As financial directors across the land wince at the cost of their company’s Christmas jollies, January is probably a prudent time to evaluate the purpose – and payback – of corporate hospitality. For however sophisticated marketers become in terms of relationship marketing initiatives, loyalty schemes, client segmentation and the like, at the core of any successful and sustainable business relationship lies personal chemistry. Quite simply, people who get on well together, work well together. But the crucial question is: can chemistry be cultivated? And if so, how? Moreover, given the large sums of money often involved, does it pay to lay on lavish events, or are there more cost-effective ways to do good business?
Sue Martineau, managing director of The Ultimate Event Company, believes corporate events can be split into two. “There are the traditional packages that can be bought off the shelf from a calendar of events. Tennis at Wimbledon, rugby internationals at Twickenham, a box at Manchester United Football Club – they all have a similar format. Clients arrive, are served drinks then a meal, given grandstand seats and drink champagne throughout, then off they go. But frankly, this way of doing business is on the decline because it’s so costly. It’s as much as £1,000 a person on finals day for a Wimbledon package.”
Justify the need
Clearly, a great deal of new business needs to be generated to justify that kind of expense. Martineau continues: “When you consider that for that kind of money you could fly them to a chateau in France instead, it’s clear why clients are looking at alternatives. We’re finding tailored events are increasingly popular; our clients are entertaining their clients in a way that reflects their mutual interests.”
So what kind of corporate events are especially sought after? “We might arrange a weekend of skiing for clients who enjoy winter sports, or a five-day trip to Sun City for those who love gambling,” says Martineau. “Or for a mixed group, we might take over a country house for a few days – arrange clay pigeon shooting, quad biking, horse riding. The point is to create something different, but appropriate.”
The advantage here is not just a better use of funds, from a time-management point of view it pays dividends too. Capturing a client over a longer period means more time to bond, develop a relationship and, above all, do business. “Per head, the most expensive event we put together is a Golf Open event for a US risk insurance company,” Martineau continues. “We handle the whole thing – we fly them in, then, as soon as their feet hit England, whisk them off to the Open. They stay for five days, attending the Open for a couple of those. They are indulged throughout; they have a housekeeper and chef and get to play their own golf too. It costs between £4,000 and £5,000 a head, which sounds a lot, but the point is, it works. Our client has its clients’ attention for nearly a week, and the amount of business that gets done is phenomenal. Yet, despite its profit focus, people fight to get on the trip.”
And perhaps therein lies the secret of success : places are coveted and the event is one that is bound to be remembered.
Making your mark
Ursula Benson, group account director at the River Communications Group, would agree. When she and her colleagues were deciding how to entertain their clients this Christmas, the “wow” factor was key. “From an almost endless choice of venues and entertainment, the ‘bespoke’ hospitality playing field was vast,” she recalls. “So it was important to us to be able to personalise the event to create a genuine night to remember. We asked our clients for input, and in the end, opted for the Kensington Roof Gardens.
“With the pink flamingos, a matching ice sculpture dispensing vodka, roulette, live music, a dedicated VIP lounge and food that was far from just a mere afterthought by the venue, we put on something spectacular, at a similar cost per head to a standard day out at Henley or Wimbledon. The side-entertainment alleviated the problem of clients waiting around to talk to their respective account handlers, while River-branded invitations and illuminated standalone posters raised awareness and appreciation of the agency. So while it’s difficult to measure the precise effects of such a venture in terms of profits, the sheer feelgood factor ensured those attending would not forget the party in a hurry.”
New name for old
Carlson Marketing Group director Ken Aston has strong views on the subject. “Even the phrase ‘corporate hospitality’ is misleading,” he argues. “It’s a throwback to the late Eighties and early Nineties, when it seemed you could buy business more easily – a favour for a favour, so to speak. I like to think that we’ve moved beyond that. Clients have to justify themselves and their expenditure more. Personal guilt plays a part too in preventing mindless extravagance.”
Discussing how entertaining has moved on since the Eighties, Aston says: “Back then, there were three basic reasons for entertaining a client: as an incentive or bribe; as a thank you; or as an attempt to get closer to clients without any particular focus on a piece of business. In the past it was so easy to accept invitations that clients used to joke about how many they turned down. But that’s no longer the case. Today there is a search for business value. We encourage our clients to be accountable and to set clear objectives as to why a specific event is the right choice.”
So why this change? “It reflects a belief that you have to invest in relationships,” says Aston. “And we’re not just talking about money, but time and energy spent getting to know your client. For example, I recently organised a trip to a second-division football game, as I shared a passion for the team with my client. The tickets weren’t expensive, but it meant much more to him than, say, a lavish trip to the Grand Prix in Monaco. And now that we’ve established we’re fellow supporters, our bond runs that much deeper.”
According to research published by the Incentive Travel and Meetings Association, trends in corporate events and the incentive travel industry are shifting. “Successful agencies are those that anticipate the different industry sectors’ communications needs and can offer the appropriate solutions.”
There’s another change too: hospitality events used to be organised by suppliers for clients, but now guests lists include suppliers because companies have recognised the importance of supply chain relationships.
Phil Rushfirth, head of quantitative research at Nunwood Consulting, helped co-ordinate the kind of event that typifies this new way of thinking. After identifying that senior market research professionals had no opportunity in their usual working environment to discuss current issues, best practice and solutions to common problems, Nunwood held a one-day client forum last November.
“The aim was to bring together senior researchers to discuss topics that they themselves had proposed,” explains Rushfirth. “Nunwood’s role was to act as host, and our aim was pretty altruistic. There were eight delegates from a number of blue-chip organisations, including senior in-house researchers from ARG Equation (GUS), Cheshire Building Society, Hallmark, Reckitt Benckiser, Standard Life and Yorkshire Water. It was a great success. They all said how refreshing it was to get the opportunity to learn from other people in a small group. The Market Research Society does organise an annual conference, but it’s on a huge scale and clients often feel ‘talked at’. What they seemed to enjoy about our forum was the interactivity. And for us it was an opportunity to be part of that process. We found it a constructive way of working as it was less overt, more consultative and people could be more honest. The benefit was professional rather than personal – it was about learning, being forward-thinking, which is more our scene, frankly. Doing business on the golf course isn’t how our clients operate any more.”
Acclaim managing director Simon Hambley agrees. “We have been organising more events which, although they could be termed corporate hospitality, are designed to build stronger relationships with customers.
Show you care
“I believe that there is no better way to tell customers just how valued they are than by creating face-to-face experiences; then we can present a product, listen to their feedback and share an experience. In this regard, definitions of corporate hospitality, incentives or conferences are not as clean-cut as they used to be. Specialist knowledge is required to plan events that aren’t just about showing off, but demonstrate that you listen, understand and react to individual needs.”
And Aston adds: “It’s no longer acceptable to go along on a pure ‘jolly’. A conference will have a full set of talks and presentations attached, even if there is a two-day stay in a posh hotel. Budget and creativity are important, but business objectives and payback are the forces that drive us, and this isn’t solely driven by the taxman. Decision makers have to identify benefits. I’d even go so far as to say we need a new phrase for corporate hospitality; a phrase that evokes relationship marketing and reflects the discipline’s segmentation, information gathering and targeting skills.”