Measurement Tip 24

Understanding the Value of Conferences

Is your conference an expense or an investment?

Many organizations regard their conference as a necessary expense, one that serves to educate customers to be successful in using products or influences employees to do a better job.  Having evaluated and measured a variety of conferences, we found something different. In this tip, we explore how conferences deliver real, near-term profit improvement beyond the conference.  And, we look at how a great conference can influence other objectives such as organizational growth and customer retention.

The conferences that deliver the most value for the organizer or host have a common characteristic; they successfully provide value to all of the other players in the conference ecosystem.  Simply stated, organizers attract participants through valuable offerings and content.  Sponsors and exhibitors seek valuable access to targeted, high-value participants. Sponsors and exhibitors provide the organizer with valuable funding and support in return for access. The organizer perpetuates and grows the cycle.  All participants seek value in return for their contribution of time and money and smart organizers and hosts ensure that it is provided. 

In addition to profit improvement, the well-planned conference also serves the organizer’s overall mission and goals. For example, many associations seek membership growth, in part, by providing great value to their members through the conference experience.

For those of us with interest in exhibitions at conferences, numerous studies have shown that that exposure to content provided by sponsors and exhibitors is an integral part of conference participant value and satisfaction.  When the organizer and the sponsors and exhibitors are attuned to the strategic needs of the participants, the momentum builds quickly. Intra-event communications using digital and social media make it possible to learn from members as well as serve their needs between events.  

Increased revenue and expense reduction resulting from conference participation – after a successful conference participants may take actions that result in improved business results for the host.  Here are a few of the most likely results:

Increased Sales –

Participants will make upgrades to systems and products and purchase new offerings learned about at the conference.  Designers or integrators may incorporate more of your products into their designs and offerings.  Applicable measures: Conference related sales

Reduced Support Requirements –

• Participants will have less need for technical or customer support through knowledge gained at the conference.  Applicable measures: Changes and cost associated with levels of customer service access and requirements

Enhanced Loyalty, Customer and Revenue Retention –

• Retention of the participants’ existing level of business is ensured through enhanced affinity, familiarity with your company and product and reduced perceived risk. Applicable measures: Retention rates among conference participants vs. non-conference participants, Average revenue value of a customer, Cost of a lost account, Cost of a new or replacement customer.

Recurring or Repeat Revenue Growth –

• Participants experience personal and company success, leading to growth on the existing revenue stream. Many conference providers focus efforts to help their participants grow their own business, thereby increasing the demand for their own products.  Applicable measures:  Financial and growth performance of conference participants.  Associated sales volume.

Other Expense Reduction -

• Conference activities may produce cost savings in hundreds of ways.  Exploiting the time and place opportunity afforded by attendance at a conference allows a company to accomplish goals that would require additional time and expense to duplicate in the future and in different locales.  For example, teaching 3,000 customers at a conference the nuances of your upgraded product may be much more cost effective than sending field sales teams out to do the job on-site or relying on digital media.  Providing customers and prospects with access to your executives and experts may create an experience and exert influence that would not otherwise be possible or financially feasible. The possibilities are endless. 

Communications, Press and PR Value –

• Conferences can generate considerable press and PR exposure through conference related promotion, advertising and marketing campaigns.  The value of conference related promotion and earned media can be equivalent to several million dollars of advertising exposure for the host.  Inspiring the press to focus on your strategic initiatives, included in the conference content, is invaluable.

All of the above either impact the revenue or expense side of an organizer or host’s profitability or income. 

How can a conference help an organization to grow?

When participants and sponsors feel they derive great value, organizers may experience an increase in event participation and membership.

In my research I have learned some of what participants seek at conferences, related to their job:

Immediate Impact:

• The ability to make informed decisions
• The ability to make effective near-term changes and improvements
• To make connections with people and resources valuable in achieving improvements and goals
• To reduce personal and organizational risk (see what works!)

Future Results:

• To identify and consider influences that affect good planning

These may be regarded as “strategic needs” of the conferee.  Conferences that focus their content on these types of topics excel.  Exhibitors and sponsors who focus their messages and demonstrations for customers on these types of needs will be successful as well.  This provides a great basis for targeting the content of publications, and content delivered through education, digital, and social media on value for all concerned.  

As the word spreads of a conference’s value in meeting these needs, attendance will grow.  As it becomes apparent that a company or membership organization delivers a constant stream of strategic information, customers and memberships will grow too!


Ed Jones
President, Constellation Communication

To get started on your event marketing measurement program, contact us today at +1.770.391.0015 or edjones@constellationcc.com

 

 

 

 

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.