With 2023 already underway, we thought it might be useful to take stock of where we are in the B2B incentive space, and where we see current trends headed. Internally, we like to keep our finger on the pulse of the industry by participating in a wide range of conferences, and in the past year we’ve heard from experts and thought leaders in everything from B2B marketing and sales, to the latest trends and pain points for distributors.
Based on everything we’ve been hearing at these conferences, as well as from our conversations with clients and prospects, there are a few key ideas centering around the topics of incentives, technology, and travel, that we think are worth highlighting. Add to this the macro forces like inflation, the pandemic, and de-globalization that have been reshaping business ecosystems in recent months, and it’s no wonder that many thought leaders feel we are living through a time of tremendous change. Is it also a time of tremendous opportunity?
With all of this as a backdrop, here are some of the trends that are top-of-mind for us and our clients as we gear up for a new year:
Travel Is Back . . . with a Caveat
Since the pandemic, everyone’s been wondering when travel would return to “normal”. In 2022, as restrictions were lifted around the country and much of the world, it seemed like the time had finally come. And this was certainly true for personal travel, with air traffic back to 70% of pre-pandemic levels.
However, for incentive travel and group travel in particular, the logistics of planning a post-pandemic trip still provided enough of a headwind to slow the industry rebound. This appears to be changing for 2023, though, with the Incentive Travel Index suggesting that more than half of corporate buyers plan on raising their 2023 per-person spending beyond pre-pandemic levels.
This presents some obvious opportunities to promote these types of rewards, but program managers also need to make sure they’re planning ahead. With many businesses pausing or delaying their annual trips over the past few years, a significant backlog is likely to have developed, and it wouldn’t be shocking to see demand for desirable locations outstripping supply in 2023. What’s more, some Destination Management Companies (DMCs) in foreign destinations quite possibly never recovered from the hit they took during the pandemic. As a result, it’s easy to imagine program managers having a more difficult time planning trips, events, and experiences for their participants.
A Shift in Focus
Due to the dual impacts of the pandemic and inflation, there’s been a shifting perspective on rewards and work in general, and compensation in particular. Consider the following:
- Professors from Harvard Business School have indicated that there’s a growing need to modernize incentive structures for employees of the “quiet quitting” generation, and that increasing compensation hasn’t produced the kind of returns executives would expect. Instead, they believe non-monetary offerings like training opportunities and recognition elements— as well as more personalized incentive packages in general—will have a greater impact than traditional monetary incentives.
- SITE President Kevin Edmunds suggests that “the next generation of incentive winners [will be] looking more at company culture to fulfill them.” In particular, he highlights the central importance of incentive experiences, and the need for travel programs to include not just free time (though this is still a key component), but also the ability for participants to engage with one another and feel that they are helping to build the culture of the organization.
- In their recent article on Loyalty Trends for 2023, global B2B loyalty marketing firm Motivforce placed purpose-driven initiatives at the top of their list. Whether this involves some kind of Corporate Social Responsibility (CSR) event, community awareness campaigns, sustainability strategies (see below), or something else, “identifying ESG-related goals and objectives [can help] you stay the course with your loyalty-with-purpose strategy and keep driving connections with members on issues that they care about.”
- According to a 2023 Trends Report from the Incentive Research Foundation, a significant majority of clients have been placing pressure on program planners to offer a bigger variety of sustainable choices when it comes to meetings, events, transportation, and travel venues. In addition, there’s been a growing need to consider where and how merchandise rewards are being sourced, and program planners are now having to balance the importance of cost pressures with concerns—and more specifically perceptions—of sustainability.
As with any new generation of young workers, there is going to be a shift in mindset. But the major macro issues that have served as a backdrop for millennials and Gen Z-ers these past few years—along with the technology that has made this cohort one of the first to be truly digitally native—have given them a unique perspective and made them more conscious of the meaning of work.
The Stage Is Set For True Transformation
The word “transformation” is often thrown around to indicate pretty much any kind of change, but this belies the fact that change is happening all the time. In the zero-sum game of capitalism, nothing is ever static. And yet, as we’ve started to experience what feels like the exponential growth curve of technology in real-time, the concept of transformation is becoming not just relevant, but omnipresent.
We’re seeing it in the ramp-up of self-service technologies that are modernizing the entire sales landscape and improving the customer buying experience. We’re seemingly on the cusp of a revolution in A.I. and machine learning that could lead to incredible advances in almost any industry, not the least of which is optimizing the personalization of rewards and incentives.
We’re witnessing the rise of digital marketplaces and the Amazon-ing of traditional eCommerce—itself a recent trend that already seems to have become table stakes, even in B2B. And of course, the reorientation of industries around data and analytics has yielded tremendous growth and opportunities in things like customer segmentation and targeted marketing campaigns, but also presents increasing challenges and risks in the way this data is handled. Heck, even the metaverse (despite its recent punchline status) is generating buzz as a potentially impactful way to drive engagement. In fact, Gartner suggests that 40% of large organizations globally will be engaged in some form of metaverse-based project by 2027.
Adding it all up, it certainly feels like the stage is finally set for true transformation, both in the technology we’re using, and the way that we’re using it.
The past few years have been a bit of an anomaly, as we’ve seemingly dealt with a number of “once-in-a-generation” forces and trends shaping our world. But as we continue to hear talk of “normalization” in everything from supply chains to inflation, you have to wonder what this new normal will actually look like as we come out the other side.
After all, technology’s exponential growth curve is only getting, well, more exponential; the magnetic pull of globalization seems to be reversing with recent initiatives like the $280 billion CHIPS and Science Act; the nature of work is changing, with more than 40% of Americans in 2022 working either fully remotely or some hybrid version of remote and on-site, with the number set to double by 2024; and more and more jobs are set to become fully automated, while a huge number of Baby-Boomers will be looking to retire in the very near future—if they haven’t already.
These are big changes, and change can be scary. That’s why we see 2023 as a pivotal year—not just in the sense of its importance, but also literally in terms of it being a year in which we must begin to pivot towards a new horizon of strategy and focus. Of course, we believe this new horizon must necessarily include new ways of motivating, incentivizing, and engaging the people who will bring it into existence. The question, then, is going to be whether or not we’re ready.
What does the future look like for your industry? And are you prepared for the trends that are shaping it? Contact us to find out how a cutting-edge approach to incentives can optimize your customer loyalty strategy, improve your channel solutions, or enhance employee engagement.