MEASURING TRADESHOW ROI: Measure Twice…
MEASURING TRADESHOW ROI: Measure Twice…
“What gets measured gets managed.” – Peter Drucker
You have heard the saying, “Measure twice…cut once”, right? This phrase is most commonly used to illustrate the importance of measurement and being sure you are doing the right thing before taking action in a wood cutting or construction setting. No one wants to run to Lowes for a new 2×4 because they were too rushed to plan, measure and account for resources. A two by four is not an astronomical financial investment; it is small in comparison to even the smallest size display and trade show booth space costs. In the trade show realm, no one is advocating analysis paralysis, but some effort evaluating costs in relation to post show profit is paramount to determine whether or not said event is one to revisit and repeat in the future. Peter Drucker said it this way, ““What gets measured gets managed”. As marketing professionals it is our job to not just suggest, create, and implement promotions but, as you recall from Marketing 101, to measure results.
The Center for Exhibition Industry Research (CEIR) has determined that “ROI metrics are used by 62% of exhibitors, with the most popular metrics relating to sales revenue (45%)”. One might assume that 100% of exhibitors would want to know how they are doing at each show. So why the discrepancy? What is happening to the remaining 38%?
Unfortunately, determining ROI, although it does involve math (no cringing allowed), is not always contingent on just a cut and dried equation. There are formulas to help but, with a number of uncontrollable variables, there will still be some room for subjective judgement to play into long term decision making. In an article entitled How to Track Your Trade show ROI, Peter Symonds makes this point, “Many businesses make the mistake of setting vague, incalculable goals before tradeshows and other events. Without a clear and quantifiable goal, it’s impossible to tell whether your tradeshow was a success or a failure.”
With the goal of being able to quantify, here’s a simplified formula with which to help calculate Trade Show ROI expressed as a percentage:
(Gross Profit – Marketing Expenses) / Marketing Expenses x 100 = ROI%
Adding up “Marketing Expenses” is the simpler of the two components that you need to plug in. Here in this scenario, we are referring specifically to trade show related marketing expenses. What are some items to include in the expenses category? Booth space, physical exhibit (may need to amortize cost of this over # of shows it is used for), show costs such as shipping, drayage, and rental of lead collection systems, tables chairs etc., hotel, travel transportation at show, food, entertaining clients, pre-show mailings, ads, promotions, swag/literature handed out at the show and anything else that is specifically a show related expense. You may also want to include man hour time. How many hours did we invest in tradeshow planning and in travel time and pulling booth personnel off other projects and tasks? You may not always include this in dollar value but it should be taken into consideration at some point as it is all part of an investment your company has made.
ROI will grow in percentage if you have an exhibit you have used at more than the one show and can amortize the cost so that it a smaller part of your expense total. Older booths, however, do need refurb, upgrades, changes in graphics to be show specific – all of these costs need to be accounted for too for the most accurate measure of ROI. Doing this accurately means there needs to be interdepartmental communication and information sharing in order to get a thorough calculation of true costs. Calculating ROI after the show, starts before the show and will be easier with keeping accurate records of all show expenditures.
The trickier component of this equation is tracking the “Gross Profit” that can be traced directly to the show. If you do not have a good customer tracking mechanism, or what is now popularly known as a CRM software, this may be a difficult job. It is tough to manually keep track of customer sales over time and remember where each customer’s journey with you began. Keeping a good database and being diligent with tracking information in your system is paramount to having an accurate view of ROI for any sales and marketing effort. Lacking the proper foundational tools may be why 38% of exhibitors are failing to track trade show ROI.
If you do not have the best software for this, do make an effort to track all direct sales and new customers that come from the show so you can get an idea if there was any ROI for the show. Without the newer tracking methods, this will take some coordinated effort and specific communication between sales, marketing and your front line customer service representatives who may or may not see the value in asking the new clients questions to identify or match up where their point of origin with your company started. This information is essential, otherwise you may find yourself going to a show each year just because it is what has always been done. If there is not some tangible return on investment or a specific and trackable return on objective, you might just be wasting a lot of money that could be funneled into a more profitable way of marketing your products and services. Keeping track of the number of leads at the show can also give you a cost per lead value from the show that can be used for comparison in cost per lead against other marketing options too. As Drucker alludes to, if you want to manage well, you really do need to keep accurate measurement records of all that you do. Quantify as much as possible.
Remember, don’t stop tracking ROI too soon! You cannot judge ROI after only one week. True, you might have had one or two at show sales that were significant but if you stop there, or only count at show sales, your data will be extremely skewed. Sometimes the value of a customer traced to a show matures over time. Your qualified leads’ purchase cycles may require review of your sales over several months to a year. Measurement of sales for each customer over time can also help you determine lifetime customer value.
Once you are able to plug in all the numbers into the simple formula you have something to use. Is the ROI a high percentage? How does it compare to other trade shows we have attended? Should we return to that show – or based on lower costs and expected returns should we attend a different show next time. Ask the tough questions too. If we put this amount of money into different sales and marketing programs, advertising, social media, special events, direct sales would we get a higher ROI? Could we increase sales faster? Measuring ROI at the tradeshow is a necessary metric to have in your decision making toolbox.
In the quest for evaluating ROI, here are a few other metrics to consider as well:
- New Leads – this is about brand awareness. What percentage of leads from this show are brand new to us as company or product segment?
- Incremental Business from Existing Customers – these are existing companies but it may be that this show spurred them on to a new purchase or reactivated stagnant account. Can we assign a traceable dollar amount to this client from this show’s activity?
- Average Cost per Lead – This is the total money spent on trade show/ total leads generated through the trade show.
- Average Cost per Opportunity – This is total money spent on a trade show/total leads converted into opportunity.
- Social Media Reach – Usually considered a vanity metric but you do want to track to see if there is a significant spike in the week following the show.
- Website traffic – What is your average weekly total of visitors to your website before the show? Note this, then evaluate to see if this number increases during the show and the week directly following. Remember to look at organic traffic (entering through search engine) and direct traffic (entering your specific URL into a Web browser) too. Use Google analytics to help out with this. If you used show specific promotions or intro pages you can track their performance, you can see demographics of your visitors and other relevant data.
All of these metrics can help you assess whether there is adequate return on investment for not just one show but all of your trade shows and comparatively speaking all of your marketing endeavors. Trade show ROI calculation is important. You invest significant time and dollars pre-show, at show and in post-show follow-up so do not neglect your responsibility to evaluate your performance. How else will you be able to justify giving yourself a pat on the back? Remember measure often, cut only with conviction based on data!