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1 1 of 12 3/27/2008 3:25 PM EXHIBITOR magazine March 2005 MEASUREMENT efore 2003, The Coca-Cola Co. gauged its trade show success on opinions, rather than hard facts. The only measure we had was qualitative feedback from senior executives, says Rod Tabert, corporate director of marketing communications. Either they thought it was a great show or they didn t. That all changed in 2003, when the Atlanta-based beverage manufacturer implemented a four-part measurement strategy, based on 1) revenue generated, 2) cost savings, 3) customer-relationship management, and 4) promotion impact at the show. To make the measurement relevant to the rest of the company, Tabert and his event team now base measurement on generally accepted metrics already used by different departments at Coca-Cola. You have to be able to identify and then quantify trade show results in a way that either marketing or sales is looking for, Tabert says. I often tell people I m multilingual. I speak sales, I speak marketing, I speak ops. As a result, Tabert has been able to evaluate Coca-Cola s improvement from one show to the next, refine its strategy at each show, and better justify its program to management. Here is a simple guide to the measurement strategy that Coca-Cola, Austin, TX,-based 3M Telecommunications Division, and even small

2 2 of 12 3/27/2008 3:25 PM companies like Tura, an eyewear distributor based in Great Neck, NY, use to measure the value of a trade show. Part 1: Revenue Generated Revenue can be the most difficult measurement to track at a trade show, because you don t usually close a deal on the show floor. The lead is typically routed to the sales department and, depending on the length of the sales cycle, it may take months or even years to turn into an actual sale. By then, there may be no way to track it back to the original trade show lead. But you don t have to wait to measure the revenue you generated from a show. You can make a reasonably accurate estimate using commonly accepted, internal assumptions based on the experience of your sales department. First, gather the following information: Number of hot leads. Identify the number of visitors who commit to a sales contact or other specific sales-related step after the show. Close rate. Ask a sales manager to provide your company s average percentage of closed sales per hundred sales calls. Average value of sale or contract. Again, a sales manager should be able to provide this data. If you ll be promoting multiple product lines at the show, develop a weighted average based on the level of interest for each product at the show and its price. Then, use the following equation to calculate estimated revenue: Since the formula is based on real statistics or assumptions provided by the sales department, sales managers will be more likely to accept the estimate as a true measure of potential revenue impact. Then it s the sales department s responsibility to close the sales. Part 2: Cost Savings

3 3 of 12 3/27/2008 3:25 PM Trade show participation can also save the company money. For example, Coca-Cola held 50 meetings with high-level customers in its booth at the 2004 Food Marketing Institute Show. If held independently, each meeting would have cost the company an average of $1,500 per meeting in travel and other expenses if it would have held them independently a total of $75,000 in savings. To calculate the savings of your trade show participation, gather the following information from the appropriate managers or the accounting department: Cost of meetings between executives, sales, channel partners, strategic alliances, technical experts, standards-body members, investors, and industry analysts. Consider facilities as well as time and travel. Field-sales costs. A well-executed program may eliminate up to two or more sales calls in the field. Typically, these calls cost a company approximately $100 each to more than $3,000 for a full-scale pitch. Your financial department or sales department should be able to estimate this cost. Value of getting to market more quickly, ahead of the competitors. Cost of acquiring names for the sales and marketing databases. Trade shows provide hundreds of newly qualified contacts. Value of any other cost-saving activities at the trade show such as reuse of creative development and materials for sales activity and future events. Then plug the numbers, as applicable, into the following formula: Remember, the total cost-savings number is not a calculation on how well you saved money in your trade show budget it s a report of the total savings to the company of sales, marketing, press, and PR activities that would usually take place outside of trade shows.

4 4 of 12 3/27/2008 3:25 PM Part 3: Customer-Relationship Management One of the most common objectives for trade shows is to strengthen relationships with current customers. However, few companies specifically measure the value of customer-relationship management at trade shows. Coca-Cola bases its CRM calculation on the revenue generated by the specific market represented at the show and the percentage of that market that will attend the show. It then makes conservative assumptions as to the effect the show will have in strengthening relationships with those customers, as a percentage of the revenue potential. If your company has a structured CRM strategy, find out how it calculates the costs and value of CRM. Consult with managers in charge of the strategy to help you set CRM objectives for the show, or do some background research to estimate the cost and impact of CRM. To measure the value of CRM at a trade show, use the following formula:

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6 6 of 12 3/27/2008 3:25 PM Part 4: Promotion Value Dennis Mick, marketing-communications manager for the telecommunications division of 3M, introduced a new fire-optic cabling system for local-area networks at Comnet in Washington, DC. His main objective was to create product awareness with targeted attendees. After the product launch, 3M surveys showed that 52 percent of its target customers were aware of the new product by the end of the show, as compared to 0 percent before the launch. However, a number of marketing campaigns contributed to that increase in awareness. To isolate the contribution of the trade show to the product awareness, Mick measured impressions at the show the typical metric public-relations and advertising departments use to determine the influence of a campaign. Impressions are a measure of the number of people who see or hear images and messages about your company (gross impressions) and the number of targeted, qualified individuals who see or hear your messages (targeted impressions). After adding impressions from each of the show promotions, including the exhibit, Mick calculated that the trade show generated the same number of targeted impressions as advertising for a year in four monthly business magazines at $15,000 per month a total of $720,000. He also calculated that the equivalent magazine advertising would have cost $200,000 in creative-development costs, for a total of $920,000. The show budget was only $450,000. To calculate the number of impressions you make, list the activities in which you will engage that are seen or heard by an audience. Generally, you can divide these activities into four categories: 1) direct marketing, 2) media coverage, 3) on-site promotion, and 4) the exhibit. Remember, both exhibit visitors and people who see your exhibit from the aisle but do not step inside receive impressions. Then figure out the total number of people each activity will reach and what percentage of those people fit your target profile. Find out how your PR and advertising departments measure the dollar value of each impression, and apply their system to your calculations. If the information is not available, consider the cost of a full-page ad in a relevant periodical, plus all creation costs, divided by the circulation number. That will give you a basic cost-per-gross Coca-Cola measures the revenue impact, cost savings, promotion value, and CRM value of each major show it attends.

7 7 of 12 3/27/2008 3:25 PM impression. Use the following formulas to calculate the value of gross impressions (GIs) and targeted impressions (TIs) accomplished at your show.

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11 11 of 12 3/27/2008 3:25 PM Payback Ratio Once you ve calculated the revenue, cost savings, CRM, and promotion value from the trade show, add them together to figure out the total value of the show (see formula to right). Then divide the total-value number by the total-show budget to determine your payback ratio. To estimate ROI, substitute the profit margin on expected sales for the gross-revenue number. The payback ratio will help you evaluate the trade show as an opportunity for your company. Does the show bring enough value to your company to justify attendance? Could you change a factor, such as decreasing the size of your exhibit space, bringing a smaller staff to the show, or taking advantage of more promotional opportunities? You can also use the payback ratios from several shows to evaluate current shows and decide how much to spend and which shows to fund the following year. First, calculate the average payback ratio from all trade shows on your schedule. Examine each trade show that falls below the average, and determine if it is worth attending. After evaluating the payback ratio for its trade shows, Tura realized it was spending too much money for too little customer interaction. The eyewear manufacturer decreased its investment, and changed its staffing strategy, improved traffic flow, and increased the overall efficiency of its exhibit program. Because of the improvements, we re able to handle a much greater volume and quality of buyers, says Keith Kamalich, eastern national sales manager at Tura. It s created a structure that allows everyone to do the spectacular to add sizzle as opposed to just trying to manage the logistics of the show. Using this measurement strategy will give you metrics each department in your company will understand, because they helped to create them. The results will help you justify and improve your program, and they ll give others a new appreciation for what you are contributing to the bottom line. NOTE: Based on the EXHIBITOR SHOW 2005 seminar: How to Measure the Value of Trade Show Participation.

12 12 of 12 3/27/2008 3:25 PM Ed Jones is president of Constellation Communication Corp., an Atlanta trade show- and event-consulting and research firm that specializes in event ROI. Copyright EXHIBITOR magazine, 206 South Broadway, Suite 745, Rochester, MN 55904, ,