Corporate Hospitality ROI Measurment

The is no such thing as a free lunch. Today, companies invest millions of dollars with corporate hospitality activities. The question often asked is, "What return on investment are we generating from all this expenditure"? It is a very valid question, especially as people often have quite contrasting views about corporate hospitality, some viewing it as an unnecessary expense and other saying its just good business. Well, the history of hospitality itself points to it being practiced since ancient times. It is perhaps one of the the earliest forms of ‘persuasion techniques’. Entertainment of important dignatories as a form of persuasion for treaties, politics and trade has been traced back as far back as 2000 BC. What makes it effective and why do companies continue to invest in hospitality? The answer lies in the psychological behaviour of people themselves and the nature of what is called balance theory. Aristotle, the Greek philosopher first discussed this form of influence on others as the ‘Theory of Distributive Justice’ whereby an individual or society maintains equilibrium in their relationships based on inherent reciprocation. What that means using a simple illustration, is if someone saves your life then you owe a debt of gratitude to the person that saved your life. Your attitude to the person has improved and you will try and reciprocate back to return your relationship to equilibrium. In terms of corporate hospitality, the logic is the same, if the guest is provided with an experience that they enjoy then they will readjust their relationship back to equilibrium by changing their attitudes and behaviour. The more memorable and unique the event experience the greater the level of imbalance in the relationship created. Good corporate hospitality is about creating the greatest imbalances in relationships because it will require the greatest amount of readjustment. So, for an example with journalists from leading and influencial motor racing magazines, it is fairly standard that automotive manufacturers will actively try and invite them to their corporate hospitality events. The may extend to flying the journalists at great expense to a variety of different motor races. The underlying basis being that the journalists will write more favorable reviews and recommendations for the hosts product range after the event which is often the case. The method is also applies for key business partners whereby corporate hospitality is used to break into new markets. Some airlines use extensive corporate hospitality as one of the most important persuasion techniques to obtain access for new airline routes. Announcements of new routes following not long after major events and sponsorships where the corporate hospitality investment was very high and the guests were key government officials. The corporate hospitality itself playing a significant role in facilitating the negotiation process. The issue then becomes how to we measure the return on investment for our corporate hospitality programmes themselves? Some are obviously much better than others, and there are real improvements that can be made to existing programmes that could make a significant difference to the bottom-line. The first thing to consider is what needs to be measured here, keeping in mind that the most effective corporate hospitality programmes are the ones that create the greatest imbalance in relationships. Post event survey are an effective way of obtaining measurable feedback on event effectiveness and SponsorMap utilizes a specific methodology called SponsorMap Connections. There are two key things that need to be measured. Measure the Passion This is simply making sure that the event chosen appeals the target guests. The higher the level of passion guests have towards the event the easier it will be to create the imbalance in relationship that is desired to make it work. We use our PassionIndex benchmarks to compare different corporate hospitality programmes. It is a useful method that enables us to better target a corporate hospitality programme to particular guests. Corporates need to ensure that they are actually investing is corporate hospitality events that are appealing to their guests. In this example, some of the cricket corporate hospitality programmes measured actually had received the greatest level of passion from guests there. Naturally, the Passion Index depends very much on the individual markets and we expect executives from different countries to be passionate about different events or properties depending on their interests. In the arts example, Passion Index levels were very high for women and very poor for men as an example. It’s target specific. Measure Appreciation or the Imbalance The most important one is assessing the level of ‘imbalance’ created as a result of the corporate hospitality programme. SponsorMap uses a Gratitude Index to measure the amount of appreciation that guests feel towards the hosts as a result of the corporate hospitality programme. Some example are shown in the graph below taking a look at various different types of hospitality programmes measured in previous research studies. This is a useful measurement benchmark because it we are able to benchmark different types of corporate hospitality programmes. The Gratitude Index is perhaps the best indicator of ROI because we are able to benchmark against other corporate hospitality programmes. The best results are claimed to be achieved from the events that created the highest Gratitude Index, with qualitative feedback attesting to this post event. The nature of corporate hospitality outcomes depends on client relationships. It is hard to put a firm dollar value of an airline route and at the same time compare it to the favourable recommendations of motor industry journalists. These are quite a lot more qualitative measures of ROI. So, the best thing for corporate hospitality measure of ROI is to encompass both quantitative measures and benchmarks from survey based methods such as SponsorMap where we are able to benchmark performance and identify improvements with qualitative measures to reach an overall assessment of the value of a corporate hospitality programme. This generally provides very useful means by which businesses know how well their corporate hospitality programmes are working. When managed well, corporate hospitality can be effectively used to create networking opportunities and develop and cement business relationships. It is an effective tool to use to achieve certain business and strategic outcomes for a business. SponsorMap has a module called SponsorMap Connections which is designed to measure corporate hospitality ROI. 

Details can be obtained by downloading the brochure.

 

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  1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor