2020 Incentive Trends and What Incentive Trends to Expect for 2021 – ADR

BY Lucy Fang
Dec 19, 2020
2020 Incentive Trends and What Incentive Trends to Expect for 2021

2020 has been a crazy year full of changes and surprises. In the incentive industry, some interesting things have been happening. The Incentive Research Foundation (IRF) recently released their report on the Industry Outlook for 2021, which included some trends from 2020 and what they are predicting for 2021.

Business Outlook

When IRF conducted their 2019, 85% of companies expected to have a strong financial performance in 2020. The IRF’s new study showed that only 64% believe their companies will have a strong financial performance in 2021 and 50% think that the U.S. economic outlook is strong for 2021. These percentages are still reasonably optimistic, considering the situation with COVID-19. 

There was a 10% rise in incentive program cancellations in 2019 from 18% to 28%. The rate of incentive program cancellation in 2020 remained fairly steady at 29%.

Reward Mix Changes

The IRF study showed an increase in preference for gift cards and merchandise, but a sharp, but not unexpected, decrease in offerings of experiential rewards. Many people still desire experiential rewards, but most program managers have chosen to exercise caution in light of the COVID-19 pandemic. The IRF believes that the distribution and adoption of COVID-19 vaccines may cause these trends to change in the second half of 2021.

Merchandise & Gift Card Incentive Preferences

For the third year in a row, the IRF found that the average value of a merchandise reward was $160. Electronics and sunglasses showed to be the most popular merchandise incentives. Other preferred merchandise rewards included clothing, sporting goods, and jewelry/watches. 

Merchandise rewards preference
Image from

Gift card rewards, typically offered in denominations of  $25, $50, and $100, saw a 12 percent increase in use from 67% to 79%. The most common gift cards offered included online retailers (such as and coffee gift cards (Starbucks, Dunkin Donuts, etc.). 

Gift card rewards preference
Image from

Incentive Program Spending Changes

Since the onset of COVID-19, high percentages of incentive programs have shifted their investments in gift cards and merchandise. 64% of respondents to the IRF study changed their investment in merchandise and 54% of incentive providers changed their investment in gift cards. Of those who changed their investment in merchandise, 52% increased their spending, and 48% spent less. 

2021 Incentive Program Predictions

As incentive program managers are making their plans for 2021, a broad portfolio of rewards will be common. It is essential to program managers to increase the motivation of their employees to help accelerate our country’s economic recovery, as well as the recoveries of individual businesses. The effectiveness of merchandise and gift cards as motivators will continue to be a key to the growth and success of many incentive programs.

All Digital Rewards has extensive experience in working with incentive programs. We can provide the right rewards, technology, and support to create an effective incentive program to help you prepare for a successful 2021 incentive program. To speak to one of our incentive program experts and learn about how we can help you, call us now at 866-415-7703, or click on the button below to schedule a demo.