Non-cash incentive programs are expected to remain part of businesses’ toolkits for attracting and retaining talent, despite the potential for an economic slowdown in 2023. Data from the Incentive Research Foundation’s “Industry Outlook for 2023: Merchandise, Gift Cards and Event Gifting” report, produced with the support of PPAI, shows that incentive programs remain an effective approach to motivating a modern workforce.

The Study

“The 2023 Industry Outlook provides a bullish view of the non-cash incentive industry both in North America and Europe. Budgets for merchandise, gift cards, and event gifts all increased in 2022, and are expected to rise even further in 2023,” says Stephanie Harris, IRF president. “With stubborn inflation and ongoing workforce challenges, non-cash incentives are considered more valuable and impactful than ever.”

The IRF study has tracked key trends in economic optimism, budgets, and award types for incentive programs for 13 years and in 2023, for the second year in the row, featured input from respondents in both North America and Europe – the United Kingdom, Italy, Spain, France, Sweden and Germany. The 543 industry professionals participating oversee non-cash incentive programs including merchandise, gift card and event gifting programs.

Fundamental Optimism

Overall, the IRF’s research found that incentive industry professionals’ financial and economic expectations for 2023 were largely positive. It found similar responses among both the North American and European respondents in the study.

  • Among North American respondents, 88% agree that their “company would have a strong financial performance” in 2023; 47% “strongly agree.”
  • North Americans’ expectations for 2023 were ahead of the 78% who predicted, in the previous year’s survey, that their company would have a strong 2022, and ahead of the 85% who expected in 2019 that 2020 would be strong year.
  • The financial outlook among European respondents was also positive, at 82%, with 30% strongly agreeing on the robust 2023 outlook.

The IRF’s “Net Optimism Index” balanced out those that anticipate the economy will have a negative impact on non-cash reward/recognition program design from those that believe the economy will have a positive impact on program design.

  • Among North Americans, 53% expected the economy to have a positive impact, compared to 25% believing it will have a negative impact. The +28% index net score was almost double last year’s +15%.
  • European respondents also registered a +28% net score.

In 2022, the IRF added a new question to the survey about inflation’s impact on the value of non-cash incentives.

  • In North America, 50% of respondents stated that high inflation increased the value of non-cash incentives, compared to 23% who said inflation decreased their value.
  • Among respondents in Europe, 38% said inflation makes non-cash incentives more valuable, and 29% said they are less valuable.

Incentive Programs In 2023

The IRF’s data shows that incentive program budgets in 2023 are expected to grow in both North America and Europe. In 2022, North American average spending per person was $1,060. In Europe, the average spending in 2022 was €650 ($690).

  • In North America, overall incentive budgets are expected to increase by 44% in 2023, with merchandise increasing 44% and gift cards 48%.
  • In Europe, overall incentive budgets are expected to increase by 52% in 2023, with merchandise increasing 50% and gift cards 55%.

The IRF data on merchandise gifts showed a focus on different product categories in North America and Europe in 2022.

  • In Europe, the most common merchandise gifts are electronics (51%), clothing (45%) and office accessories (44%).
  • In North America, clothing apparel (66%), logoed brand merchandise (56%) and food gifts (53%) are the most frequent.
  • The average value of a North American merchandise reward is $191, and the European average merchandise value is €152 ($161).

Gift cards use in incentive programs is expected to pick up in 2023. The IRF study found that 62% of North American and 50% of European respondents anticipate an increase in gift card spending in 2023.