In normal times, corporate gifting is a routine cost of doing business. It’s used to recognize employees and strengthen relationships with clients or partners. But it took on new urgency as a result of the pandemic.
With company staff dispersed, a well-chosen gift became a way to keep employees connected and reward them for work performance above and beyond under extremely difficult circumstances. When corporate events went digital, a gift box for valued attendees brought a touch of reality to an otherwise virtual event. Likewise, with client relationships kept at a distance, a well-chosen gift bridged the gap.
A new study, conducted among 300 corporate gift buyers across companies up to $30 billion in revenues, details the changes the pandemic brought about in the business of corporate gifting and predicts the trends that will carry that business forward.
The study was conducted by Coresight Research and sponsored by GiftNow, a Synchrony solution, that makes corporate gifting digitally easy for gift buyers and provides access for retailers and brands, like Target, FTD, Crocs, and Dover Saddlery, to a largely untapped corporate gift market.
“The first thing we set out to do was determine the actual size of the corporate gifting market,” says Kevin Payne, GiftNow’s vice president of corporate marketing. “We felt it was bigger than previous estimates, but how much bigger we didn’t know. We also believed it grew extremely fast over the past year and the study confirmed it. Corporate gifting is growing faster than the rest of the gifting market.”
The new study estimates the corporate gifting market will reach $242 billion this year and continue growing at an accelerated 8.1% CAGR through 2024. By comparison, personal gifting is only expected to rise at a 6% CAGR through that time. Approximately 60% of the corporate gift total will be spent on gifts to clients and partners outside the organization and 40% for internal employee recognition and awards.
Corporate gifting budgets got a boost too, with more than half of respondents reporting their budgets increased because of Covid. The amount spent on a per gift basis is also surprisingly high. Most spent between $25 and $125 on a corporate gift, with the largest percentage reporting the sweet spot between $75 and $100.
Benefits gained through corporate gifting
It’s been money well spent for gifting companies. Over 80% said gifts have improved relationships with employees and/or clients, with 48% saying gifting delivered a substantial benefit. Chief among the benefits gained was making the recipient feel valued (45% reported substantial benefits), improved customer loyalty (43% substantial benefit) and improved employee retention (41% substantial benefit).
With these benefits accrued, companies plan to keep their current accelerated pace of corporate gifting or even increase it.
“We found among our respondents that seven out of ten expect their current frequency of corporate gifting to remain at current levels or even increase,” explains Steven Winnick, senior analyst at Coresight.
“Covid looks like it will have more of a long-term impact on corporate gifting, less driven by holidays and more by certain events happening in the organization,” he continues.
The pandemic changed the game of corporate gifting from simply a routine to a business priority. It drove home the most meaningful effect of a corporate gift: making the recipient feel valued and appreciated by the company. The number one gifting occasion was to show recognition and appreciation to an employee (64%) and about half gave gifts to clients and partners as a token of appreciation too.
Such recognition gifts carry an element of surprise that enhances their value in building an emotional connection. “Even though there are direct monetary benefits of corporate gifting, such as lead generation and improved sales, these are overshadowed by emotional and sentimental benefits,” GiftNow’s Payne explains.
Business and personal gifting are not so different
In this way, corporate gifting is not that different from personal gifting. To build deeper emotional connection between the gifter and giftee, the best gifts are those that are carefully chosen and show a real understanding of the recipient.
This is where corporate gift buyers can get into trouble. For example, sending a bottle of wine or Scotch whisky to someone who doesn’t drink or worse is a recovering alcoholic wouldn’t be appreciated. Similarly, a food basket filled with baked goods would fall flat for a gluten-intolerant person. Personalizing the gift selection is critical for both corporate and personal gifting.
As for what corporate gift buyers look for in a gift, that isn’t so different from personal gifting either. They want good quality products (88%), timely delivery (82%) and a wide variety of gifts to choose from (81%).
But in corporate gifting there is an added level of complexity caused by the sheer numbers of gift recipients involved. This is especially problematic when choosing a one-to-many gift, such as for holidays, rather than a one-to-one gift for recognition and appreciation occasions.
Solving corporate gifting challenges
Simplifying and personalizing the corporate gifting process for both one-to-many and one-to-one gifting is where a digital service fits, like GiftNow.
Corporate gift buyers don’t need to manage individual recipient’s addresses. Using the platform, buyers provide the intended’s email address where an instant notification is sent that a gift is on its way. The gift recipient can then specify where and when to deliver it. These gift notifications can be further enhanced with a video or personal message.
More personalization comes with the recipient able to make an exchange before the gift is shipped. This saves headaches for the retailer, who can avoid the opearational hassle of processing returns, but most especially for the gift recipient, who doesn’t have to do the extra work packing up a return or suffer delays during the returns process.
Opening a new gifting channel for retailers
What the research study uncovered is how many dollars retailers are leaving on the table by not tapping the rapidly growing corporate gifting market.
”The opportunity that is overlooked by retailers is that corporate gifting can be a new channel for retailers,” Payne relates. “Say you need to buy 500 gifts for your clients or employees this holiday or 50 shirts for a holiday event. Those would be purchases moving through a new corporate gifting channel, not through the store or the website. When you think about the scale that this could provide, it is a huge opportunity for a retailer to develop.”
The pandemic opened the door for retailers to step into this burgeoning market for corporate gifts. And a service like GiftNow makes it easy to step through.
“We foresee corporate gifting is a long-term habit that is going to be sustained in the post-Covid world,” GiftNow’s Payne concludes. “In the past corporate gifts were looked upon as a way to drive more sales back to the corporation. But now the driving factors and perceived advantages of corporate gifting outweighs the direct monetary benefits. It’s all about the sentimental benefits, like relationship building, making the recipient feel valued, boosting productivity and loyalty. And ultimately these all end up on the bottom line.”