The corporate event industry received a welcome boost in April's budget when Chancellor Gordon Brown doubled the tax-free limit on individual spend at corporate parties to £150.
However, in these days of economic uncertainty, many companies are still reducing their marketing budgets by trimming down or even axing their corporate event activity.
As clients are faced with the very real commercial decision about whether to spend thousands of pounds on a party or corporate hospitality activity, event management firms are striving to convey the message that nothing communicates better than a well-planned corporate event.
Scott Balfour, managing director at event company Fortesqueue's, argues that firms like his need to address misconceptions about corporate events.
"People still think it's just a sports event like a £500 ticket to go to the rugby, but it's much more than that. We need to define our industry better," he says.
The Ultimate Experience managing director Mike Kershaw agrees. "There is a perception about the frivolous nature of a party or hospitality event," he says. "We need to make companies realise that investing in corporate events is a good commercial decision."
Sara Binns, business development director at caterer and party organiser The Admirable Crichton, argues that events are increasingly being recognised as an important part of the marketing mix. "It is short-sighted to remove the event budget as it supports other marketing activity. If corporate events are done right, they can form a significant part of the revenue-generation process," she says.
Arthur Somerset, managing director at Mask Event Design and Production, believes live events are an essential brand communication tool. "An event is the most powerful way to communicate to your staff and your clients," he says. "It is a branded moment that says something about your company and your relationships with your clients."
This is why Binns believes companies can't afford to tighten the purse strings on their event spend. "Investing money in corporate hospitality and events where you have invited the guests and can control the environment means you can maximise on the experience and develop those relationships," she comments.
Corporate events, like other face-to-face activities, also offer the opportunity to network. Somerset says: "It's good to get clients and potential clients together. There is no better PR for a company than happy clients."
Corporate events can also be an opportunity to reward and motivate staff. The Ultimate Experience specialises in this area and Kershaw argues that they are invaluable to companies not just in financial terms, but for other, less tangible reasons.
"According to a Sunday Times poll The 100 Best Companies to Work For, published in March, many of the firms listed are part of the FTSE 500. They are perceived as the best employers because they all do corporate events and believe in having a happy, well-rewarded and motivated staff," he says.
Somerset agrees. "People want to be appreciated. If you just give them money in an envelope it could be quite insulting. It's much better to throw them a £200-a-head party or a motivational event," he says. "You want to be the employer of choice. If you're trying to recruit and you're known as second-rate, dull and boring it feels like joining a rather bad football team."
Fortesqueue's too has developed a motivational event programme for clients. Balfour says: "A lot of companies aren't entertaining any more and we need to continue to send out the message that it's important to invest in your people. If staff are accustomed to lavish parties and they don't happen any more because the company has to save money, employees become demotivated."
Changes in the market have forced event firms to extend their offer. "From what happened with 9/11 and then the market crash, companies have realised they can't rely on the core event management business - we have to be broad ranging," says Balfour.
Kershaw agrees. "Clients are more sophisticated and that is not good news if you are a purely event management firm. Nowadays, clients are encouraged to buy event services direct from venues or caterers and are often not allowed to hire an event management firm independently."
Binns adds that clients are becoming more sophisticated in terms of customer relationship management (CRM) and adds that corporate events are useful tools for this. "Corporate hospitality is an extension of the CRM process that takes place out of the office," she states. "A firm can spend a fortune on CRM technology but it won't be as successful as the company that spends money on entertaining and rewarding because that's the way to generate new business."
But the panel warns that for any corporate event strategy to be successful, it needs to be given a great deal of thought and planned properly from the outset.
"A lot of businesses don't have an event programme or an internal communications plan. They do Christmas parties just because they do it every year - they have no objectives," states Somerset.
He adds that many companies are losing out because they hand the responsibility of organising the events to people without the relevant experience. "You would not ask the head of facilities to organise an advertising campaign, but this is exactly what companies are doing with their corporate events," he says.
Binns agrees: "Firms often push the responsibility on to the managing director's personal assistant. We have to make sure that person understands what they are trying to achieve with the event and what is involved."
Somerset argues that clients should use event firms to make sure they get the most out of a corporate function. "We give people a professional service at a very reasonable price. Companies should use us more," he says.
Where our strengths lie
Balfour adds: "We need to make sure people know where our strengths lie - companies like us are best placed to know what's going on with health and safety and other event issues." He also points out that in times of economic difficulty, clients want event firms to deliver quality events with smaller budgets.
Somerset argues that event firms have lowered their costs too much in an effort to boost business. "It is a problem - we are giving far too much for far too little. We've raised client expectations and in doing so we've created our own noose," he bemoans.
Kershaw disputes this view, arguing that raising standards has only improved the industry. "It's not about saying 'woe is me', it's about market forces that have made us create fantastic value for clients," he states.
Lack of research
The panel, however, does agree that the corporate event industry continues to suffer from a lack of research into the effectiveness of corporate events. More quantitative and qualitative evidence would make companies more confident about their return on investment. Company spend on client entertaining or staff motivation events could then be justified more easily, they argue.
Binns points out that it is difficult to measure emotions, which is what corporate hospitality is all about, but Somerset counters that post and pre-event research could yield enlightening results.
He says: "People have been having special events since the Stone Age, but the marketing opportunities and the branding have not been measured, and this is why people cut events."
Axing a Christmas party or other annual hospitality event has consequences that go beyond just saving money, according to Kershaw. "If you've been doing an annual client event and then you stop it that sends out a negative message," he says. "If the company has done some analysis and found it just doesn't work any more then that's one thing, but they must make sure they look at the merits of those events before taking any drastic decision. Do it with some science, please."
As Somerset concludes: "There are still people who think that corporate events are entertainment and not communication. Until we start measuring our industry and telling them how wonderful it is they will continue to think like that."
SCOTT BALFOUR, managing director, Fortesqueue's Event Management - Set up Fortesqueue's 12 years ago with co-director Zilla Houghton. He has more than 20 years experience in the events industry
MIKE KERSHAW, managing director, The Ultimate Experience - He is a co-founder of the corporate party specialist and is a main board director of parent company The Concerto Group
SARA BINNS, business development director, The Admirable Crichton - Joined the party organiser and caterer in 2001. She has spent 14 years in the exhibition industry, including a ten-year stint at Reed
ARTHUR SOMERSET, joint managing director, Mask Event Design & Production - Set up the company in 1998 with business partner Tamsin Mitchell. Somerset is also president of the International Special Events Society.
PARTY POLICIES - Top ten reasons for corporate entertaining in the UK
- Build relationships with potential customers
- Reward customers for their loyalty
- Marketing tool to raise profile
- Increase sales
- Informal contact in a relaxed atmosphere
- Keep up the company's profile and PR
- Retain clients' business
- Keep the customer happy
- To network
- Improve communication and understanding
Source: 2000/2001 Corporate Hospitality Best Practice Guide, published
by Sodexho Prestige
"If you just give people money in an envelope it could be insulting. It's much better to throw a £200-a-head party or a motivational event" - Arthur Somerset
"A firm can spend a fortune on CRM technology but it won't be as successful as the company that spends money on entertaining" - Sara Binns
"We need to make companies realise that investing in corporate events is a good commercial decision" - Mike Kershaw
"When staff are accustomed to lavish parties and they don't happen any more, they become demotivated" - Scott Balfour.