If you use client hospitality as a means of ensuring your tender is moved to the top of the list, you are essentially bribing the client to secure their business
Client hospitality is nothing new. For decades, businesses have wined and dined new and existing clients, schmoozing them with boozy lunches, tickets to the theater and major sporting events, and sending them expensive gifts. It’s all part of doing business. But, whilst taking a client out for an expensive meal at a Michelin starred restaurant is viewed as an acceptable way of managing an important client, it is very important that you don’t cross the line.
The Corrupt Policies Act
There is a fine line between genuine client hospitality and bribery. Most business owners are fully aware of the penalties for bribery, but unless you are careful with how you entertain clients, you could inadvertently fall foul of the Corrupt Policies Act.
Bribes, kickbacks, and passing gifts to sway someone’s decision or persuade them to do business with you are unethical and illegal. It goes against all principles of free enterprise, yet some business owners continually push the boundaries of what is, and is not, acceptable.
The problem is that there is a huge gray area in client hospitality. Some business owners and managers spend thousands of dollars entertaining clients. It’s a great way to build a rapport with clients and let them know you value their custom, but if you use client hospitality as a means of ensuring your tender is moved to the top of the list, you are essentially bribing the client to secure their business.
Bribery and kickbacks attract large fines and federal prison terms – depending on the severity of the crime. The best way to avoid falling foul of the law is to be very careful about your client hospitality policy.
An Effective Strategy
An effective corporate hospitality policy is an important marketing strategy. The majority of clients increase how much business they do with a client if they are treated to a hospitality event and most companies believe it’s an effective way to boost client relations.
Entertaining clients at the company’s expense builds new relationships and incentivizes employees to perform better. However, you need to identify your objectives before you purchase tickets from ticketsales.com for a headline concert in a bid to impress visiting executives from a new client.
Unless you have a clear idea of what you are hoping to achieve, you are throwing money away. Try to tailor any events you organize or attend to fit the client. For example, if you are treating clients from Beijing, they might not appreciate a boozy night out at a popular night club, but a day out at a major sporting event could be just the thing.
Find out in advance what type of event the client enjoys and check their personal preferences. Taking an important client to Daytona for some high-octane fun is going to fall flat if they can’t stand motor racing.
Pay attention to alcohol too. Not all clients enjoy drinking and a champagne reception is inappropriate for a tee-total client who has recently completed a twelve-step sobriety program.
Corporate hospitality should be relevant to the industry and appropriate for the business relationship. If you are concerned about the ethics of the event, you may have already crossed the line.