Is corporate hospitality a done thing?

Let Me Entertain You (Or Not… Depending On The Party Line)

Is corporate hospitality a done thing?

Customer entertainment, gifts, and freebies are becoming a bigger issue for buyers these days. Increased ‘professionalism’, new company guidelines and a general pressure on how you spend your time is making it harder for this traditional form of relationship building to be effective. Despite this It can still be a very potent force to improve your chances of winning or maintaining business, provided it is used in the right way – and you have thought it through properly.

Having been a sales rep, sales manager, corporate buyer and purchasing director I have seen this problem form both sides of the table. As a rep I have stood in the car park of a customer wondering why on earth marketing think a tankard with our logo on it is going to impress a buyer, and as a buyer I have been helicoptered into a grand-prix (which was nice ). So I have seen the good, the bad, and the just plain naff, of entertaining and gifts. So let’s set the record straight on whether you should entertain, and if so how you can do it to maximum effect.

Across the world it has always been traditional to mark good relations with the giving of gifts. This practice certainly doesn’t appear to have held back the Japanese economy where it is a major force in business. If you don’t think you need gifts or entertainment because ‘our relationship is strong enough’ then just try telling your partner ‘…sorry darling for not giving you any presents or taking you out this year, I think our relationship is strong enough not to need those things – is that OK?’ There is a fundamental misconception over gifts and entertaining. Most people think that they are to do with persuasion, or obligation. If that is your objective then you will fail. The only real objective should be to use them for networking, and even the most ‘bah-humbug’ of buyers can probably see the benefits of that.

Many companies have policies on entertaining. Interestingly most of the big ones have totally different ones for selling and buying. They may well have entertainment days and gifts in the marketing budget, and yet corporate purchasing has a policy of not accepting any gifts or entertainment. The Chartered Institute for Purchasing and Supply (CIPS) is the buying equivalent of the ISMM, and they have a policy. It states that gifts should really be of nominal value, and that entertaining should be managed openly, and not of the type that might be deemed to have had influence on a buying decision. So this still leaves a reasonable scope. There may even be ways around the ‘no gifts’ policy at major companies which we will come back to later. So what makes entertaining both acceptable and effective?

The first rule is line-fish wherever possible. By this I mean that you are meant to be doing something that is attractive to people. Don’t offer them United tickets if they prefer opera, and don’t do a golf day if in reality its just your sales guys who like it. I happened to enjoy my day out at the grand-prix, but when I enquired why exactly they did racing it was because the MD loved it. That really made me feel special. Even if you find your customer has a passion for train spotting, then find a way to get him a day out at Crewe station. The fact that you cant ( indeed would not in any circumstances ) boast about this to your colleagues is irrelevant. Most sales people I met worked on an ‘invite first, ask questions later’ principle, and because of that much of the entertainment these days is ineffective.

The next rule is make it easy to accept. One company I knew had a factory near Verdun – not exactly a romantic location. However to get there from the UK you do have to drive through champagne country. They put on a ‘Quality and Product Development Seminar’ to be held at the factory – mmm, fascinating. There was in fact some real content to this, and at the same time the schedule did call for an overnight stop (both on the way there and on the way back) in the heart of Champagne. They got a good uptake and everyone was (literally) very happy. This probably even got around the ‘no entertaining’ company rules.

If you do have gifts, and your customer is wary of accepting such things, then suggest a charity auction, which even the most hardened would find hard to resist. The process is simple – you give them a load of gifts (NB not ties with the company crest on…) and they then run an auction, or a tombola in-house, with the money going to charity. You get great kudos, they are happy, and a charity makes some money.

If you are able to get some key contacts to come to event then make sure you maximise your time to broaden and deepen your knowledge of your customer. I have been to events where sales guys spend more time networking with their own senior management than the customers. This is great for buyers, it lets them off the hook to go and network with others in your organisation who will probably be less guarded than you after a glass or two of Chablis.

The last key rule is don’t talk business. Entertainment should be just that. Use it to get to know people, understand them, even befriend them. Business should be done later. Not only does it put the customer in an awkward position (they mustn’t be seen to let the event affect their judgment) but also it is rare for these events to pass without someone having a drink. Many have lived to regret deals done after too much wine.

Entertaining and gifts can be great sales tools. They can be great relationship builders. The challenge is to take real care and focus on how you pitch them and how you deliver them. In the same way that a gift to your partner bought at a service station, or an entertainment of two tickets for your own favourite sports team does not hit the mark. As the old adage goes, it’s the thought that counts.