In the current economic climate, the idea of allocating budget to corporate hospitality may seem like an extravagance your company can no longer afford. In a recession, for a small business or recent company formation, priorities change from growth to survival and therefore, understandably, corporate hospitality takes a back seat. However, according to Diana Barnes, CEO of corporate hospitality company, Seed Hospitality, there has never been a more important time to concentrate on relationships with existing clients.
In a recession, while customers and clients alike cut back on their expenditure, they remain loyal to brands they have an established personal relationship with. Therefore, according to Seed, corporate hospitality is the one area you should make an effort to maintain. She comments: “By all means scale back the costs and work to a budget, but it is important to remind your existing clients that you are still there, you understand that times are hard and you appreciate their continued support of your company.”
However, times are hard, and when you are contemplating an unstable future, entertaining clients is the last thing on any entrepreneur’s mind. Yet, put aside the indeterminate factors at the moment, corporate hospitality can have a tangible return on investment and become an integral part of your company’s broader growth strategy; it just needs to be managed strategically and to a budget.
Ultimately, in the current climate, any marketing spend must offer a significant element of financial return.Therefore setting a budget, defining clear objectives and identifying how you are going to measure the success of the event, is crucial to any corporate hospitality.
According to Seed, many companies are using what little marketing budget they have, to try and attract new customers and increase their market share, instead of attempting to retain their current base. She says “With an increasing amount of aggressive price cutting, compounded by the demand of the reccession, customers are no longer as loyal as they once were, so the most important thing is to consolidate your relationships with current customers.”
But how do you gauge how much to spend on each customer? Seed says that the process is relatively simple; “Broadly establish how much each customer spends with your company and assess the future net worth of that figure, then allocate around 6-10% of that to corporate hospitality.”
It would seem that the fundamental advice is clear; never forget the return you expect on your investment, stay focused on your objectives and try and resist the temptation to allocate budget to areas which offer intangible returns. As Thompson concedes, “keep your objectives clear in your mind, establish what you are willing to pay to achieve them and stick to that budget.”
As with all lead generation activity, the most important part of any corporate hospitality event is defined by how you measure its success.
According to Seed, it is important to follow up all leads as quickly as possible. She says: “In the period directly after a corporate hospitality event, the thing most businesses notice is that they have increased contact and interaction with their clients. Now that they have put a face to the name at the end of the phone, they are much more willing to take calls, respond to emails and inform that company of any opportunities coming up.”