Entertaining clients is a great way to establish both professional and personal relationshipsbut the IRS requires you keep receipts and other documentation
When entertaining clients, you should have several goals in mind. These include establishing relationship trust and specialty trust. Make sure, however, to document the details of these meal and entertainment meetings to comply with IRS rules.
To be successful, a business must have sales flow. This sales flow is built upon a foundation of process. In the Hart Vida Raffo FlowFirstTM management model, the process is defined in four steps:
- Relationship management.
Between each of these steps there are a number of methods by which a business can maintain positive sales flow. Meals and entertainment are an important part of managing the sales process or strengthening the business relationship. From a strategic perspective, meals and entertainment play an essential role in bridging the gap between opportunity and contractand there are two main objectives to be met during meetings with prospective clients:
- The establishment of relationship trust
- Specialty trust
Strategy Relationship Trust
Relationship trust is gained by listening, understanding and asking informed questions. This is established by knowing the prospective client or vendor on both a business and a personal level. In most cases, the meals and entertainment venue acts as the vehicle by which a businessperson is able to speak at length about his or her products, company strengths and successes.
However, by also listening to the prospective client or vendor, you will not only gain their trust, but also begin the process of obtaining the knowledge necessary to achieve your objective: the contract or the sale. Asking the right questions will also enhance your understanding of the client and establish a personal connection, which in turn allows you to more easily build relationship trust. Once relationship trust has been established, goals such as obtaining a new client or enhancing an existing vendor relationship will be easier to achieve.
Strategy Specialty Trust
In the book When Growth Stalls, Steve McKee describes specialty trust as the confidence one has in purchasing from a company that has a singular expertise or product. Logic dictates that if the company has only one focus, then the product or brand must be specialized and valuable. During a meeting over a meal or entertainment, the prospective client will be more comfortable if a singular expertise or specialty can be conveyed.
Many times, the meals and entertainment venue is viewed as a setting in which one must portray the diversity of his or her companys specialties. However, the time may be better spent on explaining your companys individual area of expertise to the client. This will build specialty trust, which complements relationship trust.