NEW YORK -- Incentive travel always has depended on channels of
distribution, with companies rewarding sales representatives,
dealers, distributors and agents for performance.
With e-marketing, these channels are eroding.
The implications of this trend were at the forefront of an
education conference of the Society of Incentive & Travel
Executives (SITE) in Scottsdale, Ariz.
John Farrell, Carlson Travel Group senior director, channel
marketing, led a discussion on disintermediation (the removal of
layers of product-handling between the manufacturer and the
consumer).
According to Farrell, 90% of all incentive travel is
channel-directed and represents $7.6 billion in annual spending in
the U.S. alone.
The Internet is the key driver of disintermediation, he said at
this summer's conference, which is part of SITE's University of the
Americas program.
Buyers can log on, research the latest car models and arrange
financing, insurance and delivery. General Motors' number of retail
dealers shrank from 16,000 in 1995 to 10,500 today, he said.
"Compressed channels means less qualifiers on incentive
programs," he said, noting that budgets are being realigned to
target new channels where incentive travel is not an option.
He also predicted that as company departments vie for dollars,
measurements will become mandatory and return-on-investment
analysis the norm.
Manufacturers, grappling with balancing selling on line and
protecting channel relationships, "cite channel conflict as the
biggest issue in the B-to-B world," he said.
"Many manufacturers are viewing cooperative partnerships with
retailers as the solution to this conflict," he said.
However, channels would not become extinct, he said. He quoted
from a Forrester Research study in which 80% of manufacturers
polled saw the Web and other channels co-existing in five years,
with 84% expecting on-line revenues to be less than revenues from
other channels.
Also on a positive note, he said the incentive travel industry
will be helped by the focusing of corporations on core services,
resulting in increased outsourcing.
"General Motors makes cars. It's what it does best and it knows
it," he said.
This will reduce the number of companies that are
do-it-yourselfers in areas such as incentive programs, he said.