Megan Collins, head of marketing at Paragon, looks at how to decide how much you should spend on corporate hospitality.
Choosing how much to invest in corporate hospitality continues to be a significant strategic decision for many businesses. The Events are Great Britain report, unveiled at last year’s International Confex, stated that corporate hospitality and events accounts for roughly £1.2bn of the £39bn events industry. Clearly, corporate hospitality can be a significant marketing cost and it is vital, therefore, to get your corporate hospitality budget right, especially considering the importance of providing a return on investment and delivering business growth.
Many businesses use corporate hospitality primarily as a way to improve client relationships. Research from The Rugby World Cup Official Hospitality Report suggests that this is one of the most consistently effective uses of corporate hospitality. Based on a survey of 250 companies, 89% of UK senior managers investing in corporate hospitality believed that their hospitality was ‘very or quite effective’ in improving business relations. When the primary aim of corporate hospitality is to improve relationships with clients, the value of potential clients should influence your budget.
Existing and potential high value clients – those who are integral to your financial success – should be treated appropriately. This might mean spending more on personally tailored, exclusive hospitality packages, such as VIP sporting events, to guarantee quality time with these clients.
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 the development of your business as a major player in your market.
Corporate hospitality is now considered one of the most effective marketing tools for businesses. Research has shown that corporate hospitality is outstripping telephone calls, advertising, online and print as a popular means of improving business relations and driving brand metrics. 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 event. Budgeting and planning for events can be made easier with the help of hospitality experts. At Paragon, we work with clients to devise high-quality, strategic corporate hospitality programmes that make the most of your budget and yield measurable results.