Measure Your Event Marketing Program on Marketing Effectiveness, Not Sales
A recent study of CEOs by The Fournaise Marketing Group revealed that a sizable majority of CEOs perceive that B2B Marketers have “started (wrongly) to focus on performance indicators that are actually not theirs, such as prospect conversions and revenue.”
This should be an important revelation to event marketers. Marketing must focus and grade itself on creating customer demand for the sales team to prove value, a point I have impressed upon students in my "How to Measure the Value of Tradeshows" classes.
The results of this study support a measurement philosophy that concentrates on marketing effectiveness. I have taken excerpts from this article that I think are the most important points for trade show and event marketers.
“CEOs Want ROI Marketers 100% Focused on Generating, Tracking & Boosting Customer Demand for their Products/Services.”
The Fournaise Marketing Group 2012 Global Marketing Effectiveness Program conducted interviews with more than 1,200 large corporate and small and medium business CEOs and decision-makers in North America, Europe, Asia and Australia.
Here are some of the findings I think may be important to event marketers from this study:
“Marketers have lost sight that these (prospect conversions and revenue) are primarily Sales Force-related performance indicators, and that they should focus instead on the customer demand-related indicators directly linked to their job and for which they have 100% control.”
The findings demonstrate that executive management believes “Marketers are too disconnected from the financial realities of companies.”
“78% of these CEOs think Marketers too often lose sight of what their real job is: to generate more customer demand for their products/services in a business-quantifiable and business-measurable way.”
And, here is the definitive answer for the one circumstance most of us fear to be true.
“Unfortunately, 69% of the B2C CEOs believe B2C Marketers now live too much in their creative and social media bubble and focus too much on parameters such as “likes”, “tweets”, “feeds” or “followers” – the very parameters they can’t really prove generate more (business-quantifiable) customer demand for their products/services, and the very parameters judged “interesting but not critical” by CEOs.”
CEOs in the B2B market define customer demand as generating and delivering more qualified, “sales-ready” prospects to the sales pipeline or sales cycle of the business. These qualified prospects should be able to be converted faster into actual revenue by the sales team.
“To earn the CEOs trust, Marketers will need to transform themselves into ROI Marketers,” said Fournaise Group.
“75% of CEOs think Marketers misunderstand (and misuse) the “real business” definition of the words “Results”, “ROI” and “Performance” and therefore do not adequately speak the language of their top management.”
The preference is for marketers to deliver and report on “the level of customer demand they are asked to deliver, instead of drowning everybody with data and analyses that are too remote from the P&L.”
The report demonstrates that 85% of B2B and B2C CEOs would like prospect-driven ROI Marketers to focus on tracking, reporting and boosting Marketing Specific Key Performance Indicators: Prospect Volume, Prospect Quality, Marketing Effectiveness Rate (defined as the percentage of Marketing spending that directly generated prospects) and the business potential generated by Marketing. This last element is what I have been referring to as ”Sales Potential" delivered by the interactions at a marketing event (see Measurement Tip 10)
Jerome Fontaine, CEO & Chief Tracker of Fournaise said, “Marketers will have to understand that they need to start “cutting the rubbish” if they are to earn the trust of CEOs and if they want to have a bigger impact in the boardroom.” “They will have to transform themselves into true business-driven ROI Marketers or forever remain in what 65% of CEOs told us they call Marketing la-la land.”
We can heed these warnings by taking direct aim at delivering sales ready prospects into the sales cycle of our company though events. We must finally embrace the sales team as the customer of marketing. And we must ensure that a large part of our event expenditures are funding those activities that generate prospects. Perhaps this study answers the perennial question, “should we be tracking and reporting sales results?” The answer appears to be no.
You can access the entire study summary here:
http://tinyurl.com/fournaisestudy
Ed
If you would like more information on how to get started on an event marketing measurement program, please call me at +1.770.391.0015 or email me edjones@constellationcc.com
*Source (Articles Referenced):
“80% of CEOs Do Not Really Trust Marketers (Except If They Are “ROI Marketers”). The Fournaise Marketing Group. July, 2012.
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Showing posts with label measuring value of trade shows. Show all posts
Showing posts with label measuring value of trade shows. Show all posts
Friday, October 5, 2012
Wednesday, August 29, 2012
Measurement Tip 16
Win Lose or Draw, How Do You Know?
The first question usually asked when an event’s marketing team returns home after a show is, “How did we do?” Many times the answers are simply opinions of the most obvious indicators based upon observation and gut feel. For example, “Did we have a lot of visitors?” “Did we get a lot of interaction?” and “Did we collect a lot of leads?” These answers may make us feel good (or unsettled) about our performance, but they do not easily relate our accomplishments to business profitability and Return on Investment necessary to satisfy those who provided the funds.
An opportunity to give you a concise picture of trade show marketing success and how it is reported arose from our evaluation of four companies exhibiting at the International Woodworking Fair (IWF) last week in Atlanta. This is the largest industry event of its type for the woodworking market and the event is organized and sponsored by a group of large trade associations. The audience is well defined by the show management. The show management provided a detailed audience demographics document before the show for exhibitors to use as a valuable resource. Success begins with choosing an opportune show and IWF was a good choice.
The following performance summary presents the key elements of a perfectly sized, successful exhibit at an attractive show. We refer to these variables as Key Performance Measures. They detail efficiency and effectiveness of the trade show marketing effort.
As you will see, the quality of the show has everything to do with the level of success and payback on the event. You cannot (usually) directly affect these variables, but you can choose events and “right-size” your participation based upon these characteristics.
*Note: These variables are based upon averages and assume an average level of visitor attraction.
The variables above are opportunities/limitations of the show attendance. It is possible to forecast your expected traffic before the event begins and to use that forecast to adjust or “right size” you exhibit size, layout and number of staff. What is your cost per buyer, and how much time do you get to spend with them?
For these variables it is important to understand that all “buyers” (as defined by show management) are not necessarily qualified to buy your product. Not all buyers who enter your exhibit will be valid prospects and not all buyers who enter will become engaged with your staff or demonstrations. It is therefore necessary to estimate the number of buyers who become actively engaged with your staff or demos, using the logical assumption that most people who are actively engaged are likely to be qualified. These are the buyers that you are paying to attract.
Only a percentage of your engaged buyers will commit to the desired “next step”. This number is derived from tracking your leads as a percentage of engaged buyers, show by show. The numbers highlighted in green are what you are really paying for.
Very tightly defined leads are much fewer in number but much richer in sales potential and eventual sales results. Therefore, just answering a question about your event’s success with “We got a lot of leads” may not be a true measure of success.
While looking at the number of visitors it is useful to evaluate how well we sized our resources. We refer to this as “right-sizing.” In this case, based upon the number of engaged buyers present per hour and an exhibit that is 55% available for occupancy (otherwise filled with cabinets and equipment) and calculated at 9 sq.ft. per visitor as “full” to capacity, the exhibit size required calculates to approx. 350 sq. ft. The calculation is weighted upwards slightly to account for peak traffic. Note that booth traffic does not come in evenly for every show hour. This method is the correct way to estimate and fund exhibit size and staff resources when planning for an upcoming show.
Marketing is generally about creating sales opportunities and improving the probability of sale. Trade show marketing should be focused on doing just that, among other objectives. Sales are the domain of the sales force. A good measure of success for a marketing event is to identify the “sales opportunity” it created for the company. To do so relies on a few essential elements:
1)Leads must be tightly defined as only qualified people who are committed to take a “next step” defined by the sales team, at a certain level in the sales funnel.
2)The sales team must indicate what the probability of sale is for qualified prospects who take the designated “next step”.
3)The sales team must provide an estimate of sales value for the average deal.
This may require a number of calculations for each product set. This also eliminates the argument on how much credit should be given for a sale to the trade show activity. The show marketing activity produced an opportunity. The sales team most likely closed it.
Events provide numerous ways to reduce the cost of doing business. Consider the savings from travel avoidance, logistical costs of providing customers and prospects access to inaccessible, large or heavy products and systems, business processes such as recruiting, and re-use of creative, deliverables and properties to name but just a few.
Events accomplish huge amounts of exposure for your company and products. The main alternative is advertising. This exposure is not free and has definite value. Consider giving your program credit for at least the cost to create the same exposure through advertising. Advertising equivalency may not be a popular measure in some companies. Still there is value here. Report the impressions and consider, even if only as a subjective benefit, the value achieved.
After considering all of the estimated benefits from all sources, this event paid off well, providing almost $3.00 for each dollar invested. If we remove the estimate of resulting sales potential, the payback remains positive at $1.86/1. Finally, cost savings alone (the most tangible of all these measures) justifies $.83 of every dollar spent on the event.
I would say we could safely conclude this was a successful event! The approach was correct, the exhibit and staff sizes were correct, the necessary numbers of buyers were engaged, enough bonafide leads were collected and the results in sales opportunity, cost savings and promotion were all favorable. Most importantly, we can show our results to upper management in a context of business improvement and return on investment.
It’s a WIN!
This content is subject to copyright 2012 by Constellation Communication Corp.
The first question usually asked when an event’s marketing team returns home after a show is, “How did we do?” Many times the answers are simply opinions of the most obvious indicators based upon observation and gut feel. For example, “Did we have a lot of visitors?” “Did we get a lot of interaction?” and “Did we collect a lot of leads?” These answers may make us feel good (or unsettled) about our performance, but they do not easily relate our accomplishments to business profitability and Return on Investment necessary to satisfy those who provided the funds.
An opportunity to give you a concise picture of trade show marketing success and how it is reported arose from our evaluation of four companies exhibiting at the International Woodworking Fair (IWF) last week in Atlanta. This is the largest industry event of its type for the woodworking market and the event is organized and sponsored by a group of large trade associations. The audience is well defined by the show management. The show management provided a detailed audience demographics document before the show for exhibitors to use as a valuable resource. Success begins with choosing an opportune show and IWF was a good choice.
The following performance summary presents the key elements of a perfectly sized, successful exhibit at an attractive show. We refer to these variables as Key Performance Measures. They detail efficiency and effectiveness of the trade show marketing effort.
As you will see, the quality of the show has everything to do with the level of success and payback on the event. You cannot (usually) directly affect these variables, but you can choose events and “right-size” your participation based upon these characteristics.
The variables above are opportunities/limitations of the show attendance. It is possible to forecast your expected traffic before the event begins and to use that forecast to adjust or “right size” you exhibit size, layout and number of staff. What is your cost per buyer, and how much time do you get to spend with them?
For these variables it is important to understand that all “buyers” (as defined by show management) are not necessarily qualified to buy your product. Not all buyers who enter your exhibit will be valid prospects and not all buyers who enter will become engaged with your staff or demonstrations. It is therefore necessary to estimate the number of buyers who become actively engaged with your staff or demos, using the logical assumption that most people who are actively engaged are likely to be qualified. These are the buyers that you are paying to attract.
Only a percentage of your engaged buyers will commit to the desired “next step”. This number is derived from tracking your leads as a percentage of engaged buyers, show by show. The numbers highlighted in green are what you are really paying for.
Very tightly defined leads are much fewer in number but much richer in sales potential and eventual sales results. Therefore, just answering a question about your event’s success with “We got a lot of leads” may not be a true measure of success.
While looking at the number of visitors it is useful to evaluate how well we sized our resources. We refer to this as “right-sizing.” In this case, based upon the number of engaged buyers present per hour and an exhibit that is 55% available for occupancy (otherwise filled with cabinets and equipment) and calculated at 9 sq.ft. per visitor as “full” to capacity, the exhibit size required calculates to approx. 350 sq. ft. The calculation is weighted upwards slightly to account for peak traffic. Note that booth traffic does not come in evenly for every show hour. This method is the correct way to estimate and fund exhibit size and staff resources when planning for an upcoming show.
Marketing is generally about creating sales opportunities and improving the probability of sale. Trade show marketing should be focused on doing just that, among other objectives. Sales are the domain of the sales force. A good measure of success for a marketing event is to identify the “sales opportunity” it created for the company. To do so relies on a few essential elements:
1)Leads must be tightly defined as only qualified people who are committed to take a “next step” defined by the sales team, at a certain level in the sales funnel.
2)The sales team must indicate what the probability of sale is for qualified prospects who take the designated “next step”.
3)The sales team must provide an estimate of sales value for the average deal.
This may require a number of calculations for each product set. This also eliminates the argument on how much credit should be given for a sale to the trade show activity. The show marketing activity produced an opportunity. The sales team most likely closed it.
Events provide numerous ways to reduce the cost of doing business. Consider the savings from travel avoidance, logistical costs of providing customers and prospects access to inaccessible, large or heavy products and systems, business processes such as recruiting, and re-use of creative, deliverables and properties to name but just a few.
Events accomplish huge amounts of exposure for your company and products. The main alternative is advertising. This exposure is not free and has definite value. Consider giving your program credit for at least the cost to create the same exposure through advertising. Advertising equivalency may not be a popular measure in some companies. Still there is value here. Report the impressions and consider, even if only as a subjective benefit, the value achieved.
After considering all of the estimated benefits from all sources, this event paid off well, providing almost $3.00 for each dollar invested. If we remove the estimate of resulting sales potential, the payback remains positive at $1.86/1. Finally, cost savings alone (the most tangible of all these measures) justifies $.83 of every dollar spent on the event.
I would say we could safely conclude this was a successful event! The approach was correct, the exhibit and staff sizes were correct, the necessary numbers of buyers were engaged, enough bonafide leads were collected and the results in sales opportunity, cost savings and promotion were all favorable. Most importantly, we can show our results to upper management in a context of business improvement and return on investment.
It’s a WIN!
This content is subject to copyright 2012 by Constellation Communication Corp.
Thursday, June 28, 2012
Measurement Tip 14
How to Relate Objectives, Success and Measurement Around Three Factors that Will Make or Break the ROI on Your Event
In my classes I teach "Three Critical Success Factors" essential for trade show return on investment. These factors provide the template for a compelling set of measures of regarding what is most important and what will surely be of interest to your top management.
The "Three Critical Success Factors" are:
* You must attract enough of the right people to your exhibit or event (i.e. those individuals who can actually benefit your business)
* You must deliver compelling messages that motivate those people to act
* You must obtain actions from those participants that lead directly to profit improvement for your company (either an increase in revenue or reduction in cost)
The shorter, easier to remember version goes like this:
* The right people
* The right messages
* The right actions and results
If you miss any one of the three, you are not likely to justify your investment in the event. It is essential that they be executed somewhat in order. That is why pre-event and post-event activities are at just as important as event execution.
These ROI related success factors were developed from years of working with clients to create a solid bridge between sales and marketing. They are core to our event measurement and return on investment philosophy.
Of course, many other things must also go well for a successful result.
As I mentioned in the beginning, the following factors provide the template for a compelling set of measures of what is most important:
The right people
Determine the show demographics profile and know how many people attending the show fit your target profiles. Identify them to the individual level if the information is available.
Make a forecast of how many targets are there and how many you will see. Track the number of people who come to your exhibit or venue. Develop averages and totals for the program year.
Determine how many visitors are seriously engaged vs. just entering a drawing or making a casual walk-through. (Make counts during the events) Use exit polls or surveys while visitors wait for a presentation for example, to find our who is visiting your stand. Report all of these numbers and the mix of people by type in your show summary.
The right messages
The only way to know if your messages are resonating with customers and prospects is to ask them. Use exit surveys or post- show surveys to determine 1) Can anyone recall, repeat or describe what you were trying to tell them? 2) Does the message they retained have any potential effect on their role or plans? I.e., does the message you conveyed present a solution to problems or an improvement in a process or profitability? Do they believe what you told them? A great open ended question is to simply ask your visitors “What was the most important thing they learned during your visit?” Compare their answers with your communication objectives. Remember, “nothing” is a possible answer.
The right actions and result
What specifically will your visitors do as a result of visiting you? This is the most valuable question of all. If their intent matches with your desired follow-up behavior you are on your way to ROI. Are your visitors more inclined to do business with your company? Do they find your company to be a good fit for their needs? These elements can be determined with questions such as, “Do you plan to make changes (or a purchase) based upon what you learned today?" or “Is it more likely that you will purchase products from us ?”, etc. These metrics are guaranteed to be of interest to the top management of your company.
Determining the number of visitors who actually take a prescribed step at or after your show is the ultimate measure of success. You may even be able to place a potential value upon those people taking that step if the step is one the sales team has defined and therefore knows the probable value associated with it.
Ed
In my classes I teach "Three Critical Success Factors" essential for trade show return on investment. These factors provide the template for a compelling set of measures of regarding what is most important and what will surely be of interest to your top management.
The "Three Critical Success Factors" are:
* You must attract enough of the right people to your exhibit or event (i.e. those individuals who can actually benefit your business)
* You must deliver compelling messages that motivate those people to act
* You must obtain actions from those participants that lead directly to profit improvement for your company (either an increase in revenue or reduction in cost)
The shorter, easier to remember version goes like this:
* The right people
* The right messages
* The right actions and results
If you miss any one of the three, you are not likely to justify your investment in the event. It is essential that they be executed somewhat in order. That is why pre-event and post-event activities are at just as important as event execution.
These ROI related success factors were developed from years of working with clients to create a solid bridge between sales and marketing. They are core to our event measurement and return on investment philosophy.
Of course, many other things must also go well for a successful result.
As I mentioned in the beginning, the following factors provide the template for a compelling set of measures of what is most important:
The right people
Determine the show demographics profile and know how many people attending the show fit your target profiles. Identify them to the individual level if the information is available.
Make a forecast of how many targets are there and how many you will see. Track the number of people who come to your exhibit or venue. Develop averages and totals for the program year.
Determine how many visitors are seriously engaged vs. just entering a drawing or making a casual walk-through. (Make counts during the events) Use exit polls or surveys while visitors wait for a presentation for example, to find our who is visiting your stand. Report all of these numbers and the mix of people by type in your show summary.
The right messages
The only way to know if your messages are resonating with customers and prospects is to ask them. Use exit surveys or post- show surveys to determine 1) Can anyone recall, repeat or describe what you were trying to tell them? 2) Does the message they retained have any potential effect on their role or plans? I.e., does the message you conveyed present a solution to problems or an improvement in a process or profitability? Do they believe what you told them? A great open ended question is to simply ask your visitors “What was the most important thing they learned during your visit?” Compare their answers with your communication objectives. Remember, “nothing” is a possible answer.
The right actions and result
What specifically will your visitors do as a result of visiting you? This is the most valuable question of all. If their intent matches with your desired follow-up behavior you are on your way to ROI. Are your visitors more inclined to do business with your company? Do they find your company to be a good fit for their needs? These elements can be determined with questions such as, “Do you plan to make changes (or a purchase) based upon what you learned today?" or “Is it more likely that you will purchase products from us ?”, etc. These metrics are guaranteed to be of interest to the top management of your company.
Determining the number of visitors who actually take a prescribed step at or after your show is the ultimate measure of success. You may even be able to place a potential value upon those people taking that step if the step is one the sales team has defined and therefore knows the probable value associated with it.
Ed
Wednesday, May 30, 2012
Measurement Tip 13
A Year of Measurement Tips - A Review of Fundamental Concepts for Positive Event ROI!
One year ago I began this series of measurement tips with the theme of “How to become a manager of the business (not just of the events) by achieving and reporting accomplishments that address the profit equation of your organization.” I sincerely hope that most of your have found ways to do just that using some of the ideas and examples I have provided this past year.
Looking back over the twelve measurement tips provides a useful list of key ideas that we have shared and I believe should be an important part of your program and that will enable you to demonstrate direct influence on the profitability of the business:
1) Sales is your internal customer - Your relationship with sales will largely determine your success. (Tip 2 and 6)
2) What you measure will affect how you perform - Identifying what to measure about your event marketing program is an important step in putting your planning on the right track. (Tip 3)
3) There is more to a marketing event than leads - Cost savings and expense avoidance for your company can provide a large amount of event budget justification. (Tip 4)
4) Customer feedback is essential - The other arbiters of your program’s success are the customers and prospects themselves. They should be heard from regularly. (Tip 5)
5) Metrics such as indices allow you to compare and contrast events - Comparing events on an index basis, as with a payback ratio, is useful for identifying relative performance and improvement opportunities. New events that are only in the exploration stage can be compared to existing ones using a forecast of expected results. (Tip 7)
6) Critical Success Factors for event ROI, miss one and you are toast! - For marketing events to be successful and provide an adequate return on investment you must accomplish three things, in order: 1) You must attract enough of the right people, i.e. those with adequate responsibility of the action you expect of them, 2) You must persuade them to act through very effective messaging, demonstrations and environment, 3) You must tell them what you want them to do as a result of their visit and support them in taking that step. The count of those who take the prescribed step is most closely related to adequate ROI.
(Tip 8)
7) Your event staff is an essential ingredient of success - Staff must effectively engage and qualify visitors and persuade them to act. They are the ones who can best assess an event’s ability to provide a well qualified target audience, how well the environment worked to create persuasive interactions, and even how well your exhibit and activity compared with your competitors and others at the show. They can tell you best what should be continued or changed and even how best to participate in the same event next time. (Tip 9 and 12)
8) Nurture customers and protect the revenue base - Spending time and resources enhancing existing customer relationships and thereby protecting their revenue contribution from erosion or loss to competitors is a wise investment. (Tip 10)
9) Technology is our friend – Technology is making it easier to capture feedback, establish intra-event communication, build communities of interest and distribute meaningful content more directly and in new ways. Today, visitors come to trade shows and events with much more knowledge than they did in the past and expect a lot more from you when they visit. Mastery of digital and social media is essential and the use of technology for research is effective and cost efficient. (Tip 11)
10) Choose vendors who are interested in your success! - MC2 has been a good friend and partner with me in bringing a year’s worth of measurement tips to you through their eConnections Newsletter. They serve as a great example of a company focused on their clients’ goals. That is the nature of a strategic vendor, one that is essential to your organizational success. Thanks MC2!
I referenced all twelve measurement tips in this summary. You may find each one in complete detail on my ROI and event measurement blog: http://constellationcc.blogspot.com/
Best wishes for program and personal success!
One year ago I began this series of measurement tips with the theme of “How to become a manager of the business (not just of the events) by achieving and reporting accomplishments that address the profit equation of your organization.” I sincerely hope that most of your have found ways to do just that using some of the ideas and examples I have provided this past year.
Looking back over the twelve measurement tips provides a useful list of key ideas that we have shared and I believe should be an important part of your program and that will enable you to demonstrate direct influence on the profitability of the business:
1) Sales is your internal customer - Your relationship with sales will largely determine your success. (Tip 2 and 6)
2) What you measure will affect how you perform - Identifying what to measure about your event marketing program is an important step in putting your planning on the right track. (Tip 3)
3) There is more to a marketing event than leads - Cost savings and expense avoidance for your company can provide a large amount of event budget justification. (Tip 4)
4) Customer feedback is essential - The other arbiters of your program’s success are the customers and prospects themselves. They should be heard from regularly. (Tip 5)
5) Metrics such as indices allow you to compare and contrast events - Comparing events on an index basis, as with a payback ratio, is useful for identifying relative performance and improvement opportunities. New events that are only in the exploration stage can be compared to existing ones using a forecast of expected results. (Tip 7)
6) Critical Success Factors for event ROI, miss one and you are toast! - For marketing events to be successful and provide an adequate return on investment you must accomplish three things, in order: 1) You must attract enough of the right people, i.e. those with adequate responsibility of the action you expect of them, 2) You must persuade them to act through very effective messaging, demonstrations and environment, 3) You must tell them what you want them to do as a result of their visit and support them in taking that step. The count of those who take the prescribed step is most closely related to adequate ROI.
(Tip 8)
7) Your event staff is an essential ingredient of success - Staff must effectively engage and qualify visitors and persuade them to act. They are the ones who can best assess an event’s ability to provide a well qualified target audience, how well the environment worked to create persuasive interactions, and even how well your exhibit and activity compared with your competitors and others at the show. They can tell you best what should be continued or changed and even how best to participate in the same event next time. (Tip 9 and 12)
8) Nurture customers and protect the revenue base - Spending time and resources enhancing existing customer relationships and thereby protecting their revenue contribution from erosion or loss to competitors is a wise investment. (Tip 10)
9) Technology is our friend – Technology is making it easier to capture feedback, establish intra-event communication, build communities of interest and distribute meaningful content more directly and in new ways. Today, visitors come to trade shows and events with much more knowledge than they did in the past and expect a lot more from you when they visit. Mastery of digital and social media is essential and the use of technology for research is effective and cost efficient. (Tip 11)
10) Choose vendors who are interested in your success! - MC2 has been a good friend and partner with me in bringing a year’s worth of measurement tips to you through their eConnections Newsletter. They serve as a great example of a company focused on their clients’ goals. That is the nature of a strategic vendor, one that is essential to your organizational success. Thanks MC2!
I referenced all twelve measurement tips in this summary. You may find each one in complete detail on my ROI and event measurement blog: http://constellationcc.blogspot.com/
Best wishes for program and personal success!
Wednesday, February 8, 2012
Measuring Payback and CRM Value for Marketing Events
A great tool for conveying the value of your marketing events is the payback ratio. This is the ratio of the total value of estimated revenue, revenue retention, cost savings and promotion value gained through event activity, divided by the event cost. It is expressed as $XX/1, for example $42/1. The payback ratio serves not only as an indicator of event efficiency, but also as a useful way to compare past, current and future events. The payback ratio is based upon estimates of the four main categories of value derived from marketing events:
1.Revenue (or gross profit margin) from New sales –This element of event value is the most difficult to document as so many people and steps may be required to close a sale and sales cycles can be quite long. It is possible to estimate revenue impact using acceptable internal assumptions such as the “close ratio” associated with well-qualified leads from an event and the “average value of sale” for sales that result from those leads. The best approach is to discuss these assumptions with your sales team and get their agreement. It is also best to have the sales team define the “next step” expected of people who become leads through their interactions at an event. Use “closed loop” systems such as sales automation, warranties, registrations and other types of tracking aids where available.
2.Retention and Growth of Current Revenue Base- Customer Relationship Management (referred to as CRM) is a very important function in companies today. Existing customers and the revenue they provide are the most profitable for most companies. I have heard criticism about companies that devote their event marketing resources to interaction with existing customers, yet I would suggest this is one of the most valuable aspects of event marketing. Keeping customers up to date, reassuring them that their needs will be met, and thanking them for their business has a direct and measurable impact on retention and profitability.
One of our large consumer package goods clients assesses the revenue addressable at an event, broken down like this:
A.How much total market share (expressed in terms of revenue, number of customers and potential customers, average number of products per customer or target, etc.) is addressable at this particular event? (Addressable Revenue)
B.How much of that total is comprised of our current customers, representing existing revenue? (Retention target)
What is the growth opportunity on the existing revenue base at this event (Growth target)? For example, the percentage of current customers that are likely to be cross-sold into an additional product line(s) may help establish a growth revenue target for an upcoming event. The average annual value and lifetime value of a customer are important measures in defining the scope of the opportunity.
C.How much does that leave as additional market share addressable at the event? (Conquest target)
Defining the addressable revenue targets in this manner helps to understand and report the potential value of an event as well as add focus to the tactics and activities planned for the event.
If a company places a heavy weight on CRM as a trade show marketing goal, then it is important to know how well their CRM initiatives are working. CRM is essentially a process for providing optimum value to customers to support obtaining maximum revenue value for the company. Therefore, it is wise to use measures of success that relate directly to customers. Trade show CRM assessment should be consistent with any other enterprise-wide measures and metrics applied to other CRM initiatives. Briefing senior management CRM success measures and applying these metrics on an ongoing basis will help to ensure continued funding of your CRM activities.
As mentioned, customer feedback should be incorporated into assessments of trade show performance. Customer measures may include increases in average order size, the number of contacts required to close a sale, number of calls and time devoted to customer service or support, changes in customer satisfaction results, and marketing measures such as net promoter scores. Many of these measures provide some basis for estimating potential return on investment, such as a cost savings through reduction of reliance on customer service or technical support.
Trade show activities can be tied to improvements in customer acquisition, retention, and perhaps reactivation. Many companies know their retention rates and changes in the retention rates can be significant measures of success. They also must then agree how improvements in these areas will potentially impact profitability. Measurements may exist regarding the percentage of reactivations among lost customers for the year. Tracking these types of measures over time can assist in identifying trends of improvement related to events.
Estimating the potential value of CRM efforts is similar to estimating sales opportunity in a sales funnel. What is the effect upon the retention rate among customers seen at events where a CRM initiative was in effect? And by extension, what is that change worth in profitability? The same could be applied to “reactivated accounts.”
Investing in retention of existing customers and their revenue base at events can make really good sense. Take for example a business with any level of attrition each year. Let’s say an initiative is developed for events that will result in reaching and retaining 10 customers among the 50 or so that are lost each year. The average value of a customer addressable at these events is estimated at $750,000. It is a simple process to determine if event initiatives are a worthwhile investment:
Multiply the number of customers retained or reactivated (10) by the average annual revenue value of a customer addressable at events ($750,000): (10 Customers X $750,000) = $7,500,000 in reclaimed revenue. Multiply that times the profit margin on sales associated with existing customers (it will be higher than for new customers, say 35%) and you will find $2,625,000 in profitability attributable to those customers who would otherwise be gone. That level of contribution is likely to provide a fairly high percentage of justification for the entire event program budget in addition to the other monetary values of new revenue development, cost avoidance and promotion value accomplished at those same events.
If an event is a key element in managing the relationship with an account for the year, such as your premier customer conference or the largest annual conference you attend together, then the value of that activity would likely be a significant portion of the overall amount a company spends on maintaining the business. If the event you are considering is not a main part of relationship management then it might represent only a small fraction of your company’s effort. Regardless, if you add up the current annual revenue of the customers you will entertain or brief at an event, those numbers are usually impressive, and demonstrate what is at risk if those relationships are not maintained.
3.Cost Savings – Cost savings and expense avoidance achieved through trade show activity can be quite substantial. Events present “one on many” and “many on many” opportunities. This value element is a real, traceable source of ROI on an event.
Everyone in your market universe may be gathered in one place, thinking about the same concentrated range of topics. Prospects, customers, suppliers, allies, analysts, press, executives, sales, product management and marketing are all at a single event, usually at their own expense. The number of potential interactions is huge. Consider special approaches to maximize the time, place and focus available through the event.
Be sure your activities at your next event are aimed not only at the income side of the profit equation, but the cost side as well. Realizing these benefits requires dialogue with those managers who can take advantage of the opportunity your event provides. They may also help you estimate the value of doing multiple things at an event instead of doing them one at a time in the future at additional expense.
Reporting these results in your event measurement report will add credibility and financial justification for your investment beyond the primary goal of increasing sales.
4.Promotion Value – This is often the least reported source of ROI, but promotion value at a marketing event provides real, identifiable value. Promotion value may be calculated using “ad equivalency” values, which are derived from what an equivalent advertising cost to accomplish a similar promotional impact would be.
“Ad Equivalency” is a less popular metric today than it was even a few years ago. It is still useful to report promotion value in terms of total impressions made at marketing events as this provides an idea of “reach”. “Gross Impressions” are those that fall on the eyes and ears of anyone. “Targeted Impressions” are those that fall on the eyes and ears of those who fit your target profile. The total impressions are the sum of all gross and targeted impressions made as a result of show budgeted activity. These activities often include promotion activities in direct marketing, media (including digital and social media) show exposure and exhibit exposure.
The payback ratio is a simple measure of success for your event marketing program. By adding the monetary value of all the tracked and estimated revenue and cost avoidance represented in the categories above, we can compare apparent value of an event to its cost. Using the payback ratio as an index is a great way to convey the value of your marketing events. The payback ratio provides qualitative and quantitative analysis of events and often greatly facilitates the discussion with executives over event strategy and funding.
1.Revenue (or gross profit margin) from New sales –This element of event value is the most difficult to document as so many people and steps may be required to close a sale and sales cycles can be quite long. It is possible to estimate revenue impact using acceptable internal assumptions such as the “close ratio” associated with well-qualified leads from an event and the “average value of sale” for sales that result from those leads. The best approach is to discuss these assumptions with your sales team and get their agreement. It is also best to have the sales team define the “next step” expected of people who become leads through their interactions at an event. Use “closed loop” systems such as sales automation, warranties, registrations and other types of tracking aids where available.
2.Retention and Growth of Current Revenue Base- Customer Relationship Management (referred to as CRM) is a very important function in companies today. Existing customers and the revenue they provide are the most profitable for most companies. I have heard criticism about companies that devote their event marketing resources to interaction with existing customers, yet I would suggest this is one of the most valuable aspects of event marketing. Keeping customers up to date, reassuring them that their needs will be met, and thanking them for their business has a direct and measurable impact on retention and profitability.
One of our large consumer package goods clients assesses the revenue addressable at an event, broken down like this:
A.How much total market share (expressed in terms of revenue, number of customers and potential customers, average number of products per customer or target, etc.) is addressable at this particular event? (Addressable Revenue)
B.How much of that total is comprised of our current customers, representing existing revenue? (Retention target)
What is the growth opportunity on the existing revenue base at this event (Growth target)? For example, the percentage of current customers that are likely to be cross-sold into an additional product line(s) may help establish a growth revenue target for an upcoming event. The average annual value and lifetime value of a customer are important measures in defining the scope of the opportunity.
C.How much does that leave as additional market share addressable at the event? (Conquest target)
Defining the addressable revenue targets in this manner helps to understand and report the potential value of an event as well as add focus to the tactics and activities planned for the event.
If a company places a heavy weight on CRM as a trade show marketing goal, then it is important to know how well their CRM initiatives are working. CRM is essentially a process for providing optimum value to customers to support obtaining maximum revenue value for the company. Therefore, it is wise to use measures of success that relate directly to customers. Trade show CRM assessment should be consistent with any other enterprise-wide measures and metrics applied to other CRM initiatives. Briefing senior management CRM success measures and applying these metrics on an ongoing basis will help to ensure continued funding of your CRM activities.
As mentioned, customer feedback should be incorporated into assessments of trade show performance. Customer measures may include increases in average order size, the number of contacts required to close a sale, number of calls and time devoted to customer service or support, changes in customer satisfaction results, and marketing measures such as net promoter scores. Many of these measures provide some basis for estimating potential return on investment, such as a cost savings through reduction of reliance on customer service or technical support.
Trade show activities can be tied to improvements in customer acquisition, retention, and perhaps reactivation. Many companies know their retention rates and changes in the retention rates can be significant measures of success. They also must then agree how improvements in these areas will potentially impact profitability. Measurements may exist regarding the percentage of reactivations among lost customers for the year. Tracking these types of measures over time can assist in identifying trends of improvement related to events.
Estimating the potential value of CRM efforts is similar to estimating sales opportunity in a sales funnel. What is the effect upon the retention rate among customers seen at events where a CRM initiative was in effect? And by extension, what is that change worth in profitability? The same could be applied to “reactivated accounts.”
Investing in retention of existing customers and their revenue base at events can make really good sense. Take for example a business with any level of attrition each year. Let’s say an initiative is developed for events that will result in reaching and retaining 10 customers among the 50 or so that are lost each year. The average value of a customer addressable at these events is estimated at $750,000. It is a simple process to determine if event initiatives are a worthwhile investment:
Multiply the number of customers retained or reactivated (10) by the average annual revenue value of a customer addressable at events ($750,000): (10 Customers X $750,000) = $7,500,000 in reclaimed revenue. Multiply that times the profit margin on sales associated with existing customers (it will be higher than for new customers, say 35%) and you will find $2,625,000 in profitability attributable to those customers who would otherwise be gone. That level of contribution is likely to provide a fairly high percentage of justification for the entire event program budget in addition to the other monetary values of new revenue development, cost avoidance and promotion value accomplished at those same events.
If an event is a key element in managing the relationship with an account for the year, such as your premier customer conference or the largest annual conference you attend together, then the value of that activity would likely be a significant portion of the overall amount a company spends on maintaining the business. If the event you are considering is not a main part of relationship management then it might represent only a small fraction of your company’s effort. Regardless, if you add up the current annual revenue of the customers you will entertain or brief at an event, those numbers are usually impressive, and demonstrate what is at risk if those relationships are not maintained.
3.Cost Savings – Cost savings and expense avoidance achieved through trade show activity can be quite substantial. Events present “one on many” and “many on many” opportunities. This value element is a real, traceable source of ROI on an event.
Everyone in your market universe may be gathered in one place, thinking about the same concentrated range of topics. Prospects, customers, suppliers, allies, analysts, press, executives, sales, product management and marketing are all at a single event, usually at their own expense. The number of potential interactions is huge. Consider special approaches to maximize the time, place and focus available through the event.
Be sure your activities at your next event are aimed not only at the income side of the profit equation, but the cost side as well. Realizing these benefits requires dialogue with those managers who can take advantage of the opportunity your event provides. They may also help you estimate the value of doing multiple things at an event instead of doing them one at a time in the future at additional expense.
Reporting these results in your event measurement report will add credibility and financial justification for your investment beyond the primary goal of increasing sales.
4.Promotion Value – This is often the least reported source of ROI, but promotion value at a marketing event provides real, identifiable value. Promotion value may be calculated using “ad equivalency” values, which are derived from what an equivalent advertising cost to accomplish a similar promotional impact would be.
“Ad Equivalency” is a less popular metric today than it was even a few years ago. It is still useful to report promotion value in terms of total impressions made at marketing events as this provides an idea of “reach”. “Gross Impressions” are those that fall on the eyes and ears of anyone. “Targeted Impressions” are those that fall on the eyes and ears of those who fit your target profile. The total impressions are the sum of all gross and targeted impressions made as a result of show budgeted activity. These activities often include promotion activities in direct marketing, media (including digital and social media) show exposure and exhibit exposure.
The payback ratio is a simple measure of success for your event marketing program. By adding the monetary value of all the tracked and estimated revenue and cost avoidance represented in the categories above, we can compare apparent value of an event to its cost. Using the payback ratio as an index is a great way to convey the value of your marketing events. The payback ratio provides qualitative and quantitative analysis of events and often greatly facilitates the discussion with executives over event strategy and funding.
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