How to Calculate the True Value of a Trade Show

How to Calculate the True Value of a Trade Show —
A trade show, like every other part of your marketing plan, should produce measurable ROI. After all, the whole point of marketing is to increase profitability. As legendary retailer, John Wanamaker once said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Well, we hope this blog will help you find out just which trade shows are giving you more bang for your buck.

We’ll begin by describing four steps, including easy to follow formulas, to help you calculate how much you’re spending and how much you’re earning on every show. These formulas were developed by Ed Jones, a retired president of a consulting firm specializing in event ROI. We’ve borrowed them from Exhibitor.com to help you determine the ROI of your past trade show exhibits and predict the value of those yet to come.

Step 1: Determine the approximate impact of the show on your total revenue

We realize that there are many steps between making a contact at a show and completing an actual transaction with that customer. For one thing, a lead made at the show is routinely passed on to the sales team who may or may not keep track of where the initial contact was made. Furthermore, it may take them several months, even years, to turn that lead into a profitable sale. In addition, the value of a show actually goes beyond the number of sales made. Because it is also a vehicle to build and enhance the overall brand, reconnect with existing customers and introduce the company to potential vendor partners and future employees.

Still, you can begin to estimate the general value of a show even before revenue has been created using numbers based on the past experience of your sales department. Here’s what you need to know:

• The number of past sales leads – this is based on the number of booth visitors who committed to a sales contract or took a step toward a sale after the show.

• The close rate of these leads – have your sales team estimate the average percent of show contacts who became paying customers.

• The average value of the final sale or contract – this number too, should be one your sales force can supply. If you show several different product lines at shows, ask your sales people which product seems to generate the most interest and final sales.

Once you have this data, use the formula below to calculate your approximate revenue from a show:

____________ Number of Sales Leads

                                 x
____________% Close Rate (the percentage of these leads that became sales)

                                 x
$___________Average Value of a Sale/Contract

                                 =

$___________Estimated Revenue

Step 2: Estimate the savings of making contacts at the show vs. sales calls

The major advantage a trade show offers any exhibitor is that everyone who comes to your booth has some interest in your product, your company or is connected to your industry. That means trade shows are ideal places to offer onsite meetings to demonstrate products, introduce product changes and share insights on services with existing customers and prospects. Instead of making individual time-consuming and expensive sales calls, you can impart the same information just as effectively at the show.

Trade shows are also a highly efficient way to expanding your database by simply collecting visitor business cards. During the course of show, visitors can be pre-qualified by your booth staff to make sure hot prospects are pursued first.

Use the following formula to estimate what you’re saving by being an exhibitor. Keep in mind, this isn’t how much money you’ve saved by cutting or eliminating costs from your show budget. It’s the dollar investment you would have spent on meetings, sales calls, list fees, etc. to accomplish the same goals you achieve through your trade show exhibit. To determine these savings, consider the following:

• The Cost of Sales Meetings
  Estimate the average investment made in off-site meetings between executives, channel partners, strategic allies, technical experts, sales people, association members, investors and industry analysts. Make sure you include the cost of rent for meeting rooms, refreshments, travel expenses and any other costs associated with these events

• The Cost of Field Sales
  Face-to-face sales calls are the final stage of any marketing program. But generating leads at trade shows should warm the waters for the initial meeting and reduce the need for two or more follow-up calls. Calculate the savings by asking your accounting or sales director to provide a rough estimate of an average sales call. (Nationally, each of these calls are generally estimated to cost $3,000 or more.)

• The Cost of Name Acquisition
  This number is determined by whatever you’re now spending to rent or buy contact lists for email and direct response marketing efforts. If your company doesn’t make this kind of investment, consult list-rental firms to get an estimate of what it would cost if it did.

Use the formula below to determine your total cost savings:

$________The Cost of Average an Off-site Meeting X by Meetings You’ve Had at the Show

+

$_________Cost of Average Field-Sales Call X by the Qualified Sales Leads from the Show

                                     +

$_________Cost of Acquiring Qualified Names for Database X by the Number of Contacts Made at the Show  =

$_________Total Cost Savings

 Step 3: Ascertain the value of impressions made via promotions and activities

Impressions, or the number of times your promotions are seen or heard by an audience, fall into two categories – Gross impressions (GIs) and Targeted Impressions (TIs). Impressions are made in four different ways: direct marketing, media coverage, on-site promotion and exhibitions.

To find the value of the impressions you make at a show, calculate the total number of people who came to your booth, saw the booth but didn’t come in, saw your signage, your brand in the show’s program and attended any activities you sponsored at the show. That number constitutes the Gross Impressions (GIs) you achieved. If you can estimate what percentage of that number is your target market, that will make up your Targeted Impressions (TIs) at the show.

You may be able to get some help with these numbers from the show’s organizers who can give you an idea of the number of impressions generated by sponsorships and signage as well as your booth. Otherwise, guestimate using your observations of the show attendance, booth visitors and logic.

If your firm’s public relations and marketing departments have their own way of qualifying the value of impressions, you might want to use that. Otherwise, the formula below should help you determine the cost of an impression made via other media compared to impressions made during the show.

For example, to find the cost of an impression for a magazine ad, determine the total cost of the ad including creative and media, then divide that by the magazine’s circulation. That amount is the value of each GI. After that, guestimate the number of readers who are actually in your preferred target market. Use that number as your dividing number to find the targeted impressions (TIs) resulting from your ad. Do this for direct mail, media coverage and onsite promotions. Use the formula below to assign a value to gross impressions (GIs) and targeted impressions (TIs) from a show.

Total Gross Impressions

   _______________ GIs from direct marketing
+
   _______________ GIs from media coverage
+
_______________ GIs from on-site promotion
+
_______________ GIs from exhibit

_________________ = Total GIs

   _______________ Total GIs
                                             x
$ _______________ Dollar value of one GI
                                              =
$ _______________ Total Value of GIs

Total Targeted Impressions

_______________ TIs from direct marketing
                                            +
_______________ TIs from media coverage
+
_______________ TIs from on-site
+ 
_______________ TIs from exhibit
= 
_______________ Total TIs

Keep in mind that since TIs are also represented in the GIs figure (GIs count all impressions, including TIs), you should only add the additional value of TIs or you are inadvertently counting those impressions twice. So when calculating the total promotional value of a show, add the value of all GIs to the additional value of TIs by multiplying the number of targeted impressions by the difference in value between a GI and a TI.
Total Promotional Value

_______________ Total TIs
x
$ _______________ (Dollar value of one TI minus the value of one GI)
                                              =
_______________  Total additional value of Tis

$ _______________ Total value of GIs
+
$ _______________ Total additional value of TIs
                                              =
$ _______________ Total Promotional Value

Step 4: Determine the Payback Ratio

After calculating estimated revenue, cost savings and promotion/communication value of your booth, add these figures together to arrive at the total value of your appearance at the show.
Use the formula below:

Total Estimated Value

$ ________________  Estimated Revenue
+
$ ________________  Total Cost Savings
+
$ ________________  Total Promotional Value
=
$ ________________  Total Estimated Value Derived from the Event

Once this step is completed, divide the total estimated value of the show by your total budget for the show to arrive at the payback ratio for the event. You can express this value like this: $10/1. Keep in mind that the payback ratio is not the same as ROI because it shows more than just revenue and represents a more holistic view of your program’s value.

Payback Ratio

$ ______________  Total Estimated Value
÷
$ ______________  Total Event Costs
=

$00/0   __________Payback Ratio

Working with these formulas, you should be able to calculate the value of each show you participate in compared to other shows – and other marketing venues. Having these facts and figures gives you a more solid basis for making informed decisions about which shows to participate in, how much of your budget should be allocated to a show and how it should be used. Perhaps you’ll decide to put more money towards a newer show that gives you a higher return for less investment than a more established show. Or opt to increase the size of your booth and the staff to man it. Whatever your final decision, you’ll have a measurement tool that will serve you well with the decision makers of your company. Even more, it will give you greater control over your resources and help you achieve more satisfying results for your efforts.

Hope you found this helpful.

Thanks for reading!