Rewarding customers and employees for their loyalty or service may be a centuries-old tradition, but the marketing benefits of giving gifts to those valued by an organisation are still obvious today.
It is about fostering good relationships. Even Charles Dickens’ character Ebenezer Scrooge learned this and his clerk Bob Cratchit was eventually able to enjoy a Christmas table loaded with turkey and all the trimmings.
While the modern corporate gift market has evolved, many of the principles remain. Hampers and wine are long-established favourites, although today a company might be just as likely to give an iPod or an “experience” day.
Whatever the gift and whoever the recipient, it is crucial that the reward fits the relationship, says Jacky MacKay, head of sales and marketing at London’s Strand Palace Hotel.
She says/ “I don’t think there is a hard and fast rule as to who you send corporate gifts to, but for us gifts are about expanding on a relationship, and acknowledging a client’s business and their loyalty. If there is no existing relationship, the gift could be perceived as meaningless.”
For the gift giver, this is likely to mean more thought is required rather than simply carpet-bombing customers with identical trinkets. For some companies, this also means allowing recipients to choose their own gifts.
According to Sheila Sheldon, director of European operations at upmarket retailer Michael C Fina, schemes are often run on the basis that “an individual now chooses what they would like rather than you giving them what you think they would like”.
Vouchers and gift cards are another possible approach to giving recipients free choice, though these tend to be very impersonal, according to Simon Williams, head of corporate sales at John Lewis. “They serve a purpose in the gifting market, but it does not show a great deal of thought has gone into it and it is very transparent as to the value.”
Nonetheless, if breadth of choice is important there is clearly an upside to vouchers and prepaid debit cards from some suppliers, especially when multiple retailers will accept them. And vouchers for an upmarket outlet might possess a value in the mind of the recipient, purely by virtue of the branding.
There is also the option of offering a list of gifts from which the recipient can make the selection. Dreyfuss Group, which owns the Rotary Watch brand, has a “bespoke Christmas gift brochure with up to 40 items all broadly the same value but catering for every taste”, says managing director Victoria Campbell. “This goes out before Christmas so that staff can select a gift and have it delivered to their home. This really seems to have gone down well with everyone.”
Rewards company Cottrills supplies the brochures and gifts used by Dreyfuss Group. Corporate marketing executive Gemma Barlow says the “perceived value is far higher” with physical gifts, so providing a careful selection is often preferable to vouchers. “Companies want to show they have put a lot of thought and effort into the scheme.”
Giving recipients this freedom also removes one of the banana skins facing companies that choose to reward customers and employees. An inappropriate gift can be worse than none at all, as it could cause offence or demonstrate a lack of thought and understanding.
Business relationships could easily suffer as a result. Many people do not celebrate Christmas, for example, so a festive gift might feel to some like an attempt to impose traditions that they do not share.
More specific pratfalls might include giving wine to a teetotaller, meat to a vegetarian or an experience day to someone unable to enjoy it. These might seem obvious mistakes to avoid, but they also require an intimate knowledge of the individual to whom the gift is directed.
“You cannot second-guess somebody’s aspirations,” says Colin Hodgson, sales director at incentives specialist Edenred. “What is motivational to one individual has the opposite effect to another. Giving somebody a driving experience is all well and good, but if that individual is unable to drive or is under the age of insurance required to undertake that experience, then it is clearly not an appropriate reward.”
It gets worse, however. A poor choice of gift might not create a feeling of goodwill towards the sender, but it is nothing compared with the ethical and legal issues that could arise if the gift giver does not think carefully about potential conflicts of interest. As a result, many companies have policies on the value and type of gifts its employees may accept.
Giving the impression that a gift has been given with the intention of securing specific business – or that it has been solicited for that reason – could result in serious consequences for the individuals or organisations involved.
“It is important that we do not use it as a bribery,” says Sheldon at Michael C Fina. “You have to be very careful that it is not seen as ’you give me an iPod, and I’ll continue to give you business’. However, you should still be able to say thank you.”
All this potential for slip-ups might have marketers thinking they might not bother with gifts this year. Yet enthusiasm remains undimmed, with Christmas still contributing to a significant increase in activity in this area (see Brand in the Spotlight, page 31).
However, companies do appear to be reassessing the way they approach gift giving, mainly to “ensure that all the brand activity supports a central objective”, says Dreyfuss Group’s Campbell. “Like any other marketing campaign, specific goals should be set and metrics reviewed.”
And like any other marketing campaign, the delivery must match the brand proposition.
How can gifts build corporate relationships?
Businesses send gifts in order to both consolidate existing corporate relationships and to foster new ones. Christmas offers an unmissable opportunity to engage with a workforce via employee rewards for service or incentives to encourage performance. Companies might also give goodbye gifts to those retiring after distinguished careers or for long service.
To whom should you send a gift?
Companies send gifts to individuals, groups and organisations/ they might be customers, prospects, suppliers or employees. The approaches taken – and the kinds of gifts given – vary as widely as the business’s relationship to the recipient. Some companies offer recipients a choice, while others offer experiences or team bonding exercises, depending on those being rewarded.
Corporate gifts in numbers
One of the most popular single values for a corporate gift is £50. This is also the threshold below which VAT on the purchase can be reclaimed.
The number of Christmas gifts given by a single company range between 15 and 1,000.
The average spent on employees by companies giving gifts or incentives is about £10 per employee per year.
The most expensive hamper in the Harrods corporate gift range is priced at £1,250.
Michael C Fina’s top-selling corporate gifts in 2008 and 2009 were cappuccino makers and Le Creuset kitchen and cookware, respectively. In 2010, iPods currently lead sales (see Top Trends, page 32).
Sources: Michael C Fina, HMRC, John Lewis and Harrods
Brand in the spotlight
HARRODS and the festive gift market
Head of corporate services, Harrods
MW: How much do companies spend on Harrods gifts?
TF: For a year-end, festive or thank-you gift, the average spend would be £150-£160 for senior management and £50-£60 for second-tier staff. Hampers at Christmas are very popular as the gift can be shared and enjoyed, adding to the impact of the gift and making it more memorable.
One-off gifts for VIP clients or managing directors would cost between £1,000 and £1,500. Companies use our complementary service to source an exclusive, bespoke gift that best represents the recipient’s interests and personality.
MW: How many gifts do companies buy?
TF: Harrods Corporate Service deals with a variety of clients including bluechip corporate companies, small private businesses and lifestyle and incentive agencies. Larger multinationals buy hundreds of gifts, while smaller companies buy between 15 and 20.
MW: What effect does Christmas have on the market?
TF: We see an uplift that more than doubles sales in Q4 as opposed to Q3.
MW: Do different business sectors give different gifts?
TF: Smaller private businesses give one-off gifts at Christmas and the larger multinationals have a culture of gift giving throughout the year, ending the year with Christmas gift purchases.
The economic climate has a bearing on the gift-giving culture. Mortgage companies, financial institutions and recruitment used to be large purchasers of gifts but the recession means they now do not have the budgets for this, although they are starting to re-enter the gift-giving market. Whatever sector is buoyant and showing growth will be purchasers of gifts for the coming festive season. This is also true for emerging markets.
MW: How much does the brand of the gift matter?
TF: Most people, generally, are aware of the Harrods brand. I think the challenge is to make it more accessible. It is not an everyday high street brand, so I think they see it as a treat and that they are being given something that is out of the ordinary.
We have to turn away some of the marketing requests because there are a lot of brands that want to align themselves with us, and sometimes it is not appropriate. But generally it works really well.
TOP TRENDS 2010/11 predictions
Head of corporate sales John Lewis
There is always going to be a strong market for wine and food hampers and I do not think that is going to change dramatically any time soon. Having said that, we are certainly seeing increased interest in other options. Another development is the trend towards giving the recipient a choice of gift. That allows businesses to vary their gifting from year to year, which is attractive because it can make their gift stand out from the crowd.
Director of European operations Michael C Fina
When offering freedom of choice, it is very interesting the things people choose. You are always going to have what I call the typical gifts in there in addition to lifestyle items, such as iPods, barbecues and patio furniture.
Would you go and buy yourself a saucepan that costs £100? Possibly not, but if someone was giving it to you for nothing, then you may well choose it.
Head of corporate services Harrods
As a result of budgets being cut, many companies are trying to tailor-make gifts, so it says something about the business as well as who the recipient is.
I think companies really want their gift to be remembered and to have some impact on the recipient, which is why they are trying to make it as relevant to the recipient’s lifestyle as possible. That is where we come in to try and find a bespoke solution.
Head of sales and marketing Strand Palace Hotel
Branded goods are essential. Without proper branding or customisation, the gift is meaningless and it creates ambiguity to the recipient. Quality and choice should also reflect the product.
Corporate gift buying has remained the same for so long that it seems unlikely this will change overnight. In terms of products provided as gifts, popular items tend to follow technology. Where once you might have ordered branded pencils or pens, now you send USB sticks, and with the growing popularity of items like the iPod and iPad, maybe we will see branded leather cases emerge as favourites in the next few years.
Sales director Edenred
The evolution of the Christmas, recognition and thank you gift market follows a similar pace to long service rewards. How many companies now hand over a carriage clock in recognition of long service? It is almost unheard of these days, and that is principally because the gift-giving market has evolved in terms of consumer aspiration and desire.
The number of requests that we have for hampers is also lower than it was maybe five or 10 years ago. We are being asked more for creative ideas. Certainly we have not seen any decline in the trend in relation to this time of year. Seasonally, from our perspective, the Christmas period is our most busy time of the year.
Top tips you need to know
- Reward the individual. The best gifts cater to recipients’ tastes, and getting it right can show that you understand them. This might mean giving them a choice.
- Be culturally sensitive. Not everyone celebrates Christmas, but most will feel valued if rewarded appropriately. An inappropriate gift, however, could be offensive and worse than giving nothing.
- Be aware of the recipient’s policies on gifts. Some organisations limit the value of gifts its employees receive. Others do not allow them to accept gifts at all.
- Avoid conflicts of interest. Giving the impression that a gift has been given to secure specific business could be ethically suspect, or even illegal.
- Think outside the hamper. Traditional options still appeal, but there is a huge variety of ideas out there, from experience days to vouchers accepted at hundreds of outlets.