Choosing how much to invest in corporate hospitality continues to be a significant strategic decision for many businesses. Many will have use sporting events like The Ashes or Six Nations as a chance to entertain and strengthen client relationships. The Events are Great Britain report, unveiled at the 2014 International Conflex, stated that corporate hospitality and events accounts for roughly £1.2bn of the £39bn events industry.
Corporate hospitality can be an expensive marketing cost. Therefore, it is vital to get your budget for entertaining future and present clients right, especially considering the importance of providing a Return On Investment (ROI) to business growth and development in today’s world.
When the primary aim of corporate hospitality is to improve relationships with clients, the value of potential clients should influence your budget. A recent survey of 250 companies found 89% of UK senior managers investing in corporate hospitality believed that their hospitality was ‘very or quite effective’ in improving business relationships.
Existing and potential high-value clients - those who are integral to your financial success - should be treated with equal value. This might mean spending more on personally tailored, exclusive hospitality packages, such as VIP boxes at Lord’s, to guarantee quality time with these clients. When providing hospitality for lower-value clients, consider holding group events, such as dinners. This is a more cost-effective way to maintain good business relations with multiple clients who, whilst they may not be the most crucial investors in your business, still need to feel appreciated.
Corporate hospitality can also have a positive influence on brand value. Hosting high-quality, unforgettable events can leave a lasting impression, which in turn will help you win more clients.
According to the hospitality report, 52% of UK senior managers believed corporate hospitality was ‘very or quite effective’ at increasing brand value. The ability to spend on corporate hospitality to improve brand value will, of course, largely depend on the size of your business.
Larger businesses with stronger brands in their given market will have a competitive edge when it comes to spending on corporate hospitality to maintain their brand awareness. Even so, large businesses may find that spending large amounts of money on corporate hospitality will not drastically improve the value of their brand, particularly if their brand is already very strong.
Smaller businesses, on the other hand, may find that spending on cost-effective corporate hospitality events, such as dinners and parties, can massively boost brand awareness, and help them get noticed by potential clients and stakeholders. These stakeholders may be the key to developing your business as a major player in your market.
Corporate hospitality is now one of the most effective marketing tools for businesses. Your budget for corporate hospitality will be determined largely by your business aims, the value of your clients to your business, and the cost and suitability of particular types of events. But research now shows that corporate hospitality is outstripping telephone calls, advertising, online and print as a popular means of improving business relations and driving brand metrics. While the initial costs can be high, if you do it right the ROI is always worth its weight in gold.
By Megan Collins, Head of Marketing at Paragon