The growing corporate focus on engagement and retention will earn the incentive, recognition and reward industry a seat at the table
By Leo Jacobson November 16, 2018
Every year, Incentive brings together a group of industry thought leaders from all segments of the incentive, engagement, motivation and recognition business to talk about the state of the industry. This year, 11 participants gathered at the Lotte New York Palace on Madison Avenue and 50th Street in Manhattan to discuss topics that ranged from the C-suite’s growing focus on retaining and engaging top people to the difficulty of retaining Millennials to the importance of ROI, as well as what’s happening in the merchandise, gift card and travel award categories. What follows is an extended version of the transcript of that conversation.
- Paul Gordon, Senior Vice President of Sales, Rymax Marketing Services
- Josh Lesnick, President & CEO, Associated Luxury Hotels
- Richard L. Low, CPIM, Vice President Special Markets, Citizen, Citizen Watch America; Past President, Incentive Marketing Association (IMA)
- Cindy Mielke, CPIM, Director, Marketing & Sales Operations, GC Incentives
- Bob Miller, President & CEO, One10
- Linda Nuss, Regional Manager, North America, German Convention Bureau
- Lynn Pavony, CIS, Director, Incentive Sales, Four Seasons Hotels and Resorts; Vice President, Fundraising and Events, SITE Foundation
- Mike Ryan, Senior Vice President, Client Strategy, Madison Performance Group
- Jennifer Scavina, Executive Vice President and Managing Partner, EGR International Inc./BlackLab Media
- Allan Schweyer, Chief Academic Advisor, Incentive Research Foundation (IRF)
- Hugo Slimbrouck, Director of Strategic Partnerships, Ovation Global DMC; Past President, Society for Incentive Travel Excellence (SITE)
The State of the Incentive Industry
BOB MILLER: I think the business is really well positioned. When you look at the economic conditions both in the U.S. and globally, you’ve got a pretty strong economic forecast. I think that sets the expectations for companies focused on growth, and our types of services tend to be growth investments. I think that in an environment where people are trying to grow, you inevitably have to invest your talent, so I think this idea of how do you attract, retain and engage quality individuals is at a higher strategic level within large organizations than it has been in the past. So, the combination of a strong economy and us having solutions that address real issues for large corporations puts the industry in this situation where it’s well positioned.
MIKE RYAN: Being head of client strategy, my observation of the industry is really through the buyers’ eyes, and I think there’s good news and troubling news for the industry. The good news is that businesses’ talent management concerns have never been greater. It’s hard to find a great employee. It’s hard to keep them. It’s hard to appeal to different generations. It’s difficult to manage remote workforces. So, executives are open to the conversation of, “how do you do that?”
The challenge for our industry is we’re competing with a lot of other talent-management issues. We’re competing with consultancies that go in and talk about engagement as a score, not as an activity. We’re competing with learning development firms that go in and talk about how training and learning is really the genesis of engagement. I think it’s imperative for our industry to begin to talk to executives on that level. We’ve talked about changing the conversation before, and I think our industry could be and should be talking in the context of business issues. Engagement is no longer simply just an HR concern. It has material benefits at the marketing level, at the operations level. It is a global issue, independent of whether or not you’re a global company. It’s a brand issue because of what companies can say both to customers and also to each other on social media. So, the organizations in our industry that are prepared to have that conversation are going to do very well.
Paul Gordon, Josh Lesnick, and Linda Nuss
RICHARD L. LOW: Where’s the industry right now? We’re stagnant. In my opinion, we need to change the conversation, change our focus and encourage more companies, show them what a good program looks like, show them what rewards and recognition can do, and how that helps them retain their employees.
ALLAN SCHWEYER: I think really this is a pivotal time for the industry and if reward and recognition professionals can step up now, they might fill a gap. As chief academic advisor for the Incentive Research Foundation, I both conduct research and produce research, but also work very closely with academics — the university professionals around the world who are more and more attracted to this area. I see a lot more journal-quality and published material written about incentive rewards and recognition. It’s a really burgeoning field of study.
And a lot of the research we’re doing, and a lot of the academic research, is really showing that to drive these citizenship behaviors and build these powerful cultures that most successful companies in the 21st century exhibit, non-cash rewards really line up to these motivators better than anything because they attack people’s emotions. They really make memories and create that reciprocity effect where people want to work harder and stay with organizations, where their customers are more loyal and spend more.
PAUL GORDON: We need to have a greater voice of what the incentive reward-recognition piece is. I find that it’s almost stigmatized in terms of what we do. We drive innovation. We drive productivity. We drive imagination. We drive the family unit in terms of feeling good about what dad or mom does at work because they won this item. It is vitally important, whether you’re a Millennial, whether you’re a Boomer, whatever manufacturing segment you’re in, to drive those types of behaviors. So, I think that’s a task that we have, collectively.
CINDY MIELKE: I think that this is an exciting time for our industry. Incentive-solutions providers need to come to the table better prepared to have larger conversations about helping the leaders in companies look at recognition, at engagement, as part of the culture that they’re trying to build to attract and retain talent.
JENNIFER SCAVINA: I feel like right now it’s becoming real, it’s becoming tangible. Now we’re being called in to the C-suite, and they want us to talk to HR. They want us to talk to the sales head. They want us to be involved in a long-term communication, and it’s music to my ears. Ten years ago, EGR International made a very proactive, very specific turn and said, “what are we going to be?” Because it seemed as though the incentive piece was just not enough. It’s an incredibly powerful arrow in the quiver, but we need to be talking about the whole package. So, we said we’re an engagement agency — have us be involved because you will actually get more bang for your buck. There’ll be more return on investment. They weren’t ready. To me, this is a great time for our industry, and I think they’re elevating the conversation, but also recognizing that we know what we’re talking about. We’ve been talking about return on investment and they’re seeing it.
Even pointing out this big concept of retention. That is where we want to live. I’m having calls from HR, where HR never called us. I find it kind of encouraging, and they’re saying, okay, how do we blend the different things that you’re doing? So, it feels like an elevated conversation.
It’s All About Retention
GORDON: I think human capital has always been taken for granted. I’ve had meetings where I’m sitting there with a senior person and I’m telling them what this program is and they say, “Well, they’re lucky to have a job,” and I’m thinking, no, you’re lucky you have a job because these are the people that are driving your business and you need to recognize them. They’re not just somebody that you’re filling a slot with. Given the time and what it costs to actually on-board somebody, you don’t want that turnover. You want to pick the right people and keep them.
SCHWEYER: What’s hopeful is, if you look at the McKinsey Quarterly or Harvard Business Review and magazines of that sort, you’ll see that almost the majority of the articles are about human capital management. It’s changed in the last few years. Almost the majority now are talking about engagement, retention, compensation, and so on. So, it’s getting there.
RYAN: The term “human capital” makes people leave the room. The term “intellectual capital” makes people like CFOs get to the edge of their chair, because that’s something you can identify with. That’s not just about the cost of replacing people, which it is, but it’s the cost of having relationship with clients. It’s the cost of having know-how, how to get things done in an organization. It’s all the things that come with making a company work, and again, it’s just a repositioning what we do in a manner that speaks to not our language, but in the language of people who write checks.
Jennifer Scavina and Cindy Mielke
SCHWEYER: I so disagree with what you said, Mike. Human capital gets you in the C-suite now. That’s why [leading consulting firms like] Accenture, McKinsey, Deloitte, are all focusing on that now. They know that financial strategy is not going to differentiate you anymore. When you talk about how you can differentiate on talent, engage people, inspire employees and attract them, that is what’s getting you at the table right now.
RYAN: I don’t disagree with that, but it’s not keeping them at the table.
SCHWEYER: I think it is. Just this year, you know, Ram Charan, the guru of gurus to CEOs, Dominic Barton, [managing partner emeritus] of McKinsey and Dennis Carey, [vice chair of senior executive recruiting firm Korn Ferry] wrote a book called Talent Wins: The New Playbook of Putting People First. It just came out saying this is what we need to focus on, and I think that’s such an opportunity. Reward and recognition professionals can get into that space. I think that’s going to carry them to a seat at the highest strategy tables out there.
Elevating the Conversation
SCAVINA: We want to elevate the conversation, but there’s a lot of common sense and there’s a lot of humanity that comes into it. I like what you said, Mike, about changing the conversation to intellectual capital because sometimes just that language shift makes people say, “let me look at this differently.” I often say to my people and clients in conversations that you can make a tangible difference to people’s lives. It’s not rocket science. Take the finance and put it into something that means something. We have a client that came to us and said, “it’s a channel, so they can sell 10 different products: ours and nine competitors.” They’re saying to us, “what do we do?” I said, “well, college tuition, private school tuition, Montessori school tuition — allow them to self-direct.” It’s great for the brand because when we write a check to a Montessori school, this organization’s brand is on it. You’re not going to want to walk away from that relationship.
We say, “never do away with the incentive trip because that’s the bonding, that’s your face time, and that’s what everybody wants: face time with the leadership.” It doesn’t matter how old you are, if it touches your life, you remember that. I think it’s almost common sense — that human factor — but it works, and you build a relationship they don’t want to walk away from. They don’t want to jump ship.
MILLER: One thing that’s encouraging is that a lot of the support organizations are coming a long way, like the IRF and SITE, the Human Capital Institute, and all those. I think we need a tighter connection to academia and I think this ability to range up and down in the conversation as appropriate is what’s important. If you are in the C-suite, you want to talk about human capital, it’s important. I think far too often as an industry, we’ve tried to do that with the idea being that somehow that’s going to [turn into] more margin, and we tried to sound strategic and I think that’s a little bit dangerous. It has to be authentic. You can’t say, “I’m here to speak to you today about human capital management the same way that McKinsey would, and that’s why we think you should go to the Four Seasons Scottsdale.” You can’t quickly jump from strategy to tactics. I think as an industry we’ve tried to do too much of that in trying to get to the sale, because our revenues were on the back end. If you really going to be in a consulting role, you have to be careful. If you’re going to tell IBM that, or Toyota or General Motors, you better be really good at it. I think it has to be authentic, you have to be able to scale the conversation based on the audience.
RYAN: Human capital management is obviously important to companies, but in terms of making a buyer understand why they need this, it’s important for them to understand that it’s not just a nice thing to do. It’s a business necessity. And I think that’s the migration that our industry needs to make. We need to be more proactive. We need to ramp up our level of credibility and we need to go beyond where our traditional buyers are and start thinking more about the ancillary areas of the business that are also dependent upon people. That’s a scenario of coverage that I don’t think our industry gives enough credence to. There are many senior-level people that have business issues that are related to people, that just don’t understand the benefit that we can bring to their issues.
NUSS: I think it’s an education factor. A lot of times it’s still the old mindset of, “well, they’re lucky to have a job,” and I think that’s also a cultural issue. If somebody is saying, this company’s had a lot of turnover, that’s going keep me from going to work for them. So, I think it’s an education, everybody having to shift the mindset of it’s an emotional experience and that it’s no longer just nice to have, but a must.
SCHWEYER: That emotional connection is so important. It’s not as cool to work for IBM as it used to be, but they have this corporate executive services program where if you are a really top performer, you get to go to a village in Africa or Central America, and you and give away IBM equipment and know-how and stay there for a month, just like the Peace Corps. It’s by far their most subscribed program. People want to get in that program. People who leave it have said things like, I would never quit IBM after that experience.
PAUL GORDON: I think the reason why the conversation changed dramatically is the Millennials are these magical unicorns that somehow no one knows what to do with, and it made everybody sit back and go, are we doing it right? Are we doing it wrong? What do they need? I think that’s where the conversation has become elevated. I literally have had people leave the company to go someplace else because the other company has beer Thursday and it’s like, what? That was the driver? I think that’s why these companies and the consultants are looking at it, because it’s somewhat of a concern.
I think that the reason the conversation has been elevated is that people are really scratching their heads, and the problem is that when we finally solve the Millennial thing, isn’t like Generation Z around the corner?
BOB MILLER: [One10 bought a company, Aimia, that had] very much embraced the modern office look. It’s a renovated warehouse, it’s standup beanbag chairs, you can walk on the treadmill, all those kinds of things. I think it does have a halo effect — if someone will invest in the offices that way, they’ll do other nice things.
Mike Ryan, Hugo Slimbrouck, and Lynn Pavony
But when we actually did surveys of Millennial workers, they actually liked it less. It was completely contrary to what we thought. They were like, “we don’t want to hang out in coffee shops. We’ve been doing that. We were hoping to get an [office] door when we got a job.” One of the most profound things we do as a company is a concept called Work Your Way, which means as long as you work it out with your manager, you work wherever you want in the world, every day, at any time, on your mobile or whatever. It just can’t be frontline customer service people. I think that’s the kind of benefit that — we could never put that genie back in the lamp. There’s a fair amount of debate about whether it’s great for productivity or not, but I can tell you for morale, boy do young people love that.
ALLAN SCHWEYER: The research shows that when you do things like that, it’s not so much the beer on Thursdays as that people attribute to employers like that an aura of caring for employers. They almost take the beer as a proxy for an employer who’s going to do other nice things for them. And so, they leave, and not necessarily just for the beer. Some of the research shows they will leave for a lower salary in return for an organization that’s perceived to care more.
GORDON: Some of these tech companies create a fun environment, right? They can go in there and they’ve got three different restaurants they can choose from, dry cleaning is done for them, they can do their food shopping. But what the employee doesn’t realize is that now they’re working 12 hours a day.
So, they’ve lost the quality of life part of it, but they’re induced by that environment. And there’s a burnout rate, and then there’s a turnover rate on it too.
LINDA NUSS: After a year or two, I’ve had people turn over, not because they were dissatisfied with their jobs, but because in New York, it’s so easy to get another job after a year, year and a half, so what do you do as a company to retain them, because it’s perfectly normal. It’s not necessarily looked down upon anymore, at least not in New York, that you only have a year or two under your belt in each position before moving along. So how do you get them to stay on board a little bit longer, because onboarding is so expensive?
MIKE RYAN: The other side of connection that I think sometimes gets overlooked fundamentally but is a big part of what we all do is the social connection. When you talk about a Millennial who’s been in a company for six months and is looking to leave in New York City, chances are they wouldn’t be doing that if they really had strong social connections with their coworkers. I think that when you look at what motivates workforces, it’s a lot more compact than companies think. You know, employee engagement is always talked about being intellectually committed to the organization and its values, et cetera. It’s really about being committed, as well, to the people on your right or your left.
You also need to look at the power that can have on a very tangible business attribute, which is the leadership side. When you talk about talent management and you break it down, it’s not just about acquiring people. It’s about building for the future, and companies are more worried about who’s going to lead in 10 years. We hiring somebody right now who is 25, 26, 27. Will they be a front-line manager when they’re 35 or will they be elsewhere?
GORDON: I think risk aversion is always the No. 1 thing that we face, whether it’s a good economy or it’s a soft economy. From the client standpoint, what does it take to actually carry this off, what are the moving parts? What kind of time do I have to commit, what’s the investment, those sorts of things. So, risk aversion is always top of mind.
What’s become even more important is it’s very, very, hard to get talent right now. It really is. Four percent unemployment is an issue. Not only is it an issue from the standpoint of there aren’t a lot of bodies, but there aren’t a lot of good bodies. I get people who come in and they want to make $300,000 a year. They can make $300,000 a year if they sell to make $300,000 a year, but we’re not out of the goodness of our heart. I think the perception of what their value is in the marketplace to where their role is, is an issue right now.
RYAN: We need to position what we do as a solution in the context of what business is worried about. Talk about uncertainty. I think one of the biggest things that they’re uncertain about relative to what’s happening in their world is the cost of labor. There is labor inflation on the horizon, no question about it, the supply and demand is just out of kilter. What we need to do as an industry is we need to talk about what we do as a legitimate and proven form of compensation.
It’s that simple. We talk a lot about the motivational side, we talk about trophy value, we talk about all the things that have been ingrained in the conversation of our industry, but what executives are tuned in to hearing is, okay, this is another form of compensation. And then you can have the conversation of, it’s more effective and, in comparison, it’s cheaper then cash. Then you can have conversations about how it can also be used from a communications point of view to distribute information about what your company stands for, and to socialize what that means.
So, I think when we talk about uncertainty, we talk about opportunity, and I think that’s one thing that we as an industry need to see and recognize and not be fearful of.
MILLER: I think your point about being part of compensation is a good one. We used to try to avoid that 30 years ago in the business. I think it goes even further, it’s not just compensation, it’s this whole total rewards concept of what’s the total value proposition of being an employee for that organization.
We need to help companies not just with the old-school thinking of I’m going to on-board an employee and motivate them, but how am I going to create a culture that attracts talent throughout my ecosphere — everything that is about people wanting to work with me as suppliers, people wanting to work for the company, and in the channel. How do you create that compelling, high-performance culture is what it’s all about, and it’s harder today.
HUGO SLIMBROUCK: But how much of this is being taught in business schools? How many business schools are teaching incentive travel as a motivation tool, as a solution?
RYAN: I have an MBA, and I think what business schools teach you to do is to think about business in a way that is beyond what the stated approach of business is. I think that if you’re creative and you’re consultative and you’re proactive and you understand basic sales — which is to speak in the context of what the buyer’s agenda is and not yours — the conversation will quickly move in that direction.
MILLER: One of the greatest services we can provide is helping a client think through, what is the business objective, because you can’t measure how successfully you’ve addressed it if you don’t really define it. I think that’s still really hard for companies to do. The bigger, the more complex an organization, the more challenging that is. It tends to be well, we’re a president’s club. We do it every year. If you know why you’re doing it, you know whether it worked, but otherwise, it’s sort of anecdotal feedback by people that they had a good experience and might come back, but it’s really hard to do true ROI.
I think our industry talks in generalities and not numbers, but I think when you really work hard to understand what’s the true forecast on an issue, what’s the true expectation of incremental growth, then you can present numbers that are legitimate and credible. You can present them using the math that they use. You’ve got to speak the language of the chief financial officers. That’s one thing I think we as an industry don’t do very well.
We also should be more aggressive in taking credit for something that we wouldn’t normally take. When you look at the sales incentive, for example, and you talk about improving sales in a particular period of time, what’s the value of that customer over the next two, three, four years? And can you bring that number back into your program? You have to discount it, obviously, but bring it back because it is real revenue.
MILLER: I think one of the real dichotomies when we talk about this is, one side talks about the science and analytics and ROI analysis, all those kind of things, all those credible, academic sort of financially driven things, but the flip side of that is, companies don’t just share their innermost objectives, their numbers, unless there’s a high degree of trust. So, the dichotomy of our business is, it remains a relationship-driven business because unless your client-interfacing people have the trust of the right people within the client, you never get the right information in order to apply the academics.
GORDON: I think as an industry, we need to be more proactive in talking about just how valuable what we do is to the overall culture and productivity and imagination and innovation and all that. That’s what we do. The results are very tangible and proven over and over again about what works, what doesn’t work and if it’s structure is right and it’s the best return on their investment because it should be self-liquidating and not only self-liquidating, it should be profitable because they’re getting a lift from what their desire is.
RYAN: And more profitable over other options.
LYNN PAVONY: ROI is what we’re all looking for, and we are getting there, but what are your objectives? We should all be speaking return on objectives. One, it’s retention of top talent, easily measurable. When you can see what the metrics are, what their numbers are each year when you have a well-run program, those people are making it year after year and their goals are going up and so your revenues are going up as well, but again I really emphasize, at least from a travel perspective, we’re talking about connections in an office space, connections on a trip. The connections that you make with leadership and your colleagues is truly magical.
The State of Incentive Travel
LYNN PAVONY: From a travel perspective, the industry is very vibrant. We’re seeing that a lot of our customers who once did not know how to quantify the return on an incentive program have really figured out that the benefits are manifold. One is, if you structure a program in a way that it provides an experience that is something very different for a top performer, they really work harder in order to achieve the program the following year. The other thing that I see is that leadership has recognized that it’s brought them an opportunity to bond with top performers, which results in retention and really brings a closer connection to the company culture.
HUGO SLIMBROUCK: Incentive travel, as a global tool, is different from region to region. It’s a mature profession in North America. It’s growing in Europe, but it needs a lot of support on the education side towards the C-suite. We haven’t done that before. It’s growing in Asia, as well, with very large groups connected to occasions. They like to have education mixed into it. And Latin America is catching up to the Brazilian market. Bragging rights are really the important thing for incentives there. They do not look at the corporate structure behind it.
JOSH LESNICK: We’re seeing, particularly in the U.S., a lot of growth, a lot of interest. A lot of the stuff we’re seeing is very personalized and customized and curated. A lot of the groups just don’t want to go and have everybody do the same thing. They all want to do something unique. It might be a social responsibility thing in the community, or other types of things.
PAVONY: I would say “one size does not fit all” is really what we’re seeing. When I talk to our sales team, they’re saying that their clients are saying their budgets are flat, when in fact they’re increasing their budgets, but not always increasing their per-person spend. So, their programs either are becoming a little bit longer or larger. Business is so robust that they actually have more winners and so the increase in budgets is to support more people, which is not necessarily keeping up with the increased cost of air and hotel room rates. So, we find that there tends to be a need for a lot of negotiation and our sales organization has become a lot more consultative in working within budgets and in trying to help them find a location or time of year in which the client can afford to stay with us.
SCHWEYER: Our research showed the same thing. The budgets are increasing, but not as quickly as the cost. Sixty percent said that.
SLIMBROUCK: There’s a lot of money going into the air. As for hotels, they stay in all the high-end brands, so there’s no money being saved there. We see some savings in the program elements being cut because people want more free time while they’re there.
PAVONY: There continues to be a real drive for unique experiences. It’s actually been great for us because it has pushed our teams all over the world to a point where everyone is becoming a concierge and cultural ambassador of the destination. Now it’s all about curated experiences, which really have been fun. As we consult with some of our clients who are, perhaps, running low in their budgets, some of these experiences are things that are very low cost and very high return, such as spending time with our culturalist in a certain destination and walking the grounds, or doing a morning run or stand-up paddleboard with our resort manager.
The Hot Destinations
SLIMBROUCK: What we have seen out of the North American market, which is the prime market for our company, is that it’s growing faster than we thought. We have put in a lot of effort in the market here and what we see is that companies start discovering new destinations. It’s the second-tier destinations that are really catching up. Just in my mailbox this morning, I had RFPs for Greece, RFPs for Croatia, Iceland, Finland. In Asia, long-haul incentives are going to Bali, to the Philippines, to Taiwan. Colombia is really catching on, Peru is catching on. These were not the top destinations of the past. Out of the U.S., you would get the business into the Caribbean region, so the Dominican Republic, Mexico, Jamaica and so forth, and European capitals. European capitals [and major cities] are still hot — Barcelona, Madrid. And Lisbon especially is No. 1 this year. But now people have started discovering other destinations. We have a partner in Munich and she’s doing fantastic on the incentive market, but Munich was never a prime destination. I think this audience is much more educated. They’ve seen the Parises, Amsterdams and Londons of the world and now are out to discover new destinations.
LESNICK: Secondary markets are very popular. We’ve also seen a lot of regional incentive trips that people can drive to, which is interesting, and a big shift.
MILLER: Some of the secondary markets — Austin, San Antonio, Charleston — are popular because they’re cheaper to get to, and have great product.
PAVONY: I would agree, domestically, about those secondary cities. I mean, try to find a room in Nashville. Internationally, I would say within our outbound U.S. travel we are seeing much more Europe than before, which is a really good sign. Portugal is really hot. It’s interesting, it hit the cover of Travel + Leisure magazine in 2016 as destination of the year and that brought more individual travelers. And when you have more individual travelers, the group market tends to follow. When you look at Costa Rica, it was very much that way. Greece’s economy has stabilized, and I think that has made organizations much more comfortable in bringing their groups there. Iceland is through the roof. I would not say it is hot yet, but the one to watch out for is Colombia. If anyone has a client that is really pushing them to provide an experience that is very different and new, Colombia would be the one to do.
LINDA NUSS: Germany is coming on the radar a little bit more when it comes to incentives. It’s not the traditional incentive trip, but we’re seeing a shift of more and more people looking for the smaller destinations. People are looking for that really special kind of experience, renting out a castle in the Alps, something like that. We’re seeing very specific and focused high-luxury level incentive trips or these big ones from Asia where it’s 2,000 people doing a trip through Germany.
SLIMBROUCK: The Chinese are everywhere. We have great incentives in Norway. Chinese are there. You go to Iceland, Chinese are there.
NUSS: In Munich we do have an influx because of the shopping and the connections are very easy.
In these smaller destinations in Europe, you’re going to have to do a one-stop or two-stop, and that sometimes is a factor that we hear — people don’t really want to do that. What we’re also seeing in Europe is a lot of combining of countries: doing a Frankfurt-Paris or Amsterdam-Hamburg combination.
SLIMBROUCK: And Munich-Salzberg or Vienna-Prague. Always in combinations.
MILLER: There is tremendous interest in the African Safaris.
PAVONY: It’s back.
MILLER: Oddly enough, people are now asking, are there secondary sites in Africa we can go to, so we aren’t repeating.
SLIMBROUCK: I would call it southern Africa, not South Africa, because it’s a combination of three different destinations: South Africa with Namibia and Victoria Falls. That’s the triangle that works best. It’s a combination of Cape Town with lodges and Victoria Falls, but now we’re seeing demand as well to Mozambique and Botswana and other countries. It’s really moving up very, very rapidly.
PAVONY: I find there’s a lot of interest in Dubai, but the conversion is very poor.
SCAVINA: Every year for the past six years, EGR has taken somebody there, and we’re not pushing it, so there is still the allure. It’s fascinating, even just pharma reps, how many of them are saying, “oh, yeah, I was there.”
Corporate Social Responsibility
MILLER: It’s in a lot of RFPs and you have to get a good score — they will score you on your CSR activities and your sustainability, and if you don’t achieve certain scores as a tier-one provider, then you have to have a remediation plan. I think it’s a very hot topic, and I think the hotel industry is stepping up to that, as well.
LESNICK: It’s table stakes.
SLIMBROUCK: You must have genuine activity. They have to really feel they have done something for themselves, for the community or for the world as large. I wouldn’t say CSR as CSR, but more as sustainable elements. Sustainability in the hotel is important. The way you serve food which is locally produced and so forth, the activities, gifts that are produced locally instead of flying them in and paying all the air charges, but true locally produced gifts.
LESNICK: There’s so much information available to your employees and around social media and what they can get access to. If you’re using a certain provider or certain destination that’s not environmentally friendly, socially responsible, I think you’ve got push back from your associates internally because they’re digging in and looking at this information that’s all readily available.
Marriott-Starwood Merger and Consolidation
LESNICK: It is less of a concern for independent hotels and more of a concern for the actual planners. I think they’ve lost buying power and they also don’t feel that a lot of the sales teams matter. It’s so big they don’t even know the product anymore —for a curated luxury trip, how could you actually know the product?
SCAVINA: I think the word on the street is, let’s see how this plays out. They don’t really know how this is going to affect us yet. And to your point, how could they possibly know all the information that I need them to know, because there’s such a vast amount of it now? That might just be perception as opposed reality.
Security and Terrorism
RYAN: One thing we are behind the curve on is safety and security, and I think you’ll see more and more RFPs coming in [demanding detailed information about security planning].
PAVONY: [Terrorism has] become much more commonplace. For Europeans, it’s been a part of life for so many years, in varying degrees depending on which country you live in. In the U.S., we were so shielded from it for so long and the recovery from an incident took a long time. I feel that we as a country have become much more resilient and when a situation occurs, there may be a stop for a moment and then there’s a reset and a move forward a lot faster than ever before.
NUSS: I think anyone who travels generally travels with the thought anything could happen anywhere. You never know. Anyone that chooses to do a travel incentive has an idea that it might happen, but it probably won’t. Like you said, people are more resilient to it.
GORDON: Las Vegas had never seen anything of that magnitude. It scared people off. I think New York is a little bit more resilient because we saw the ultimate terrorist attack and lived through it and things that are happening are a little different. But I think to your point, it can happen anywhere, and we’ve just sort of embraced that that’s the way it is now.
SLIMBROUCK: What you need to do is just be ready. You must have a plan as a destination, as a DMC, as a hotelier: What if something happens? And the most important thing is communication. [After the coordinated bomb attacks in Brussels, where I live, on March 22, 2016] we reacted very quickly. The whole industry got together. The next day, we were around the meeting table with the officials, tourism boards and so forth. The first thing we did, because it was 10 days before IMEX Frankfurt, was get our story together: What’s happening now? People who are in the city or coming to the city, what do we tell them? What is the situation, what is not happening? So, get all of those stories out of the way. This is what’s happening. This is what we’re doing. These are the contingency plans. This is what’s happening in the future. Once you have a plan in place like that, you’re much stronger. It was a lesson for everybody to re-look at your security protocols — every hotel, planner, agency.
Golf and Spa
MILLER: People like golf, but they seem to like spa more. The spa activities are really huge, [especially] if they can be curated or specialized. There will always be a certain golf faction that wants to golf, but that seems like a smaller percentage.
PAVONY: Our number of golf participants have dramatically gone down when we talk about group incentive travel. Has anyone heard anything about reducing the length of the game? I was talking to someone in the golf industry who told me that there’s discussion about changing the game to 12 holes. I think the big thing on a program that we see is that it’s a time for a couple to be together, and golf usually separates them. What we see is golfers shooting nine holes and then come back, because they can still have the rest of the day together.
RYAN: I’m an avid golfer and even on local courses, I’ve long supported the idea that you should break the course fees up into six holes, because I think nine holes in some cases can be a little bit too long. Just in terms of the game of golf, if people wanted to tee off at six o’clock, which is an hour after work if you leave at five o’clock, it’s even a struggle to finish nine, whereas, I think if you can think about playing at six, you can get more people out at twilight, it’s less of a physical tax for some people who aren’t in great shape. It gets you home by dinner. I can golf for six holes is not a bad idea. Twelve holes is not a bad idea. In many cases, 18 is an investment of time that a lot of people can’t make.
MILLER: The hard part is you’re usually somewhere where there’s a beautiful golf course, the more you try to make it fun and more inclusive, the more you’re going away from the purists.
European GDPR Privacy Regulations
SLIMBROUCK: [The General Data Protection Regulation] is there, and any company related to Europe or that has people on the program from Europe is [responsible] to follow the regulations. It’s on us [on the supplier side] to be completely compliant, which we have done. But for incentive companies in the U.S. doing business in Europe, be aware of who you’re working with, because this can affect, this can ruin your client’s program. There’s no escape from it.
MILLER: I can tell you we have teams of lawyers and data security experts looking at that, and to your point, you have to be compliant, so we have to find ways to do that. The trouble, I think, is being compliant is in contradiction to other agreements that are in place about data retention and things like that. So those are things that have to be worked out.
SLIMBROUCK: We did an exercise where we looked at in what instances do you get data from your clients, be it corporate clients, association clients or third-party agencies, and we found 17 points where we get information. It’s as simple as 10 people going for a dine-around tomorrow night at X restaurant. If there’s a name attached to it, you have to be compliant, even with as small a list as 10 people. So, we have adapted our protocols after an event, about which documents will be deleted. For instance, a list of dine-arounds. After the program is gone, one week later we delete them. It’s very thorough, but it’s the only way.
What Are the Hot Award Categories?
RICHARD L. LOW: You look at Amazon and say, “what are the top 10 items in each category, and that’s what’s happening in our world?” People who are program participants are just consumers. They are influenced by the exact same advertising, all the information brands put out there in social media and print. Right now, the higher-end is doing better than mid-price is.
PAUL GORDON: That’s really across the board, whether it’s a TV, whether its jewelry, whatever it is. People are going to gravitate, because they’re feeling pretty good. Luxury items are much more in demand in terms of redemptions. Anything with connectivity is very, very hot, whether it’s the Google platform or the [Amazon] Alexa. People want the brand. They want the real deal. Electronics are always going to be big. Celebrity chefs, in terms of cooking stuff, are very, very hot, as always.
ALLAN SCHWEYER: This year’s IRF Outlook study found the most popular awards are electronics first, sunglasses second, then clothing followed by open-loop [credit-card branded] gift cards, luggage, jewelry and golf items.
LOW: You see luxury fashion items like watches and handbags really coming on strong in the last six months. People that have 16- to 20-year-old kids, will probably notice that those kids are starting to wear watches because it’s a fashion accessory. You can’t find a Millennial without the phone in their hand, so no one was wearing watches. Now watches are coming back. We’re actually seeing a nice resurgence in the watch category and mid-price especially, because you don’t want to buy a 16-year-old kid a $500 or $600 dollar watch. You want to buy a $250 watch. And because it’s a fashion accessory, people are buying more. Instead of buying a $1,500 watch, they’re buying three $350 watches. Today it goes with black. Tomorrow it goes with brown. Kids are a little more attuned to what’s going on in fashion, so I’m excited about watches.
GORDON: There was a time not so long ago when the demise of watches was predicted. Everybody has a phone in their hand and what do you need it for? Well, people love fashion accessories and there’s that whole category of the fitness [wearables], which is part of it, too, that became very, very strong.
We took sort of a calculated risk a couple of years ago and really dove deep into the fashion category — handbags and all of that — which is a little tough because fashion is transient. It’s like a golf club. You could have the best driver for 2018, and on Jan. 1, nobody wants that driver. They want the 2019. It causes a bit of an inventory struggle when things are more transient and fashionable, but that’s sort of where the business is going.
Then cameras. It’s amazing that the number of images that are captured — billions more than 20 years ago. That’s all based on the phone, and I think the fact that everybody wants to document every single minute of their lives, whether it’s what they’re eating for dinner or whatever. You can stand in front of the Grand Canyon, instead of looking at it, you’ve got to take pictures of it to tell your friends “I’m here.” But just like there are audiophiles, there are videophiles — there are people who want better quality. What we’ve seen in the camera business is a shift from point-and-shoots to SLRs. If they’re going to really shoot something that’s of substance, they’re going to want a better quality camera, zoom lenses, things like that. The point-and-shoot market has shrunk dramatically, but cameras will always be there.
GORDON: I think the marriage of travel and products has come together in a bigger way than ever before. I think that people understand that travel is a core part of incentives. People like to get the experience of going someplace and forging relationships for the next 10 years, but they also like to have the residual value of a product, as well. We’ve done a lot of mini shopping sprees on-site at travel programs for our clients, and that’s really resonated big time because they get the best of both worlds.
Take the pillow-gift concept. When you spend that money, the range is everything from a bike to a cookware set to exercise equipment, whatever. Why not give them a choice? Show them all these things. We’ll ship it later. That really has been a seismic shift with our clients. They’ve embraced it and it’s worked out well.
I think the marriage of travel and products has come together in a bigger way than ever before.
I think the biggest change that’s taken place, which for us was a monumental shift, was the idea that the client wants to take it with them. No, they don’t. They don’t want to go through TSA. They don’t want to hassle with the stuff. What they want is to have it shipped after they choose it. What’s great is two or three weeks after they get home, here’s that touchpoint again, which can reinforce the key points of what the initiatives are for next year.
JENNIFER SCAVINA: A lot of our clients are saying, “we want our people to self-select and get some kind of merchandise,” but then they’re also saying, in terms of the incentive travel piece, give them something that is very unusual. It’s not rocket science. One of our vice presidents was at a gallery opening and there was a woman there quickly painting these incredibly beautiful sketches — almost like a caricature and yet not — of the people who were at the opening and that was their take-home gift. We said to her, “how would you like to go to Dubai?” She asked, “you really want me to go on a trip with 1,000 people?” We had [the artwork she created] beautifully framed and shipped to their homes. We have gotten more positive feedback on that particular piece — it’s an original artwork from a place where they were representing something that in their mind, they needed to be honored for. People want to use their points, and they want stuff, but they want something meaningful, those more emotional but also tangible things.
What’s Popular in Gift Cards?
CINDY MIELKE: Amazon is the leader, it’s what [participants] want. The restaurant category is very hot. Electronics is big, it’s right up there. And discount retailers — your Target and Walmart — as well. I think anything that’s electronics, restaurant, clothing, those are the leaders. It can shift somewhat based on demographics and denomination, but that’s what we see.
SCAVINA: We are most successful with Amazon gift cards, but then it’s restaurants, local restaurants. Like, “I live in Nashville and I want a gift card to the No. 1 Nashville restaurant.” We’ve got a small group of client services people who are calling and getting these gift cards and sending them — it’s this whole shift into, “I want something personal.” We’re doing Greenville, S.C. hot yoga because it’s something that speaks to the individuals there. We kind of created a monster because we always say, “you don’t know what they want unless you ask them.” And they always say, “we want to go to this local restaurant,” or “We want to spend these points towards Montessori school tuition.” It’s more work on our part, and we’ve actually had to increase the number of employees we have doing these nuanced things, but the return on investment emotionally is huge. They love it.
MIKE RYAN: That’s going to really cut into your margins.
SCAVINA: You’re right. It’s not great margins and for us it’s not lucrative, but it’s powerful, it’s truly engaging.
MIELKE: Whether the card is physical or digital is split 50/50 for us. One of our initial products is either physical or digital. Eighty percent of that is issued digitally, but then you can redeem that code for a gift card. I think it does vary by demographic, by who is involved in the program, but we are seeing that 50/50 split. Some people want the card so they can re-gift it. Others want it quick and digital. A lot of that is Amazon — it goes straight from the code to Amazon digital to the Amazon wallet.
The complete article can be found on northstarmeetinsgroup.com