The business of giving

Whether it’s a memento, a promotion or just a token, a gift by any name is always an important communication with your client

By Yvan Marston

Whether it’s a present for a valued client or a promotional memento marking a golf tournament, giving gifts in a business context is a powerful tool, one that can just as easily strain as maintain a relationship.

Business gift giving has become big business. According to the Promotional Products Association of Canada (PPACanada), last year 28% of promotional product distributor revenues were derived for items sold as business gifts. Sales of promotional products in Canada for 2003 amounted to $2.1 billion. In the context of the study, and this article, business gifts are defined not as extravagant presents or trips but items used to thank customers, develop business or to recognize employee performance.

“A gift shows you’ve paid attention to that person and that you’re interested in developing that relationship,” says Hilka Klinkenberg, founder of New York-based Etiquette International. “If you give a gift that’s appropriate to the person, the receiver will be really pleased by the gift and not wonder about your ulterior motives.”

Giving well

The key to finding the right gift is to listen to the recipient throughout your dealings, and even make notes of her wants and needs, says Klinkenberg. Finding a gift, she explains, involves asking yourself simple questions such as, why are you giving the gift (a holiday gift, a birthday, recognition, or simple generosity) and who are you giving it to?

While the latter question may seem self-evident, it’s important to understand your position in the pecking order and whether it’s even appropriate for you to be giving, for instance, a lavish desk set to your client’s CEO when you’re a 25-year-old sales professionals. A gift like that, she says, demonstrates that you don’t understand your relationships.

Klinkenberg cautions against excessive spending. She suggests a gift from a junior executive to a client need not exceed $35, while $70 is what mid- to upper-level managers should spend on their clients. Senior executives should spend $150 on their best customers. But exceeding the $150 mark, she says, is only for very special occasions.

And no joke gifts. Klinkenberg says these are rarely funny, mostly embarrassing and frequently backfire.

Ideally, you want to focus on a gift that addresses an interest or a hobby of the recipient. Keep a note of these and other pertinent tidbits of information on file. Remember things like their alma mater, the purchase of a new house or a favourite sports team. All this information can prove a tactical advantage when using gifts as a communications tool.

The strategic gift

Strictly defined, a true gift should come from you personally and should reflect how well you know your client. A gift with a logo, however, is another matter. Equally powerful as a communications tool, the logoed item has come a long way from the foam-backed mesh baseball caps that were little more than portable billboards.

 “[Promotional items] went from being about getting someone to advertise your company or service for free to targeting that one individual,” explains Jae Rang of Great Canadian Adventures in Advertising, a firm that specializes in developing strategic marketing solutions using promotional products.

Rang admits the line between promotional products and gifts is somewhat blurred, but part of the reason for this, she explains, is the increasingly high quality of the items being logoed. Retail brands like Tommy Hilfiger and Roots have entered the promotional products market and as such, clothing items tend to be co-branded with the trendy name in one spot and the company logo subtly embroidered, tone on tone, on a sleeve or behind a collar.

The notion is a simple one, says Rang. “If it’s a nice quality shirt, they’ll want to wear it and they’ll remember where it came from,” he says.

So which is it, mass media or targeted advertising? Rang says there’s a place for both techniques. When Andlauer Transport Services was hosting a Calgary Stampede barbecue, it approached Rang to arrange a promotional gift.

“We asked them: Do you want to give something that clients will take home and share with the family or do you want to see an ocean of bags all over the Stampede with your logo on it?” says Rang. The company chose both, opting for branded denim bags containing barbecue tools.

The power of promotion             

Peter Saunders, president of Merit Impressions, a Calgary-based distributor of promotional advertising products, says his company doesn’t really draw a distinction between a gift and a promotional item. He says some lesser-known clothing items, for example, are still being offered on a mass basis, but that many of his customers stock brand-name clothing for VIP clients.

“In the last ten years,” says Saunders, “apparel has gone from being 5% of our business to as much as 40% of the business. Today, it’s about 33% of what we do” (a fact corroborated by PPACanada’s figures, which indicate apparel accounts for almost 40% of the promotional product industry’s sales).

Steve Wingham, a 19-year veteran of the promotional products industry, says the golf trend is, in part, to blame for the current popularity of golf shirts as a gift item, but there’s no single magic item that every company should give.

“Perception is reality,” says the co-owner of Promotional Elements when asked about popular new items. “I showed a flip-top calculator to a client looking for a desk top handout item the other day. They though it was terrific, but that item’s been out for five years.”

He explains that it’s a matter of clearly understanding your client’s needs and perceptions. Some basic gift giving advice from Wingham includes: don’t give the same gift every year, give something that is useful, and pay attention to presentation.

He suggests poly-bagging the item, gift wrapping it (there are ample opportunities for garish branding on the packaging if that’s part of your agenda) and sending it by courier with a hand written note. The best thing to do, however, is deliver it yourself.  

But presentation, perceived value of the gift and context all continue to conspire against clearly establishing what is a gift and what is indeed a promotional item.

“If I get a high quality golf shirt at a golf tournament and every one else is getting one, then I’ll see it as a promotion. It depends on how it’s used,” explains Wingham.

The gift as a communications tool is undeniably powerful. It’s no surprise then that when it comes to gift giving, context is everything. The gift tells the receiver how you want to be perceived and is intended to influence how you are perceived. But there is a mirror effect, whereupon it tells the receiver how he or she is perceived. Whether it’s a promotional item or a gift in the truest sense, in the interest of good business communication, experts agree that one should listen well, observe often and give deliberately.

Yvan Marston is a Toronto-based freelance writer.

Are you needlessly branding your gifts?

Dropping a logo, however hidden, on an item you’re giving a client has distinct advantages if you’re a U.S.-based business, since the Internal Revenue Service only allows $25 a year per client for gifts. If the item has a logo, it’s considered a promotional item and can be claimed as an advertising expense. That would explain why there’s a glut of these items in the U.S.

But Canadian businesses that follow suit under the assumption that it makes a gift a legitimate tax deduction do so needlessly. According to Canada Customs and Revenue Agency’s Sam Papadopoulos, any promotional activity that relates to revenue generation can qualify for a tax deduction.

“That’s the key,” he explains. “As long as you can link that gift giving to the potential for revenue generation, then as far as doing business, it’s deductible.”

If, for example, you purchase 20 pen sets, have them packaged and sent to clients, the process and the pens themselves are tax deductible.

“Always within reason, of course,” adds Papadopoulos, saying that a $100 deal closed with a $100 gift is construed as “not within reason.”  —Yvan Marston

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