Digital Delights

Incentive: Merchandise

Digital Delights
January 08, 2009
With their features—but not the price—advancing at breakneck pace, portable computers are hot

By Robert Carey

Think back to 2003: If you were browsing the offerings within even the most comprehensive rewards program at that time, how many portable computers do you think you'd have found? Not many.

Of course, that scenario has changed immensely in a short time. "Even when I started in this niche three years ago, notebook computers were barely on the radar for rewards," says Chris Van Dyke, premium merchandise buyer for ITA Group, in West Des Moines, Iowa. "But right now, the notebook category is just exploding. It's among our top five categories, along with tools and housewares; it's also getting up there with LCD television sales, digital cameras and MP3 players in terms of dollar volume." In fact, Frank Harvey, western zone sales manager for Sony Electronics' premium and incentive group, based in Park Ridge, N.J., notes that portable computers have become competitive with mid-level travel rewards in many programs.

Sony's VAIO TT notebook (above)

And specifically in the computer segment, "Redemption has gone from seventy percent desktop to more than seventy percent notebook pretty quickly," says Todd Faber, merchandise buyer for the electronics category at Carlson Marketing Worldwide in Minneapolis, Minn.

There are a few reasons for this. First, portable computers now offer nearly all the same features and power desktops do. This makes them appealing not only to the incentive winner for business purposes, but also to a winner's family, who could use the unit for academic and leisure purposes.

As to who's buying, "We can't say that any particular industry redeems computers through its sales-channel programs more than another," says Dave Peer, vice president of client services for Chicago-based Hinda Incentives. But Peer does see a difference in what types of units are being bought by independent salespeople versus internal ones. "Contract reps who must provide their own work tools tend to redeem for units that give them what they need to do their jobs better—and their rewards programs will often emphasize work-friendly products anyway," he says.

Features like DVD-RW units and huge hard drives make powerful new laptops highly sought-after awards

On the other hand, internal reps tend to choose a portable that will appeal equally to the family; "something with a big hard drive and high-powered multimedia capability, because it's probably going to be a shared computer, with photos, videos, music and games on it," Peer adds. A DVD-RW (read/write) unit is another essential feature, "so you can make copies of home videos for the grandparents," says ITA Group's Van Dyke. And HD/Blu-Ray capability is finding its way into more models as well.

Interestingly, when it comes to screen size on a portable unit, bigger is rarely better. "The bulk of our sales are in the 15.4-inch category," Harvey says. "We've tried units with 17-inch screens in different programs, but people consider them desktop replacements—too heavy to be something they'd want to take on vacation, or to Starbucks, or even from room to room in the house."

Customization is an area that is growing in popularity. While decorating a portable with the firm's name is rarely done, companies can offer machines that come in an assortment of colors. Black, charcoal and silver are the traditional colors, "but we'll put a pink or a red into the program and they really go," says Harvey. "It's just a more interesting, 'cooler' way for winners and their families to express themselves." In fact, one client requested a faux-alligator finish for its units, which Sony fulfilled.

Another route to customization is through accessories. Carrying cases almost always get redeemed along with a portable unit. Beyond this, "there is a much wider spectrum of possibilities than even a few years ago," says Peer. They include a wireless keyboard, wireless mouse, high-quality speakers, additional batteries, and a docking station with a large LCD screen for the preferred spot in the home.

Bread and Apples

The other major reason for the breakthrough of portable computers in rewards programs is today's price point, which just a few years ago was unfathomable for machines with so much capability. Lower prices have also brought computers into the related niches of customer loyalty programs as well as employee recognition, for longevity in particular.

Features like DVD-RW units and huge hard drives make powerful new laptops highly sought-after awards

"It's gotten to the point where you can get a portable unit with a 160-gigabyte hard drive, wireless capability and a DVD burner for $800 retail—and for an incentive program, you could probably get another ten percent knocked off that," says one manufacturer's rep, who asked not to be named. "We get some demand for miniaturization and for HD capability, and that can bring the price up to $2,000. But the sweet spot for incentive demand for us is between $800 and $1,500."

However, ITA Group's Van Dyke is seeing more of a champagne taste among his firm's incentive clients. "We have computers in our Web catalogs that are under $1,000, but the most recent research within our home-office category found that the average price is closer to $2,000," he says. "When people use their points, they're going for nicer computers. It just depends on the earning potential of reps in the firm setting up the program."

Another factor that is pushing incentive redemptions up the price ladder: The emergence of Apple as an incentive player. "In this category, Apple is a much stronger presence than in the wider business sector," says Peer. "Their success with the iPod opened their eyes to the opportunities that exist in our channel. They have some wish-list products, and they're making a concerted effort to push them as incentives."

MacBook Air (right)

Specifically, the MacBook Air and MacBook Pro models "have taken off," according to Van Dyke. "The Air model is a solid-state hard drive, so it's about $2,500, but they're really moving. And we used to sell a few dozen Pro models a year, but now it's up to a few dozen each month."

"Apple seems to have a little more eye candy for our clients; it's something different from what they use in their business," Carlson's Faber adds. "And it might be that not many people will be able to achieve a point balance to redeem those items. But just having them as options definitely improves participants' perceptions of the program and the company."

Other computer makers are hardly standing still, though. With the recent introduction of Hewlett-Packard's TouchSmart desktop unit, with its touch-screen technology, the use of computers in rewards programs will only get deeper, and more interesting.

Note: For more on digital incentives, read "Peace of Mind for Electronic Incentives" and "Top Tech Trends at Incentivemag.com.

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