According to numerous surveys, most business gifts are given to major clients. After that comes employees, then prospective clients. Reasons for gift giving range from thanking long-standing customers for their business to recognizing a valued employee for working on a weekend. The basic reason is the same: to affirm relationships and enhance the personal connection between giver and recipient.
Gifts differ from incentives in that they’re offered with no explicit preconditions for performance. They differ from ad specialties in that they don’t contain any blatant imprints or advertising. They differ from recognition in that they’re not part of prescribed programs.
But 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 their marketing strategy. And just about everyone agrees that, done correctly, gift giving is a cost-effective way to build a sense of partnership with valued associates.
Although there’s some hard evidence relating corporate gift giving to increased business activity, it probably won’t give you the ability to make specific return-on-investment projections in your marketing plan.
Promotional Products Association International (PPAI) has conducted surveys of corporate gift givers and recipients. They have shown that vendors who gave were twice as likely to increase their chances of being contacted by recipients as those that didn’t have a gift program.
Chances are you won’t be expected to come up with any kind of hard data for this type of program, since the relationship-building pluses are pretty obvious, and the costs are relatively low.
Gifts Vs. Incentives
To recognize 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 programs. Though gifts and incentive awards often involve similar types of recipients, they differ on both a strategic and practical level. 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, not given as part of any defined arrangement 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 so that they remain within tasteful and ethical bounds.
The Ethics of Giving
Before giving any gift, you should know if either the giving or receiving company has policies regarding gifts. Some companies – particularly those in the financial services, insurance, retail and medical fields – bar all gifts. More commonplace are restrictions that are 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 more 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. These have become especially dangerous in this era dominated by Sarbanes-Oxley legislation requiring new levels of financial disclosure and justification for any type of expenses at most publicly-traded companies.
Remember that the IRS now lets companies deduct a business gift valued at up to $75; for many companies this has become a useful benchmark when justifying their budgets for gifts.
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.