MEASURING UP

More than 60 per cent of companies don’t evaluate the results of their corporate hospitality Why not? And are they wasting their money?

Another wonderful corporate day out is drawing to a close. The last champagne cork popped long ago, and it’s time to shake hands and bid farewell to all those guests who have cost you 300 each over the past few hours.

What can you expect from all that largesse? Will the telephone be ringing constantly tomorrow morning? Will your order book be full for months to come? Or will the day’s camaraderie be forgotten all too quickly in a haze of canapés and bubbly, leaving you with little to show for your generosity other than a severe dent in your marketing budget?

But according to a corporate hospitality survey just published by Total Research, most corporate entertainers will never know whether their event was a success or not. The survey reveals that 66 per cent of companies questioned do not evaluate the effectiveness of their expenditure.

“The fact is that only 34 per cent of the 260 blue-chip companies we questioned actually try to measure a return on their investment,” says Total Research marketing director David Dower. “Some 36 per cent do not believe any worthwhile evaluation is possible, while 30 per cent simply do not try to measure.”

These figures highlight the unscientific basis for much of corporate hospitality spending in this country which is estimated by the Corporate Hospitality Association to be about 500m. In fact the phrase “gut feel” is one of the most used when speaking to corporate hospitality organisers. Much of the problem seems to be that, unlike other marketing disciplines, there is no standard for measuring corporate hospitality.

“Before you can think about evaluating the success of a corporate event, you have to put in a fair amount of pre-event planning and research,” says Simon Gillespie, marketing director of Sportsworld, a corporate hospitality provider officially appointed to events ranging from Wimbledon to the 1998 Winter Olympics in Japan.

“To start with, companies must carefully research their potential guest list to ensure invitations are not wasted. This means looking up records of previous invitations to see who said yes to what and who refused. After all, there’s little point inviting someone to a golf day if they dislike golf.”

The importance of planning is echoed by Eddie Hoare, managing director of Elegant Days and chairman of the Corporate Hospitality Association. “Some of our clients actively monitor their relationships with their customers in the months following a corporate hospitality event. In order to do this accurately, they need to be sure they can carry out this process against a set of clearly-defined objectives which have been set before an event takes place.

“Once these objectives have been established, they will then be in a much better position to decide whether they want a spectator or participator event, who should be invited and how much should be spent on the whole thing. Analysis of the success of an occasion then becomes that bit easier.”

Dower at Total Research, however, believes that you cannot attribute business improvement to a single corporate hospitality event.

Other surveys show how accountability of marketing has increased in recent years, and that marketing managers have to be able to show that their budget has been spent in the right way. “Hospitality is increasingly seen as a serious component of a company’s marketing mix, so to maximise its potential success, it is vital to approach it in a business-like way, with a clear strategy laid out to achieve whatever goals have been set,” says Sportsworld’s Gillespie.

However, a corporate hospitality event, according to Total Research’s report, has little value as a new business development tool. “Whereas it scored above almost everything else in its effectiveness for existing clients, it was reckoned to be a very poor performer where new customers were concerned,” explains Dower. “This supports the widely held belief that a corporate day will never be the sole reason for that new order or contract: it’s much more about cementing relationships that already exist.”

Defining the real business value of corporate hospitality is seldom as simple as calling out a few bald statistics, and none of Hoare’s clients at Elegant Days, he claims, like him to do that anyway. “At the beginning of the year you set your budgets and you establish your goals. You identify your best clients and you think of some useful ways of making them feel good, looking after them, or developing your business relationship with them – call it what you will, it’s the business equivalent of giving them a big cuddle to make them feel wanted.”

From the viewpoint of hospitality, its success is best measured not only by the continued growth in the industry but by the number of repeat bookings achieved by popular venues, according to Gillespie who says that the highest repeat business his company registers is from Wimbledon, Royal Ascot and the British Grand Prix.

But Gillespie says there is no such thing as a guaranteed event.

“Henley had enormous success during the Eighties when budgets for corporate hospitality were high and there were no attempts at measurement. I think Henley suffered from overkill and saw a real decline in business over the last five years. But it is making a comeback,” he says.

“Companies often find a particular event which works very well for them, in terms of meeting their aims, and that they are comfortable with in terms of its operation. They will often stick with that same event for several years and are reluctant to drop it from their marketing plans,” he adds.

Just such a case is TNT’s corporate golf day at the Belfry. TNT marketing director Steve Doig organises one of the largest days in the Belfry’s calendar, an annual event of 13 years standing. “We have very clear objectives for the day, in that it must create just the right environment for us to cement relationships with existing major customers,” he says. “We would never see it as a means for closing a business deal, but we are sure that we succeed in creating bonds.”

According to the Total Research survey, golf comes second only to rugby union, with 47 per cent of companies questioned including it as a part of their corporate hospitality plans. Rugby itself scored 55 per cent, far outstripping cricket (37 per cent), tennis (30 per cent), motor sport (18 per cent) and rowing (14 per cent).

“It is in the best interests of the industry that clients try to quantify the success of corporate hospitality,” says Hoare. “They would then prove to themselves that it works and they would certainly spend more.

“Right now it’s rare to be able to point to a corporate event and say that it cost 20,000, but led to 100,000 of new business. However, a marketing manager who has the simple objective of wanting to give his client that all-important ‘corporate cuddle’ will not be disappointed by the long-term success of what he has arranged,” says Hoare.

Occasionally there are organisations lucky enough to deal in business areas exciting enough to render days out of the office somewhat pedestrian. John Osmond, marketing manager of Oxford-based McAlpine Helicopters, is able to plan corporate events that are not only very focused, but are also much easier to evaluate in strict financial terms. “We set up special events in the form of garden parties based around our helicopters. Helicopters are very sexy toys, and clients are sure of an event that will be exciting and memorable,” he says. “We recently held an event which was attended by 26 guests. The fact that one of them subsequently bought a helicopter may not have been due exclusively to his day out with us, but it was certainly pivotal in his decision-making.

“Compare that to the cost of a chalet at the Farnborough Air Show where we’re paying upwards of 250 a head for guests: they eat lunch with us and before we have time for any useful relationship-building, they’re off to have tea with another company and evening cocktails with someone else. The end result is once again easy to evaluate – it gets a definite thumbs-down in terms of its business effectiveness.”

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