YEAR-END GIFTS... Investment or Bribery?
About the Author:
Richard Gee
Business Strategist at Geewiz
Richard is a mentor, business coach and small business specialist at solving problems, creating strategy and helping you make great decisions for your business.
Over the next 6 to 8 weeks you have to make a decision on whether you are going to give a recognition to some of your customers, before the holiday season.
The tradition of business gifts at this time is an old one. It was created to say thank you to those customers who have a good purchase record with you during the year. This tradition then evolved into gifts for categories of customers according to their purchases, and perhaps even gifts to make up for mistakes that you may have made during the year.
Many customers receive gifts from many suppliers, and have little idea of the recognition that they have been given, taking the gift for granted, so you have to be careful about your choice of gift.
With gifts coming in from many suppliers, it is not uncommon for receiving customers to pool the gifts and divide them up amongst staff.
Alternatively, they could use them for a staff Christmas function, so credit goes to management and very little recognition is made to the suppliers who provided the gifts. This would defeat the purpose.
In addition, many customers also have their own year-end functions, where they recognise their own staff for efforts they put in during the year, and this could also negate the value of your gift.
The reasons for giving a gift can be classified as:
A thank-you in recognition for custom during the year from key customers, sometimes known as "A Category" customers, who have grown the business during the year, and other customers who are very important to your business
To recognise the people within a customer's business, as having contributed towards making sound buying decisions. However, you need to be careful that the gifts are appropriate so as not to be mistaken for a bribe and ensure that you do not contravene any policy that your customer may have in relation to gifts being accepted by their staff.
As a way of encouraging your own staff to recognise and value customers who are important to the business.
Never send out your gifts by courier or normal delivery if delivery in person is an option, as the gift will lack impact and perhaps give your customer the impression that you're not particularly interested in the people side of their business.
Whenever possible and for all categories, the gift should be hand-delivered by someone from your business who deals with the customer. This gives the opportunity to say thanks in person and pass on the appreciation along with the gift. Phone first and make a time to pop in. This then maximises the personal contact and is more likely to please the customer and strengthen the relationship.
The reasons against giving could include:
The practice is costly and can backfire if not done right. Then, where do you draw the line and decide who gets a gift and who doesn't, and how do you balance gifts for different customers and their employees, so that no one is offended?
Unless your gift has been branded with your company logo, it will probably be forgotten, especially by customers who receive several gifts.
Christmas is such a busy time of the year, that with your customers trying to get their goods or services out, their staff being busy, your staff being busy, who has time to sit back and reflect on the true value of the gift?
Alternatives to the giving of gifts
An interesting alternative, especially in current circumstances, could be to make a donation to a suitable charity in the name of the customer. If you do, send a recognition letter to the recipients who have been recognised, letting them know that instead of giving a gift you have made a charitable donation in their name.
Consider posting something on your website mentioning that you have made donations instead of giving gifts, but make sure that this is done in such a way as not to cause offence to those who missed out on the recognition. Note, this approach could be more effective when one donation can be in honour of several named customers.
Another alternative is not to have an end-of-year gift, but to have a January "welcome back to work, here is the New Year, full of opportunities" gift. This has the effect of separating from Christmas, and getting across to your customers that with the new year coming up, you really want their business and that you would like to grow during the coming year
Another idea is not to give a year-end gift, or a welcome back to January gift, but to give an anniversary of when the customer "started doing business with you gift", a little bit like a birthday card with a cake or souvenir which says to your customers in that month, "Hey, thank you. We appreciate the value of your business" and gives an ongoing cause to be recognising some customers each month.
Different kinds of gifts
Many companies give gift baskets, which contain food and wine, for sharing in the festive activities, and while this is very enjoyable at the time, once the food and the wine has been consumed there is little memory of the gift, or the reasons for it.
Another idea is to take your key customers on an outing, an event, or an activity, and enjoy some social time with the decision makers and their staff with whom you have done business. This has the effect of helping to bond with them and build relationships, but can be costly depending on the activity and venue.
How much to spend?
The budget, when you consider how much you should spend, is always a difficult one to calculate. However, here are some guidelines to consider.
Firstly, the better you know your customer, the more you are likely to tickle their fancy and impress without having to go overboard with cost.
If there is accepted or generally applied practice within your industry regarding gifts, use this as a guide for costs, but try to do something a little unusual or special to stick out.
If you know the cost of acquiring a new customer, this will also help you set a ceiling for retaining an existing one. For example: If you provide a reward or thank-you for referrals, base your budget around that. If not, then the cost may be calculated by dividing the total costs of acquiring new customers (advertising, sales team etc…) over a period by the number of new customers acquired in that time.
Take into account reasonable policies that your customers could implement in their line of business, even if they do not have any in place, and do not cross that line.
Be careful about going overboard when there are big tenders coming up for which you are being considered. Any hint of bribery or questionable behaviour will be likely to raise questions about your intentions or ethics and count against you.
In summary
Gifts, cards, emails, and messages of goodwill are very enjoyable, and engender a warm, family type feeling with many participants and customers, as well as your staff. Remember that any recognition or thank-you should be appropriate in the context of thanking your customers for past business.
If there is an opportunity to do something together that helps to build relationships or to provide something different and special without being excessive or giving the wrong impression, then that should be appreciated.
Finally, be sensitive to different cultures. People of all backgrounds and beliefs are likely to appreciate a Christmas gift, but if you have any doubt whatsoever, then don’t associate the gift with Christmas. Think carefully before you make a choice to give a gift of appreciation, and what the alternatives are, and what the benefits will be to your customer relationship management.
Business Strategist & Mentor
Geewiz
0800 GEEWIZ
www.geewiz.co.nz or watch videos on www.geewiztv.com
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