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Article
-Linda Musgrove
-TradeShow Teacher
-www.tsteacher.com
Hello Class, as always, it's good to be back with a new lesson! We touched on some of the points of this lesson in previous classes, but today we are tying various techniques together to "sell" the value of trade show marketing to management; and if you are ready for a little bit of a balancing act, also to your peers in other departments.
As you know, it's not easy comparing the value of trade show marketing with other marketing initiatives since trade shows are multi-faceted marketing vehicles that if used properly, provide tremendous value in so many different areas. Management tends to like comparing numbers and projected returns when it comes to budget allocations. But comparing "apples to apples" just isn't easy when it comes to trade shows, and people usually have problems comparing "oranges to apples," so today we'll look at ways to make the trade show orange be an apple, or at least look like one. OK, this sounds confusing and even my husband had this "yes honey" look on his face when I told him what I was going to write about. The concept is very simple however; we have to figure out ways to make it easy to compare the value we provide with the value of other programs, and of course win that comparison.
To get going, we have to gather some data about our "competition" first. We make a list of marketing programs and initiatives the company is either involved in or considering, but our main focus should be programs currently in place since we'll hopefully have access to some solid data in those areas. So what are we "competing" with? Here is a short list of possible contenders:
• Organic Web Leads
• Telemarketing
• Outside Sales
• Direct Marketing (such as E-Mail campaigns, Direct Mail, etc.)
• Media Advertising (such as online ads, print advertising, TV commercials, etc)
• Channel Programs
• And a bunch of other things
Ideally, we want to compare dollar spent vs. dollar earned; how much revenue do we get for every dollar the company invests for each marketing/sales program? Unfortunately different programs might not have that data readily available. They may use other metrics like cost per impression, cost per lead, cost per converted lead, etc. You'll find information in sales reports, campaign reports, maybe corporate annual reports and similar sources. You might also get information from your peers, sales and/or marketing management or your CFO. Asking your CFO for data and help is often a good idea, it gives your ultimate comparison an additional degree of credibility.
Once we have the data we need, we calculate everything down to a revenue vs. dollar spent model. For example if it costs your company $60,000 per year to maintain your website, and you have $475,000 in revenue coming from organic web leads, you divide revenue by cost and end up with a number. In this case $475,000 divided by $60,000 means that we have $7.92 in revenue for each dollar it costs the company to maintain the web site. Now, organic web leads always tend to have the highest return but you can't really scale them properly, you can create more web traffic, but that is online advertising and has its own ROI math. Since most organic marketing has a very high ROI but doesn't scale, I propose we simply leave those out. If anyone brings it up, just explain the reason I just gave.
Below is an example of how a comparison may look like. I used fairly random numbers just to illustrate the concept. Odds are, trade show marketing will not have the highest ROI after discounting the organic web leads; that is until we get a little more creative.
Our next step is to make our numbers more favorable. We're not cheating, but there is an awful lot of cost in our trade show budget that arguably shouldn't be attributed to us. So we have to put a price tag onto the other value we provide, such as PR and Media opportunities or cost savings for sales.
For our example, let's assume that during our trade shows, we provide opportunity to meet with media that otherwise would have to be done by travelling to a few cities to meet with reporters and analysts individually. Let's assume each of those PR tours would cost the company an average of $10,000 and if it wasn't for trade shows, the company would have to do 3 more per year. So that's a value of $30,000.
Then we have Outside Sales; there simply are a number of clients that need some face time. For our example, let's assume we can arrange meetings with 50 important clients per year at trade shows that otherwise would have to be visited. Let's assume each visit would cost $1,300 in airfares, car rental, hotel etc… So we just provided Outside Sales with a value of $65,000.
Trade shows are also a great place to conduct customer research and competitive research. For the purpose of our example, let's assume we can save Product Management $40,000 per year by doing some of that research at shows rather than other more expensive methods.
Then there is additional media coverage. Due to our unique booth and clever program, we get a lot of local media coverage which has an advertising value of $200,000.
The last item I am going to put a price tag on for our example here is "Executive Involvement". Executives usually have some desire to personally talk to key clients and hear feedback from real customers. This one is the most difficult to put a monetary value to, but for our example, let's assume we save $80,000 per year due to reduced travel and saved executive time.
There are many other items we could try to put a dollar value to, such as increase in brand awareness, networking opportunities, partner recruitment etc.
So the "new" cost for our tradeshow program is quite different:
See what we just did? We "removed" expenses the company would have anyways from our trade show costs and all of a sudden the "actual" cost is only $110,000, which means we have a return of $8.55 for each dollar that is specific to actual trade show cost. Granted, the math we used here was a little creative, but fact is that trade shows are often disliked and disrespected by management because of their seemingly high cost and hard to interpret results. We just took this disadvantage and turned it into an advantage. And yes, the numbers I used in this illustration are a little strong, but I just wanted to teach you the concept.
The other option is to "increase" the value of your program. The changes in ROI are less drastic, but your numbers will also receive less scrutiny. In the example above, we deducted $410,000 from our trade show budget to only leave the cost that should only come from our budget. We also had $940,000 in revenue directly attributed to our shows. So if we take that revenue value ($940,000) and add the additional value we created ($410,000), we end up with a total value of $1,350,000. In both cases we have shown that there is much more value to trade shows than initially meets the eye. Now, it's up to each and every one of you to decide what factors, numbers and formulas meet your specific requirements and situation. You don't want to overdue this either.
The point to take away is: It's really not that hard to show management that trade shows are a great investment and provide tremendous value. You can even use those numbers to go budget poaching. Since you provide so much value and cost savings to other departments, you can argue it is only fair if part of the money that would normally go to them should go into the trade show budget. However, unless you want to find yourself sitting alone at a table in the cafeteria, it's probably a good idea to make your peers from the other departments understand what dollar value you provide for them first!
That's it, your homework is to show that trade shows are the best marketing investment your company can make. Use similar math to our examples to make this work for you. Never forget: Numbers, if tortured, will always submit .
Until next month… Bye for now!
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