SBHD: In the lean Nineties, the emphasis of corporate entertainment is shifting. The traditional boundaries between corporate hospitality and sales incentives are coming down, to form hybrid entertainment packages. These changes could spell lots more fun in the future for both customers and staff.
There was a time when everybody in the corporate hospitality and incentive businesses knew where they stood. Hospitality was for customers. Incentives were for staff. Sometimes similar activities were used for both purposes but, in general, they were separate.
The differences stemmed, as much as anything, from the varying objectives. Entertaining was designed to help sales people build relationships with customers. The rationale was that once you had poured enough champagne down a customer’s neck at Wimbledon or at Silverstone, it would be easier to get to see him next time you made that sales call.
Incentives, on the other hand, were aimed at sales-people. If they worked their socks off and reached their sales targets, they were taken away for a weekend in London. Then came the recession.
As the Eighties faded, sales teams found it increasingly difficult to reach their targets. Some companies reacted by reducing their targets, others dispensed with target-related incentives altogether.
While all this was affecting the incentive business, the corporate entertaining people were facing different problems. For one thing, it was considered callous for senior staff to be entertained royally while others in the company were being made redundant. Apart from that, time became very precious as personnel were cut and customers found that it was increasingly difficult to spare enough time to be entertained.
At the same time, the emphasis shifted from entertainment for customers to entertainment for employees. According to Sam Gill, managing director of Business Pursuits, which specialises in activity days, the shift has been dramatic. “Five years ago 80 per cent of our clients were entertaining their customers,” he explains. “Today, 80 per cent of them are entertaining their own staff.”
The shape of that entertainment has changed as well, with more and more companies staging entertainment days for the benefit of all employees and their families.
Gill also claims smaller staff events have changed. Where qualification used to be by performance, the agenda is now dictated by different criteria. “Most of the staff work we do is not related to performance,” he says. “There’s much more interest in team-building activities.”
The traditional approach to team building has been based on the idea that hurling a group of managers together into outward-bound-style activities will help to weld them into an effective business team. But Peter Morgan, the managing director of Motor Safari, claims that the emphasis has changed here as well. Motor Safari organises off-road driving days and has been called on to create increasing numbers of team-building events. He claims that they are softer now, partly because they are being used in a surprising way. Many of the exercises are being used ascliententertainment.
He admits that they are not presented as team-building events: “But they use the same techniques, so we end up with a hybrid; a corporate entertainment with a lot of the elements that go into team-building,” he says.
However, the aim is still the same as it is with traditional corporate entertainment: to build relationships and make it easier for sales people to contact buyers after the event. That is why Morgan usually arranges for photographs to be sent out to the participants once theyhave arrived back. “It’s A good excuse for the sales team to make contact,” he says. “They can ring up to make sure the customer got the photographs.”
He claims, however, that there is a longer term benefit. “Everybody feels bonded to the host client,” he says. “It’s a question of creating a strong team spirit in the buyers.”
Gill has also found a shift in favour of team-building events. “There’s a greater emphasis on fun and team work and less on razzle-dazzle and helicopters,” he says.
Both Gill and Morgan point out that the nature of the event has to be tailored to the group far more carefully than traditional corporate entertaining. Where just about anybody could be invited to Wimbledon, senior executives are likely to baulk at being asked to wade through muddy water dressed in track suits.
“You have to be more sophisticated,” claims Morgan, who points to an exercise carried out recently for a car manufacturer as an example. The international sales directors were brought to the UK for a conference. They did not get on as a group and so the manufacturer wanted an event to get them working as a team.
“With people of their seniority you have to come up with something special,” explains Morgan. “They’re mentally performance-orientated. They don’t want to be stretched to their physical limit and they definitely don’t want to be frightened. So you set them a team challenge that requires both ingenuity and guile and you give them state-of-the-art vehicles and telecommunications to use.”
So the incentive and corporate entertainment operators have had to adapt to changing circumstances in recent years. The same is also true of companies organising their own product launches. They, too, are turning increasingly to incentive and entertainment skills to attract people to their events.
Ultrafilter is a prime example. The executive sales and marketing manager for the company’s UK operation, Graham Fuller, recalls that, in the past, product launches and hospitality days were completely separate.
However, in the past two years, the company has experienced increasing difficulty in persuading their 43 distributors to attend product launches.
As a result, Fuller has combined the two types of activities and he claims that he is achieving much better results as a consequence.
The difficulty arises because Ultrafilter’s distributors sell products from a wide range of manufacturers and so they have no obligation to attend Ultrafilter events. But Fuller has a vested interest in getting them together in one place.
“The problem is that each of the distributors would prefer us to go and tell them about the new products,” says Fuller. “But if we did that we’d end up with 43 one-hour meetings. It’s much better to kill two birds with one stone and find a way to get them all to attend a launch event.”
But if Fuller needs to find a way to attract the distributors to launch events, he also faces a problem in getting them to accept invitations to hospitality events. “For one thing, everybody has got less and less time,” says Fuller. “But you’re competing here as well. For instance, if you’re going to have a golf day, the distributors won’t come because they get so many invitations.”
The solution in Ultrafilter’s case is to combine a conference with a hospitality event. One recent example involved a driving day at Oulton Park, with product promotion an integral part of the activities.
Motor Safari’s Morgan is another who has noticed that companies are having to work harder to attract audiences to conferences and product launches. “Dealers have become very reluctant to attend events unless they can see a bottom line benefit,” he says. “And over the last two years, with time and money being tight, people have been trying to get the best attendance at the tightest cost.”
Morgan maintains that an increasing number of companies are using incentive techniques to attract dealers to product launches. “More and more of them are saying that they want to be sure the guys are going to turn up so they want to offer some sort of carrot.”
Fuller agrees. “Unless you do something special, the drop-out rate is very high on any product launch,” he says. However, he says that the inclusion of entertainment elements has another benefit. “It’s good to break down the barriers socially with something like the driving day,” he says.
Nobody is prepared to say whether these changes are permanent, although Gill believes that the number of customer entertainment days will begin to increase again next year.
Certainly Fuller expects to combine the product launches that he has planned for the spring with some form of entertainment.
The reality, however, is almost certainly that the range of activities on offer to buyers is likely to grow even further. Ten years ago, they would have been promised a day watching the stars at Wimbledon or a day at the races. There can be no doubt that there is still a demand for that type of activity. Five years ago, the emphasis had shifted to participation events, in some cases with enormous budgets. Although the budgets are now smaller, this style of event is also still in demand.
The past few recessionary years have seen budgets under close scrutiny and yet there is clearly still a great deal of corporate entertaining going on. Similarly, there is no doubt that there is still a huge market for incentives, as the financial results of the organising companies show.
Perhaps, then, the real result of the past few years is that clients have become more adventurous. If that is the case, then the outlook for employees and customers has to be good. There should be some excellent events on offer in the future.