Since the turn of the last century, American organizations have used brand name incentives, rewards, and recognition to enhance their own internal or external marketing programs. Many of the nation’s leading brand manufacturers have divisions specifically set up to help companies use their branded products for almost any type of business application. Frequently, these awards are presented in print or online catalogs from which people can choose their awards, often on a points-based system so that they do not equate the award with a specific dollar value. After all, non-cash awards are used specifically as an alternative to cash so that they are not confused with compensation and pricing.
Branded merchandise awards are used in programs targeting consumers and customers, channel partners, salespeople, employees, and even vendors and shareholders. In the consumer area, branded merchandise is sometimes used as a premium in self-liquidators, on-pack or in-pack promotions, and as awards in contests, sweepstakes, and loyalty programs.
Despite growing competition from gift cards (see below), select branded merchandise is still used by most organizations that use non-cash rewards, according to the 2005 Incentive Federation Survey of Motivation and Incentive Applications. The most popular non-cash awards vary by type of program, but fall generally into the following categories:
- Gift certificates/cards
- Computers, accessories, software
- Food and beverages
- Writing instruments
- Watches and clocks
- Plaques and trophies
- Home entertainment
- Tools and flashlights.
- The ability to select brands that reinforce your message, your own branding, or generate attention. Much as a magazine, radio, or television program would do, brands function as a medium to reinforce your message. Selecting the right brand will have a lot to say about your own company and your understanding of your target audience.
- Trophy value: Chances are, the merchandise award will end up at home or in the office and generate multiple opportunities for the recipient to remember what he or she did to receive it, or to reinforce the accomplishment with friends and colleagues.
- Perceived value: The right branded awards can carry a perceived value that is higher than the out-of-pocket cost of the product itself.
- Buzz: The right branded merchandise can create excitement and buzz – and increase the chances that your message breaks through the clutter.
- You can often pay for the merchandise upon redemption, instead of at the outset of the program.
- Many branded merchandise providers offer discounts or markups for resellers while still offering end-users a value.
- The creativity factor: To be most effective, attention must be paid to proper award selection. This can take time.
- Logistics: Someone has to properly ship and deliver the award, preferably with some kind of thank-you message, and a high quality customer service process should be in place in the event the award arrives damaged. Fortunately, multiple companies exist to provide such services on a turn-key basis to companies and organizations.
- Taxes: If the award is over $600 in value, an employee recipient should receive a 1099 for the fair market value of the award. Of course, all employee cash awards have to be treated as income.