Emerging reward trends are changing the rewards and engagement industry.
Many emerging trends have an impact on the rewards and incentives industry but can also double as a major opportunity. Having the ability to effectively deliver rewards globally is now an entry level requirement for Fortune 2,000 companies who are universally shifting their programs from local to global. In short, if your reward solutions are not global then you will not be able to compete for their business. To ensure your company can compete globally you will also need to address the following emerging reward trends.
By 2020, Amazon, Alibaba, and eBay will control 40% of the world’s e-commerce and this will heavily impact the incentive and reward industry. Amazon has already entered the promotional products market and has become a big player. Having a few industries controlling a large portion of e-commerce means that consolidation is inevitable, and this makes the consolidation of gift cards crucial to success in the industry as more and more programs are seeing 80%+ of their Gift Card redemptions through 5 major brands.
Having the right reward mix is a proven way to create real excitement among your program participants. Non-cash rewards are increasingly important because they provide a great way to avoid creating a “reward mono-culture” that cash only reward offers invariably create. Offering broad reward selection across all major reward categories is a proven way to increase member engagement.
Outside of the United States, every country uses a value-added tax system (VAT) which adds a graduated tax at each stage when the product is sold and resold. The EU and Middle East countries all have a minimum reporting threshold that ranges from 0-100 thousand dollars depending on the country. The minute your sales reach the minimum reporting threshold you are required by law to report your VAT sales tax. Failure to report your sales and VAT tax collected will result in significant penalties. Additionally, you may be required to incorporate before you can even transact within a specific country.
Countries like Brazil and Mexico now require all foreign entities that are transacting within their countries to first create an incorporated entity. By law, you cannot purchase and distribute rewards within those countries without a legal entity for each country. This also means that your legal entity is required to report both your monthly VAT taxes collected as well as complete year-end corporate tax return including divulging the income earned from your domestic transactions - and it doesn’t stop there. Many countries like Brazil also require a personal ID number (similar to a SIN number) be added to every order and if this number is not available you cannot ship orders by law to any in-country participant. The global tax compliance landscape is constantly changing, making it increasingly challenging for companies to operate on a global basis, plus country level tax laws are normally part of the criminal code so getting it right is extremely important.
Major merchandise brands are now becoming more open and willing to look at international distribution opportunities in the rewards and incentive industry. Global brands like Apple are starting to design global delivery solutions using new UX technology to help manage the user journey. This is slowly creating some very exciting opportunities to work with great brands like Apple, but don’t forget that to do this you must also be tax complaint; it’s always the price of admission to work internationally. As more and more big-name brands expand their global presence, it is becoming increasingly important to have their products as part of your global reward mix since it creates a major competitive advantage.
Technology is advancing how we connect, work, play, stay fit, save, and even how we spend our rewards currency. Building technology today has become far easier which translates to more competition entries entering the global engagement space. API’s provide faster connectivity to new services such as global reward platforms while UX improvements make front-end sites far more interesting and dynamic.
AI and machine learning are now converting our data into a powerhouse of information that can drive decision making as well as automate the processes behind how we communicate and drive human behavior. It’s an exciting time for the industry because AI has the potential to completely revolutionize how we work and interact. Today AI is helping us to target how we track and measure the activities of every stakeholder from our employees to channel sales partners and end customers. AI will automate and intelligently drive human behavior in ways that will finally make engagement truly measurable.
Health and Wellness is the fastest growing reward category which is being driven by wearable technology that instantly connects with individual wellness apps through devices like Garmin, Fitbit, and Apple Watches. These devices automatically track and convert “the healthy activities” of our program members into personal rewards. In addition, tying into financing programs enables members to redeem for a wellness tracker such as an Apple Watch and then finance the watch over 12 or 24 months, but instead of the member paying for their watch each month, they can now earn fitness credits by achieving their fitness goals such as reaching 10,000 steps per day. These credits are used to offset the members monthly watch payments which converts personal health into a key performance driver while boosting member engagement and wellness. Employee well being is a massive corporate advantage and the increased performance benefits of a successful wellness program are endless and completely measurable.
Experiential Rewards are becoming increasingly important as they are seeing continued year-over-year growth and this trend will continue as younger employees are preferring experiences over cash. Your employees, sales teams and end customers will forever associate an experiential event or getaway to your company’s brand. Participants are far more likely to remember an amazing concert, theatrical performance or unique adventure over a cash payout since experiences build positive memories that contribute to positive associations that we all like to recall time and time again.
This type of reward has paved the way for long-lasting emotional loyalty where consumers act in the same way they feel toward the company. When people associate positive experiences with a company they become inclined to share their feelings with others and this expands the reach of a company’s brand building and brand equity far beyond the cost of the experience itself and that is something you cannot accomplish with cash.
The P2M Advantage
Being at the forefront of the rewards and incentives industry, Power2Motivate takes advantage of international trends by always staying ahead and planning for the future. Foresight is a powerful tool against industry changes and this industry continues to rapidly evolve thanks to technology, people and government which collectively shape how we manage rewards on a global scale.
The P2M Reward mix embraces the best practice of delivering program participants the world’s greatest selection including merchandise, hotel and travel, retail gift cards, global charities, global mobile top-up, and Global Savings. This mix encompasses both non-cash and cash rewards, and features over 10 million reward offers internationally.
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