Small biz can't scrimp on customer gifts

TEXT OF STORY

Steve Chiotakis: Well, the recession's done a number of small business. Owners are pinching as many pennies as they can, and that includes employee bonuses. You know what they're not pulling back on? Swag to clients. From the Entrepreneurship Desk at Oregon Public Broadcasting, here's Mitchell Hartman.


Mitchell Hartman: Just one in three small-business owners will give bonuses or gifts to their employees this year, according to a recent survey by American Express. That's down more than 10 percent since 2008.

But there's one thing employers can't afford to skimp on, says Amex small-business advisor Alice Bredin: gifts for customers.

Alice Bredin: Giving to customers is a marketing must. If you don't give to customers and thank them, there may not be any employee bonuses or gifts to even talk about this time next year.

But, Bredin says, it's a delicate balancing act to short-change employees while spending on clients.

Bredin: If you don't openly address the fact that you're cutting back on what you're doing with your employees, they are going to be really upset with you. Particularly if they're seeing you spending money and putting energy into thanking customers, they're going to say, "Hey, what about us?."

Bredin suggests giving employees time off or other non-cash perks to keep spirits up. And, she says, tone down the "flash" factor on those customer gifts. Instead of imported Scotch or a fancy paperweight, give some of your own merchandise or services.

Marketing expert Joseph Heinen at Genesys Telecom Labs says gifts aren't what builds customer loyalty, anyway.

Joseph Heinen: They're not necessarily focused on something that was dropped in their office or a card or a thank you so much as their experience when they transacted business or resolved a problem.

Bill McEnery realized that after years of giving out customized mugs and other tchotchkes at Pedal Power, his bike shop in Middletown, Conn.

Bill McEnery: We did little gifts and things like that, and they have that immediate-hand it to the customer and they say, "Oh, thank you," and appreciate it. But we found that doing things like events seemed to have a greater impact.

McEnery now throws a few big parties for customers every year. He also sends them personalized discount offers based on the type of cycling they do.

And even though business wasn't great this year, he'll give his 12 employees the same bonuses as last year, ranging from $50 to a few hundred dollars. He says he wants them to know their efforts are appreciated -- especially when times are hard.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...