The Art of Business Gift Giving

Corporate gift giving is serious business. As part of a well considered program, it can help establish or enhance critical relationships and become a cost-effective means of recognising activities that benefit the business. This article describes the many issues to consider if a corporate gift program is to succeed.

Definition

According to many surveys, most business gifts are given to major clients. After that come employees, then prospective clients. Reasons for gift giving range from thanking long-standing customers for their business to recognising a valued employee for working on a weekend. The general reason is the same: to affirm relationships and enhance the personal connection between giver and recipient.

Gifts differ from incentives in that they are offered with no explicit preconditions for performance. They differ from ad specialities in that they do not contain any blatant imprints or advertising. That doesn't mean there's no bottom-line benefit to be derived from corporate gift giving. For some companies, it's an essential part of marketing strategy.

Just about everyone agrees that, done correctly, gift giving is a cost-effective way to build a feeling of partnership with valued associates.

Research

Although there's hard evidence relating corporate gift giving to increased business activity, it won't exactly give you the confidence to make specific return-on-investment projections in your marketing plan. Chances are you won't be expected to come up with that kind of hard data anyway.

The Promotional Products Association International conducts regular surveys of corporate gift givers and recipients. A recent one shows that vendors who gave were twice as likely to increase their chances of being contacted by customers as those that didn't have a gift program.

Harry & David, a gourmet food company that's a big player in corporate gifts, routinely sends gift packages to some 25,000 customers who spend more than £500 a year with the company. Company research, comparing a control group of 5,000 prime customers receiving gifts with a similar group that didn't, revealed that the former increased their purchases by much more than the latter.

Even if your company isn't up for that kind of research, it doesn't mean you can't have a strategy. As long as you do it right, gift giving will help to build the relationships that are the lifeblood of your business.

Gifts V Incentives

To recognise what an effective gift strategy is, it helps to understand what it isn't. Start by making the distinction between corporate gift giving and incentive award programs. Though gifts and incentive awards often involve similar types of recipients, they are different on both strategic and practical levels. Incentives are awards for achieving defined levels of activity, such as sales quotas, safety improvements, or good attendance.

In contrast, gifts are more or less spontaneous, given not as part of any defined exchange between giver and recipient. The gift recipient doesn't consciously set goals in anticipation of a reward, whereas the incentive recipient does. It's tempting to view gift and incentive programs in the same light. After all, you want to know that you're getting your money's worth from any business investment, and most givers want to motivate the recipient in one way or another.

But be careful. Leaving customers or employees with the impression that they're being bribed can do more harm than good. Instead, look at gift giving as a subtle, long-term process of relationship-building, following the basic guidelines described in this article.

The Ethics of Giving

Before giving any gift, you should know if either the giving or receiving company has policies regarding gifts. The most extreme are the no-gift policies that became popular in the late 1980s, partly as a result of scandals involving gifts and partly as a reaction to the perceived excesses of that decade.

More common are restrictions placed on the value of a gift or on situations in which gifts may be given. Ask the potential recipient if his or her company publishes an ethics handbook or has any policy on receiving gifts. If so, then follow it to the letter.

A few words of advice:

• Giving gifts during a bidding process is a definite no-no, even if a holiday happens to fall during this time.
• Lavish gifts, such as cars and luxury vacations, are suspect and should be used only after careful consideration.
• Even when there isn't a stated restriction, be careful not to create the wrong impression with a gift. Anything that might embarrass your recipient or lead to a reprimand can sabotage a valuable relationship.