by Lisa Grimaldi | December 01, 2007

Frank KatusakAmerican companies spent $46.1 billion on incentives ($13.4 billion on travel and $32.7 billion on merchandise) in 2006, according to research from the Incentive Federation, a consortium of incentive associations. Conducted in early 2007, the study was prepared by New York City-based GfK Custom Research North America and involved phone interviews with 1,121 executives responsible for travel and merchandise incentives.

Among the key findings:

* A third of U.S. firms used either travel or merchandise incentives last year.

* The average budget for travel incentives was $164,271, and the typical budget for merchandise incentives was $119,008.

* More than half of the respondents from large companies (annual revenues of $100 million or more) said their budgets for incentive travel have increased over the past two years, a trend they believe will continue over the next two years.

* On the merchandise side, 30 percent of respondents reported their budgets have increased over the past two years, and 59 percent anticipate these budgets will grow over the next two years.

* Incentive travel is seen as an investment by 85 percent of those polled; merchandise incentives are seen as an investment by more than three-fourths of respondents.

* Nearly half of large companies use merchandise incentives; of those, 23 percent use incentive travel.

* The most popular incentive travel application is for sales programs.

* Merchandise most often is used for nonsales recognition and business gifts.

This study will be used as the Federation’s new benchmark, since the methodology and some definitions differed from those of earlier studies, according to Frank J. Katusak, above, executive director of the New York City-based Incentive Research Foundation.