The Art and Science of Corporate Gifting
With estimated annual expenditures in the tens of billions of dollars in the U.S. alone, corporate gift giving is serious business. As part of a well-planned process, gift-giving can help establish or enhance critical relationships and become a cost-effective means of recognizing activities that benefit the business or it can backfire with negative, even publicly shared consequences or worse. This article describes the many issues to consider for a successful corporate gifting program.
By Richard Kern and Bruce Bolger
- Reasons and Timing for Gifting
- Return on Investment
- Gifts Vs. Incentives and Recognition
- The Importance of Strategy
- The Ethics of Gift-Giving
- The Etiquette of Giving
- What to Give
- Where to Buy
- Corporate Gift Applications
Corporate gifts can be so powerful an influence on behavior, some organizations and even industries outright ban them. Similar risks can come with advertising, promotions, accounting, or even many medicine: powerful tools can have positive or negative outcomes when used for the wrong purposes. Properly designed corporate gift programs based on a strategic plan and good intentions can be an effective and appropriate part of an organization’s relationship-building toolkit, just as diplomats, organizations, the military, athletics, charities have used them for millennia.
According to numerous surveys, most business gifts are given to clients, followed by employees, prospective clients, and then special groups, such as board members, donors, or volunteers. Reasons for gift-giving range from thanking long-standing customers for their business, thanking a valued employee for working on a weekend; behaving in an exemplary way that supports the brand or values, or apologizing for a big mistake. The basic reason is the same: to affirm relationships and enhance the personal connection between giver and recipient in a manner whose material expression is meant to enhance the perceived value of what really is an appeal to our intrinsic natures.
Gifts differ from incentives in that they’re offered with no explicit preconditions for performance. They differ from ad specialties in that they usually don’t contain any blatant imprints or advertising. They can differ from recognition in that they’re not part of prescribed programs that specifically state who gets what and when under what specific circumstances. But that doesn’t mean there’s no bottom-line benefit to be derived from corporate gift-giving. For some companies, gift-giving is an essential part of a marketing strategy. And just about everyone agrees that, when managed correctly, gift-giving is a cost-effective way to build a sense of partnership with valued associates.
Reasons and Timing for Gifting
Reasons: The justifications for gifting are as numerous as the people and ways they make a difference in our organizational lives. Examples include:
- The employees who do the toughest, most menial jobs, who get the least credit and who appreciate more than anyone a thoughtful and meaningful express of thanks. To people of little financial means, but really to anyone, a pat on the back and a merry thanks is always appreciated, but after long periods it rings hollow, especially when it comes to business relationships.
- Customers in both B to B and B to C and who support your organization’s efforts year after year, and the best timing for that is not at the holidays but at business or their anniversaries that demonstrate your relationship.
- Event gifting, including room and table gifts, as well as event-gifting experiences.
- Board members who often give up a lot of time with no expectation of anything in return.
Timing: The best timing for gifts is when the gift has the best chance of making an impact, which makes holiday gifting one of the least effective times in many cases. Holiday gifting is effective if related to supporting a cause during that time period, but otherwise the gift often gets lost among many others and time as such demonstrates no personal connection. The best timing for most gifts is an anniversary or occasion specific to your organizational relationship, not a holiday, or at an event, where it helps enhance the experience and memorability.
Return on Investment
Although business gifts can be correlated with sales or other activities, their impact is best tracked over the long haul when used ethically as part of a systematic engagement effort. Promotional Products Association International (PPAI) has conducted surveys of corporate gift givers and recipients. They have shown that vendors who employed gifting practices were twice as likely to be contacted by recipients as those that didn’t have a gift program. Overall performance metrics are indeed related to the recipient’s activity with the organization over time, versus the activity of people who are not included in the gifting program. The relationship is not always measured in sales; it could be measured in terms of willingness to return phone calls, open and respond to emails, or consent to a presentation about a new product or service. People who feel appreciated generally take the time to demonstrate their appreciation back. That does not mean they will buy; but the chances increase that they will take the extra time to listen, which today is half the battle—as long, of course, that your organization delivers its promises.
Gifts Vs. Incentives and Recognition
To recognize the essence of an effective gift strategy, start by understanding what it isn’t. Though gifts and incentive awards often involve similar types of recipients, they differ on both a strategic and practical level. Incentives are awards for achieving defined levels of activity, such as sales quotas, safety improvements, or good attendance. In contrast, gifts are more or less spontaneous, not given as part of any defined arrangement between giver and recipient. The gift recipient doesn’t consciously set goals in anticipation of a reward, whereas the incentive recipient does. The trigger for the gift might be a specific desired brand behavior a leader wishes to recognize and draw attention to, or it could be a milestone or holiday. What distinguishes the gift from an incentive program is that it is unexpected, delivered after the fact as a surprise, and is expressly designed to “surprise and delight.” In this way, gifts are much more like recognition than they are like incentives: they come after the fact, with no further expectation. If there’s an expectation, it is not a gift.
It’s tempting to view gift and incentive programs in the same light. After all, an organization wants to know that it is getting its money’s worth from any business investment, and most givers want to motivate the recipient in one way or another. But be careful: Leaving customers or employees with the impression that they’re being bribed can do more harm than good. Instead, look at gift-giving as a subtle, long-term process of relationship-building or “paying it forward,” following the basic guidelines described in this article so that they remain within tasteful and ethical bounds, with no expectation of a quid pro quo. Giving gifts with such an expectation is like being invited to speak as an expert on your subject at an event and turning it into a sales pitch for your company.
The Importance of Strategy
Many if not most organizations leave corporate gifting to the individual manager in the form of a discretionary budget. At all but the smallest companies, in which the owner has a hand on what’s going on, that’s a mistake. To provide a meaningful value, gifts should be part of a strategy, triggered by specific actions or milestones aligned to the organization’s strategic plan, brand, or values proposition. With most companies spending anywhere from thousands to hundreds of thousands of dollars or more in business gifts, understanding how gifts are used and for what purposes gives organization invaluable insights into who are the people most important to an organization and how gifts, and what types of gifts, are being used to express thanks, an apology, congratulations, etc. Today, many companies integrate gift gifting with their CRM (customer relationship management) or related platforms to track: who gives gifts, the nature of the gifts, the cost, the purpose—not only for regulatory compliance purposes but also to track the relationships between audience engagement and the activities used to engage them.
The Ethics of Giving
Before giving any gift, you should know if either the giving or receiving organization has policies regarding gifts. Some companies – particularly those in the financial services, insurance, retail and medical fields – bar all gifts. More commonplace are restrictions that are placed on the value of a gift (usually $25 or under in value is considered de minimus) or on situations in which gifts may be given. Often there is an exclusion for meals and events unless a quid pro quo is explicit or implicit. At some point, a sales person can casually ask the potential recipient if his or her company publishes an ethics handbook or has any policy on receiving gifts. If so, then follow it to the letter. A few more words of advice:
- Giving gifts during a bidding process is a definite no-no. If a holiday happens to fall during this time, great care should be given as to if and how it would be presented on a case-by-case situation.
- Remember that the IRS lets companies deduct a business gift valued at up to $25 plus incidental customization and personalization fees; for many companies this has become a useful benchmark when justifying their budgets for gifts.
- Even when there isn’t a stated restriction, be careful not to create the wrong impression with a gift. Anything that might embarrass your recipient or lead to a reprimand can sabotage a valuable relationship.
- The use of “customer councils,” which might include travel to a desirable destination that includes memorable experiences, is discussed below. Tax treatment of gifts related to travel to meetings are governed by a different set of rules related to the primary purpose of the event. Knowledgeable tax advisors should be consulted.
The Etiquette of Giving
There is an art to effective giving, so consider the following major issues before launching any program.
Appropriateness. In the case of customers, care should be taken that the gift is appropriate to the business relationship. This has less to do with the dollar value of business transacted, or even the amount of time one has been doing business with the recipient, than with the closeness of the relationship. Also consider national or regional cultures. If a client seems aloof and excessively businesslike, trying to loosen someone up with gifts can backfire. With a new relationship, don’t get too personal or borderline lavish with a gift. Frequency of customer gift-giving generally should be restricted to holidays, milestones and special occasions, or actions and behaviors consistent with the brand or organizational values.
Personality. It’s great when a gift has personality, but the real issue is whether the gift reflects the personality and interests of the recipient. Is she a sports car nut? Does he have an obsessive relationship with his sailboat? What’s her favorite color? What are her favorite brands? Try to find out these kinds of things discreetly, just by looking around their workspace, because when you do (and your gift reflects it), the impression and truth must be that you care about the person and have taken the time to understand their style and taste. Lack of sincerity is hard to disguise.
Brand considerations. Many people instinctively consider the issue of brand in gift selection, when the issue warrants more careful consideration. For most people, brands tell a story and depending on the person and brand the selection can make a big difference. Some women crave the Gucci logo; others don’t like it. A master craftsmen will enjoy receiving a Milwaukee or Johnson Dewalt tool, whereas another choice might appear cheap.
Timing. The most popular occasions for giving, of course, are holidays. But the champions of corporate gift-giving know that other times of the year can have a more profound personal impact on the relationship. For instance, birthday gifts are bound to make a point, since recipients know that you’ve bothered to learn a thing or two about the recipient. Important dates, such as the anniversary of a new job or the day you initiated a business relationship, may be good occasions for a gift. The mail room team or janitors might prefer gifts before they go on vacation related to what they’re doing or where they are going. You can also mark such events as a promotion, the birth of a child, or completion of an important project, or the special action someone took that exemplifies the values of your organization. Whether you stick to established holidays and impersonal occasions or get into the personal life of the recipient depends on the nature of the relationship. It may seem slightly presumptuous, or even intrusive, to choose the wrong occasion for a gift.
Presentation. The best gifts are heart-felt and show it. Special care should be taken in preparing the gift. Invest in some nice wrapping paper, and take the time to compose a personal, handwritten card. This can be as important as the gift itself, since your message to the recipient conveys your intentions and sincerity. Then there’s the issue of whether to mail it or present it in person. Mailing can reduce any feelings of obligation on the part of the recipient, and it can provide some unexpected pleasure in a routine workday. If the relationship warrants it, mailing to the person’s home may add a personal touch, particularly when the recipient is an employee and the gift commemorates a personal occasion like a birthday or accomplishment.
Customizing. To logo or not to logo, that is a key question. For many businesses, customized gifts keep the company name in the minds of recipients. When the item is a practical one that’s likely to be used every day – such as a calendar, coffee mug, or tote bag – this amounts to free daily advertising. That makes sense for trade show or sales appointment giveaways. But for corporate gifting, there’s a tackiness quotient to consider. Customized items could never be considered personal, deeply heartfelt gifts, except in the case of etching or engraving of items for commemorative purposes, which of course is a different use case. In general, avoid obvious self-promotion when giving expensive gifts or any time you want to leave the impression that the gift is coming personally from your organization for appreciation, not marketing purposes.
What to Give
There are thousands of corporate gift possibilities – far too many to describe here – but let’s look at the pros and cons of some favorites:
- Food items are very popular as corporate gifts. They tie in well to many holidays and can be taken home and enjoyed with friends and family. But sometimes gourmet baskets take on a generic aspect. Many of them get no farther than the receptionist, to be picked apart by various office personnel passing through. If you want to win hearts and minds through the stomach, try to be creative and thoughtful. It’s all very well to consider giving those tender mail-order filet mignons; just make sure your recipient isn’t a vegetarian.
- Liquor and wine are old favorites, but hard liquor has lost some of its popularity. Despite the stigma associated with liquor in the business world, however, it’s essential to keep things in perspective. After all, if your client’s pride and joy is her wine cellar or his whiskey collection, what better gift than a fine cabernet or a single malt? Also in the sin department: cigars. A box of the right stogies can make you look impressive in the eyes of a cigar aficionado.
- Office-related items, such as pen sets and desk blotters, are safe bets that reflect practicality and good taste. Be careful, though: A good fountain pen is quite expensive, and a cheap one is tacky. Use caution when considering art prints and other decorative items because taste in office decor is a personal and, for many, strategic consideration.
- Tickets to sporting events and live entertainment often make great gifts. Scarce seats for popular shows and events provide a thrill and can make you a hero in the eyes of a client. Still, you should be sure of your client’s preferences. Just because he mumbles a response when you say, “How ‘bout them Mets!” don’t automatically assume he wants to sit through an afternoon at Citifield. Apart from that, anyone in the financial services or medical professions should be aware of a growing number of government and industry-governed regulations and policies aimed to curtail lavish entertainment and that all entertainment should generally be a byproduct of education and networking and not the other way around.
- Customer councils invite customers and/or distribution partners generally to a desirable destination, with or without significant others, for several days of business and pleasure, with the goal of building more powerful relationships. Generally, to escape tax treatment and perception that the trip is a gift, the on-site program must be at least 50% of business nature and, from a perception point of view, as well. The best of these programs run for the purposes intended to benefit from an off-site experience, with a clear agenda to create a mutually beneficial learning opportunity for all involved with the goal of improving business practices going forward.
- Gift cards have much appeal if you want to take much of the guesswork out of giving. They’re available from a wide variety of brands, they offer the recipient freedom of choice and they can be given to all types of people. A big benefit is that some of these cards can be reloadable for long-term wallet power; and both e-cards and card carriers can be easily customized. The only problem is that in most cases the dollar amount is printed on the face, which, for some people, detracts from the feeling that this is a gift with some thought behind it. Some cards do come with points only redemption.
- Word of warning about cash: Unlike with personal gifting, cash is a no-no as a corporate gift, period. It’s uncreative, raises ethical questions and looks like a bribe, no matter what.
If your organization doesn’t already have a corporate-gifting strategy, consider the issues raised in this report before you buy anything, because gift-giving represents the ultimate target-marketing and relationship-building strategy with as much risk for failure as potential for good will. Every gift idea has a potential downside, and just because you like something doesn’t mean your recipient will. If ethics or other issues bar you from giving a material gift, consider a donation to the recipient’s favorite cause.
Where to Buy
There are about as many places to shop for corporate gifts as there are gift choices. Much depends on what types of services you need and how many gifts you plan to buy. Do you need customization? Drop-shipping to recipients? Personalized packaging with letters inserted? Tracking reports? Is an online component desired? If so, work with a company that regularly performs these services.
- Retail catalogs or stores provide a good starting point for the small-scale gift-giver but be careful if you’re buying in bulk and need some of the services mentioned above. Many retail gift services aren’t designed for the corporate market. A growing number of department stores and retail catalog companies, however, have corporate departments that offer extensive services and discounts for bulk purchase, so if you plan to buy from one of these companies make sure you deal with the corporate sales department. If you hate to shop but still want to give interesting items, some of the finer department stores have personal shopping services. Many major catalog companies also have gift card and online programs. Recipients receive their cards along with a catalog and Web address in the same mailing. If you go this route, make sure the company has a high-quality 24-hour customer service operation. Test it before making a purchase so your customers don’t run into trouble. Also, remember that the retailer now has a relationship with your customer as well, and that in most cases the redemption process will be at retail, not a site or experience customized with your brand.
- Direct from the manufacturer. Many large and small manufacturers have Special Markets departments that sell their products to corporations prepared to buy in volume. Almost all these companies belong to the Incentive Marketing Association, which publishes a directory at Incentivemarketing.org.
- Incentive representatives. If your company operates large gift-giving programs, it can buy brand-name items through incentive representatives of leading manufacturers in the business market. These representatives can offer high-volume customers lower prices and help them arrange for fulfillment in bulk or drop-shipped. For a list of incentive representatives in your area, contact the Incentive Manufacturers Representatives Association at Incentivemarketing.org.
- Promotional products distributors. Don’t let the name fool you. Many of these companies can provide a selection of corporate gifts for even the smallest customer. You may pay a little more than if you attempted to buy directly from a brand-name supplier, but a good distributor can provide turnkey services that take most of the headaches out of your program. For a list of distributors, go to PPAI.org or ASICentral.com. Look for a company that can demonstrate expertise in gift programs.
- Online merchants. The Internet makes it easy to send out customized gift messages and online certificates. Online merchants let you send out e-mail customizable gift certificates and messaging to recipients that they can redeem on their own.
- Incentive companies. Some incentive companies have catalogs that can be used for gift-giving programs. They put merchandise in price categories rather than specifying a specific price. Certificates or cards allow people to redeem at a certain level without knowing the actual price. Caution: You may not get much service if you plan to give only a few gifts. Be honest about your order size when making your inquiries.
Corporate Gift Applications
In addition to their traditional use around holiday seasons, gifts have many other applications in business:
- Employee recognition. Many companies don’t use incentives with certain categories of employees for fear of igniting harmful competition within their ranks or because they’re unable to single out an individual’s incremental performance in a clearly measurable way. Instead, companies often give managers a discretionary budget that may be spent on gifts to recognize employees for exceptional behavior. Actions worthy of special recognition include going “above and beyond” to please a customer, taking an exemplary action supportive of the brand, putting in long hours to complete a project on time, making a cost-saving or productivity-enhancing suggestion, or completing a big sale. Some executives would argue that such actions are expected as part of an employee’s job and should be rewarded at performance-review time. Yet, the evidence suggests that carefully timed and appropriate gifts not only make people feel appreciated for their performance, they also increase the chances people will feel good about going the extra mile in the future. When giving gifts for special performance, make sure the gift is appropriate to the employee receiving it, the person and colleagues know why, and the presentation is made in a personal and, if possible, public forum, or publicized on the organization’s communications platform. The recipient and his or her colleagues must know why the gift is being presented. Publicity in the company newsletter, or even an announcement in the lunchroom, ensures that people know the types of behaviors the organization wishes to promote. Gifts are also typically awarded to employees for years of service, as well, although most of these programs need to be recalibrated with the recognition that most employees leave long before five years and older ones certainly do not remain to achieve those milestones.
- Customers. With today’s increased emphasis on corporate ethics, you need to scrutinize not only the gift and the recipients, but the nature of the presentation. After you’ve determined which clients can accept gifts, think carefully about the gift and how it’s going to be given. If you ship gifts to recipients, you miss an invaluable opportunity to reinforce the relationship between your employees and your customers. On the other, imagine the surprise when your customer gets a surprise gift from a customer service representative that even reflects a personal understanding of who he or she is.
- Consumers. Merchandise or non-cash awards given to consumers usually fall under the category of premiums or awards associated with sweepstakes and games. The idea is to spur behavior by making an offer. In contrast, gifts reward consumers after the fact, and the aim is to surprise the customer and build long-term loyalty precisely because there is no expectation of doing so through the gift. Thus, the key to using consumer gifts is to have a specific strategy and target customers whose volume you can track over time and to not only expect such loyalty. Example: A supermarket chain wants to increase usage of its preferred-customer card so it can track its customers’ purchase patterns more precisely. It has offered incentives to get people to sign up and use the card, but usage has begun to trail off. As part of its effort to keep up interest in the card, the supermarket sends out a surprise gift with a thank-you letter from the president to all shoppers who have used the card to purchase more than $500 in groceries in a given month.
- Vendors. During the heyday of the total-quality craze in the 1990s, companies recognized the importance of building close relationships with suppliers. The trend continues today, as manufacturers and retailers alike depend upon just-in-time deliveries and companies of all types demand the best service for the lowest price. Despite these concerns, surveys generally show that vendors are among the least likely businesspeople to receive gifts. If your company depends on excellent service from a few vendors, you may be surprised by the long-term impact of sending a few gifts – not only to your customer service representative, but, if possible, to the people who do the work. Trade show contractors have long known the value of providing gifts to the convention center labor teams before the event, which conveys faith that they will do a great job.
- The media. Most daily newspapers and many consumer magazines have strict policies about giving gifts to editors and reporters, but they’re often overlooked if the gift is simple, tasteful and appropriately timed so it doesn’t look like a bribe. A very small, imaginative gift related to your message sent with a press release will increase the chances of your message being read, and that could translate into coverage if the story is right. Be wary of sending gifts to consumer journalists whom you or your public relations people do not know personally. The gift could backfire by creating the wrong impression.
- Government officials. Many businesses depend upon good working relations with government regulatory bodies or town officials. When regulatory officials or politicians are involved, proceed with caution! However, when it’s a question of municipal workers who perform services such as trash pickup for your business, a special gift at holiday time often earns a year’s worth of more attentive service.
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