peer Recognition1
RETIREES. Retail gift cards, travel rewards, and outdoor leisure rewards such as golf accessories will work well with this group. Another important category for this group is toys that they can gift to their grandchildren. Rymax proposes these options:
NEWLYWEDS. This group will gravitate toward travel rewards and reward categories like housewares and electronics that help furnish a home. Rymax recommends these rewards:
PARENTS. Whether expecting first-time parents or parents with young children, you want to provide reward options for essentials such as high-chairs, along with toys and travel gadgets for this group. For this group, Rymax suggests a variety of essential products such as these:
Does the majority of your audience own a home? Enjoy the outdoors? Have grandchildren? Look at your audience this way to clearly decipher the rewards that you should offer. Here’s how to apply this concept to your reward program recipients:
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Creativity for Kids Pottery and Refill Set
Victonix Lexicon Dual- Castor Global Carry-On
Cuisinart 5.5-Quart Stand Mixer
LG 43” HD SMART 60HZ LED TV
Juliska Puro Dappled Cobalt 5-Piece Setting
Project Nursey Smart Baby Monitor Camera with Alexa
Mellissa & Doug Chef’s Kitchen
Step2 All Around Canopy Wagon
Voice Caddie SC 100 Golf Swing Caddie Portable Launch
Monitor
Diversify Your Product OfferingRymax reminds us that most times, incentive trends mirror retail trends, so it’s important to understand what’s trending in the marketplace and offer those same rewards to your audience. For example, many trends have indicated that everything old is new again, so offer new, in-demand products that inspire nostalgia like the Victrola Record Player or the Snap Instant Digital Camera from Polaroid. With every group, it’s important to understand not only what’s trending in the marketplace, but also what your audience is looking for and provide a healthy mix of product categories for your audience to choose from.
Product selection should be inclusive of many product categories that appeal to both the wants and needs of your audience, from practical household items to products of more indulgence. Make sure the selection runs the gamut from modest value to high-end.
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STUDENTS. This group probably consists of younger Millennials and Gen Zers who lack much of the disposable income enjoyed by their parents and grandparents, so restaurant gift cards, or branded currency that can be used towards dining or entertainment work well for this audience. Rymax notes that trending consumer electronics also appeal to this group as they were born into a digital era. This group grew up with the internet and technology like Bluetooth devices, virtual assistants and wireless earbuds are part of their everyday lives. Here is what Rymax would offer this group:
HOME OWNERS. Consider housewares and home improvement rewards such as small kitchen appliances, lawnmowers, of-fice essentials, etc. Another big trend among homeowners are voice-control products and smart devices that can turn their home into a smart home. Here’s what Rymax advises:
Black & Decker 20” 13-Amp Corded Mower
Jabra Elite True Wireless Earbuds
Victrola 7-in-1 Classic Wood 3-Speed Turntable
Garmine Vivosport Activity Tracker in Limelight
Yale Assure Lock & Look Door Viewer
Echo Show
808 XL-V Smart Speaker with Amazon Alexa
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Last year saw many unexpected partnerships among retailers, such as Saks opening a limited-time wellness-focused department called the Wellery at its flagship 5th Avenue location, where it collaborated with the wellness online magazine, Well + Good. When two brands partner up in unexpected ways — especially when they are in different industries — both can benefit from the brand equity of the other.
This concept can also be seen with incentive rewards when presenting reward options through customized product bundles. Bundling products together from brands that complement each other will provide more value for the recipient and create a more customized experience, making an impression even after the initial redemption or receipt of the gift. For example, bundling a Yale Lock and Nest Connect Key-Free Touch-screen Deadbolt for homeowners adds that level of personalization and increases the perceived value of the items.
One of the biggest shifts in retail is the shift between in-store, in-person and online. Today’s consumers want what they want, when and how they want it, and given all the shopping venues available to them, those wants are critically important and retailers are striving to create platforms that engage their customers in each environment.
Likewise, incentive planners are making greater use of social media environments to engage with both consumers and employees and create communities that build brand awareness externally and reinforce corporate culture internally.
Brand Collaboration
In-Person and Online Platforms are Merging
4
5
Rymax suggests pairing a Yale Lock and Nest Connect Key-Free Touchscreen
Deadbolt with a Yale Lock
The retail space is seeing continued experiential marketing in both brick- and-mortar and online, giving customers a deeper and more differentiated brand experience.
The same is true of incentive programs. Customized gift events are growing in popularity as companies are making a greater investment in creating the experience of being rewarded and recognized. R-SITE (Rymax’s Strategic Interactive Themed Events) are unique, one-of-a-kind reward experiences that are customized for each audience. Whether set against the backdrop of a beach or in a casino ballroom or meeting space that simulates a department store, these strategically crafted interactive events are hands-on reward experiences that give clients, employees, and customers an opportunity to shop for items in-person, in an exclusive setting. Reward experiences like R-SITE offer products that connect with your specific audience, customized product bundles, expert staff that serve as personal shoppers, and a quick checkout system that is hassle-free for attendees. Successful organizations are also spending more on the rewards themselves.
The Incentive Research Foundation examined what top-performing companies do differently from their average counterparts and they found that not only were they more likely to run programs for sales (90 percent), employees (88 percent), and channel partners (81 percent), but they spent more money on the rewards and recognized a larger number of employees. The end result was that they create a motivation experience that not only engaged their employees but energized them as well.
2017 saw an increase of over 24 percent year over year growth in e-commerce, according to Doug Stephens, founder of Retail Prophet. As Stephens explains, the challenge 10 years ago was con-vincing people to buy online; now the challenge is getting products to consumers in a window of time that they deem acceptable.
That same sense of expediency is also expected by the incentive partic-ipant. Whether in person or online, the user experience is important to bringing the whole experience full circle. When redeeming for a reward in person at an event, having a quick
check-out system is key to ensure that attendees leave on a positive note. The same is true when using an online platform. If the check-out process is complicated, or the site isn’t quick and responsive, or if shipping takes longer than antici-pated, the full experience loses value and will demotivate customers and employees.
Using these seven trends as a road map, incentive planners can stay a step ahead of the curve, and the com-petition when it comes to motivating workforces, connecting with B2B partners, and building relationships with consumers. n
Experience is King
Speed Wins Hearts and Minds
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R-SITE (Rymax’s Strategic Interactive Themed Events)
customizes in-person reward redemption experiences
BONUSSPECIAL
SECTION
Now that the dust has settled, it’s time to clarify how the Tax Cuts and Jobs Act (TCJA) signed into law on December 20, 2017, treats rewards. First, the incentive industry can breathe a deep sigh of relief. While tax reform will bring sig-nificant changes for employers and employee compensation and benefits, the Senate and House came to an agreement that will have only a small effect on taxation of incentives and recognition awards. Currently, achievement awards are excluded from employees’ taxable income if certain conditions are met. Under the final bill, in 2018, deductions for an employer and the exclusion for the employee will not apply to the employee’s receipt of “cash, gift coupons, gift certificates, vacations, meals, lodging, tickets to sporting or theater events, securities and other similar items.”
Additionally, it’s important to note that a deduction/ex-clusion for any other tangible property and gift certificates allowing the employee to select tangible property from a limited array of items pre-selected or pre‐approved by the employer would still be allowed. An example of pre‐select-ed or pre‐approved tangible property would be an award catalog arrangement provided by incentive and recognition suppliers who understand the nuances of eligible achieve-ment awards. The amount eligible for exclusion is based on the fair market value (FMV) of valid achievement awards. Let’s look at the tax code today to understand what remains in effect. For an achievement award to be eligible for the exclusion, it must be part of an IRS “qualified plan” which means the award must be presented as part of a “meaning-ful presentation” and not be “disguised compensation.” In addition, there’s a $1,600 limit per year for achievement
awards given to an employee in an IRS-qualified plan ($400 for awards that aren’t qualified plan awards).
However, the exclusion does not apply in these instances:• A length-of-service award can only be tax-exempt every five years.• A safety achievement award is not tax-exempt for a manager, administrator, clerical employee, or other profes-sional employee.• A safety achievement award is not tax-exempt if more than 10% of eligible employees previously received safety achievement awards during the year.
So, what actually changed? Little is slated to change with the exception of tightening the definition of tangible awards effective in tax years beginning after December 31, 2017. The further good news is tax reform presents a big opportunity for companies to spread the windfall among their employees and shareholders -- and some of this will be directed to rewards programs. According to a survey of more than 300 large- and mid- sized employers conducted by Willis Towers Watson, nearly half (49 percent) are con-sidering bolstering at least one total rewards program after the passage of TCJA. Beginning in 2018, corporations will enjoy a tax cut from 35 percent to 21 percent. This boon may result in continuing or raising bonuses and/or increases in wages and benefits year-over-year. However, as companies consider the best ways to leverage this new financial advan-tage, longer term strategies such as investing in programs that will enhance employee engagement, productivity, and organizational culture should be a priority.
The Tax Landscape for Rewards
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