In an environment where business is subject to competitive tender, giving and receiving gifts and hospitality is fraught with problems. It’s a fine line from appreciation to bribery, and it just got even finer.

Last week The Age newspaper ran a story investigating gifts, benefits, and hospitality offered to buyers in Victoria’s Government-owned water corporations.

According to the Auditor General, there had been a 40% increase in gifts and hospitality to water corporations in a single year. Staff at City West Water received more than $90,000 over a two-year period, and at Southeast Water it was almost $70,000 over five years.

While the water corporations apparently refused to release their gifts registers at the time of the Auditor General's report, and details only emerged following a freedom of information request by the newspaper, it was not good news for suppliers.

The Age article mentioned at least a dozen suppliers by name alongside the gifts they had given to their customers, including $5,542 for a conference in Florida, $3,700 for conference tickets in San Francisco, $500 in shopping vouchers and gifts cards and large amounts spent on Australian Open tennis tickets, AFL Grand Final tickets, and many other types of hospitality.

Due to concerns about the appearance of impropriety, independent auditor RSM Bird Cameron was asked to investigate. In this case, they found no correlation between the gifts, benefits, and hospitality offered and the results of tenders.

However, Victoria's water minister has now asked all of Victoria’s 19 water corporations to review and update their policies so that any gift or hospitality worth $100 or more is declared and approval sought before it is accepted. Introducing a new culture around gifts and hospitality is going to be one of the first tasks of the new boards at all water corporations from October.

If gifts and entertaining have always taken the lion’s share of your marketing budget, it’s time to re-think your strategy. While modest gifts and hospitality, will always have a role to play in showing appreciation to customers, what they really value is what’s inside your head.

Business development is still all about relationships, the way those relationships are transacted have fundamentally changed. We’ve moved from a time when people and personal relationships had a lot of power, to one where it’s ideas and innovation that are driving the customer relationship.

Invest in continually bringing your customers insights into how they can compete better, do business better, or move closer to their goals. That is truly the best gift you can give them.

Robyn Haydon is a business development consultant who helps helps service-based businesses that compete through bids and tenders to articulate the value in what they do, command a price premium, and build an offer that buyers can’t refuse. Don’t let others dictate how far and how fast your business can grow – take your power back! Email robyn@robynhaydon.com to request the white paper for the Beyond Ticking Boxes program.