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 recognizing activities that benefit the business. This article describes the many issues to consider if a corporate gift program is to succeed.
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.
The Etiquette of Giving
Even when not committing egregious errors that may get someone fired, be sure to use finesse if you want to get the most out of your gift program. There is an art to effective giving, so consider the following major issues before you go shopping:
Appropriateness. Care should be taken that the gift is appropriate to the business relationship. This has less to do with the dollar value of business transacted, or even the amount of time one has been doing business with the recipient, than with the closeness of the relationship. If a client seems aloof and excessively businesslike, don’t try to loosen him or her up with baubles. It can backfire. With a new relationship, don’t get too personal or too lavish with the gift. Frequency of giving generally should be restricted to major holidays and special occasions. Again, be sure to avoid the impression that you’re bribing the recipient.
Personality. It’s great when a gift has personality, but the real issue is whether the gift reflects the personality and interests of the recipient. Is she a sports car nut? Does he have an obsessive relationship with his sailboat? What’s her favorite color? Try to find out these kinds of things discreetly, because when you do (and your gift reflects it), the impression is that you care about the person and have taken the time to understand their style and taste.
Timing. The most popular times for giving, of course, are holidays. But the true champions of corporate gift giving know that other times of the year can have a more profound personal impact on the relationship. For instance, birthday gifts are bound to impress, since they show that you’ve bothered to learn a thing or two about the recipient. Important dates, such as the anniversary of a new job or the day you initiated a business relationship, may be good occasions for a gift. You can also mark such events as a promotion, the birth of a child, or completion of an important project. Whether you stick to established holidays and impersonal occasions or get into the personal life of the recipient depends on the nature of the relationship. It may seem slightly presumptuous, or even intrusive, to choose the wrong occasion for a gift.
Presentation. The best gifts are heart-felt and show it. Special care should be taken in preparing the gift. Invest in some nice wrapping paper, and take the time to compose a personal, handwritten card. This can be as important as the gift itself, since your message to the recipient conveys your intentions and sincerity. Then there’s the issue of whether to mail it or present it in person. Mailing can reduce any feelings of obligation on the part of the recipient, and it can provide some unexpected pleasure in a routine work day. If the relationship warrants it, mailing to the person’s home may add a personal touch, particularly when the gift commemorates a personal occasion like a birthday.
Customizing. To logo or not to logo, that is a key question. For many businesses, customized gifts keep the company name in the minds of recipients. When the item is a practical one that’s likely to be used every day – such as a calendar, coffee mug, or tote bag – this amounts to free daily advertising. But there’s a tackiness quotient to consider. These items may make great trade show premiums or leave-behinds, but customized items could never be considered personal, deeply heartfelt gifts. In general, avoid obvious self-promotion when giving expensive gifts or any time you want to leave the impression that the gift is coming personally from you.
What to Give
There are thousands of corporate gift possibilities – far too many to describe here – but let’s look at the pros and cons of some favorites:
- Food items are very popular as corporate gifts. They tie in well to many holidays and can be taken home and enjoyed with friends and family. But sometimes gourmet baskets take on a generic aspect. Many of them get no farther than the receptionist, to be picked apart by various office personnel passing through. If you want to win hearts and minds through the stomach, you must be creative and thoughtful. It’s all very well to consider giving those tender mail-order filet mignons; just make sure your recipient isn’t a vegetarian.
- Liquor and wine are old favorites, but hard liquor has lost some of its popularity. Despite the stigma associated with liquor in the business world, however, it’s essential to keep things in perspective. After all, if your client’s pride and joy is his wine cellar or his whiskey collection, what better gift than a fine cabernet or a single malt? Also in the sin department: cigars. A box of the right stogies can make you look impressive in the eyes of a cigar aficionado.
- Office-related items, such as pen sets and desk blotters, are safe bets that reflect practicality and good taste. Be careful, though: A good fountain pen is quite expensive, and a cheap one is tacky. Use caution when considering art prints and other decorative items because taste in office decor is a personal and, for many, strategic consideration.
- Tickets to sporting events and live entertainment often make great gifts. Scarce seats for popular shows and events provide a thrill and can make you a hero in the eyes of a client. Still, you should be sure of your client’s preferences. Just because he mumbles a response when you say, “How ‘bout them Mets!” don’t automatically assume he wants to sit through an afternoon at Shea Stadium. Apart from that, anyone in the financial services or medical professions should be aware of a growing number of government and industry-governed regulations and policies aimed to curtail lavish entertainment.
- Gift cards have much appeal if you want to take much of the guesswork out of giving. They’re available from a wide variety of companies, they offer the recipient freedom of choice and they can be given to all types of people. The only problem is that the dollar amount is printed on the face, which, for some people, detracts from the feeling that this is a gift with some thought behind it.
- Think hard before you buy, because gift giving represents the ultimate target-marketing and relationship-building strategy. Every gift idea has a potential downside, and just because you like something doesn’t mean your recipient will. If ethics or other issues bar you from giving a material gift, consider making a donation to the recipient’s favorite cause.
- Word of warning: Cash is a no-no as a corporate gift, period. It’s uncreative, raises ethical questions and looks like a bribe, no matter what.
Corporate Gift Applications
In addition to their traditional use around holiday seasons, gifts have many other applications in business:
Employee recognition. Many companies don’t use incentives with certain categories of employees for fear of igniting harmful competition within their ranks or because they’re unable to single out an individual’s incremental performance in a clearly measurable way. Instead, companies often give managers a discretionary budget that may be spent on gifts to recognize employees for exceptional behavior. Actions worthy of special recognition include going “above and beyond” to please a customer, putting in long hours to complete a project on time, making a cost-saving or productivity-enhancing suggestion, or completing a big sale. Some executives would argue that such actions are expected as part of an employee’s job and should be rewarded at performance-review time. Yet, the evidence suggests that carefully timed and appropriate gifts not only make people feel appreciated for their performance, they also increase the chances people will feel good about going the extra mile in the future. When giving gifts for special performance, make sure the gift is appropriate to the employee receiving it and the presentation is made in a personal and, if possible, public forum. The recipient and his or her colleagues must know why the gift is being presented. Publicity in the company newsletter, or even an announcement in the lunchroom, ensures that people know the types of behaviors the organization wants to promote. Gifts are also typically awarded to employees for years of service.
Customers. With today’s increased emphasis on corporate ethics, you need to scrutinize not only the gift and the recipients, but the nature of the presentation. After you’ve determined which clients can accept gifts, think carefully about the gift and how it’s going to be given. If you ship gifts to recipients, you miss an invaluable opportunity to reinforce the relationship between your employees and your customers. Gifts have the most impact when presented personally by the people who have direct contact with buyers. Imagine the surprise when your customer gets a gift from their customer service representative!
Consumers. Merchandise or non-cash awards given to consumers usually fall under the category of premiums or awards associated with sweepstakes and games. The idea is to spur behavior by making an offer. In contrast, gifts reward consumers after the fact, and the aim is to surprise the customer and build long-term loyalty. Thus, the key to using consumer gifts is to have a specific strategy and target customers whose volume you can track over time. Example: A supermarket chain wants to increase usage of its preferred-customer card so it can track its customers’ purchase patterns more precisely. It has offered incentives to get people to sign up and use the card, but usage has begun to trail off. As part of its effort to keep up interest in the card, the supermarket sends out a surprise gift with a thank-you letter from the president to all shoppers who have used the card to purchase more than $500 in groceries in a given month.
Vendors. During the heyday of the total-quality craze in the 1980s, companies recognized the importance of building close relationships with suppliers. The trend continues today, as manufacturers and retailers alike depend upon just-in-time deliveries and companies of all types demand the best service for the lowest price. Despite these concerns, surveys generally show that vendors are among the least likely businesspeople to receive gifts. If your company depends on excellent service from a few vendors, you may be surprised by the long-term impact of sending a few gifts – not only to your customer service representative, but, if possible, to the people who do the work.
The media. Most daily newspapers and many consumer magazines have strict policies about giving gifts to editors and reporters, but they’re often overlooked if the gift is simple, tasteful and appropriately timed so it doesn’t look like a bribe. A very small, imaginative gift sent with a press release will increase the chances of your message being read, and that could translate into wider coverage. Be wary of sending gifts to consumer journalists whom you or your public relations people do not know personally. The gift could backfire by creating the wrong impression.
Government officials. Many businesses depend upon good working relations with government regulatory bodies or town officials. When regulatory officials or politicians are involved, proceed with caution! However, when it’s a question of municipal workers who perform services such as trash pickup for your business, a special gift at holiday time often earns a year’s worth of more attentive service.