Are You Tripping Over Dollars to Pick Up Pennies?

Are You Tripping Over Dollars to Pick Up Pennies?
By Rick Dobson, EAG Partner

Recently a meeting planner was struggling with what she perceived to be a serious problem.  The issue was that speakers who chose the special no-cost speaker registration option (which does not include any meal functions) were attending meal functions anyway.  Her inclination going forward was to reinforce the rule in writing to speakers, as well as policing the meal functions more carefully.  She was reaching out to her fellow planners for their advice.  Here’s how I responded. . .

You are not the first person to struggle with this.  But I don’t think it’s a problem that is particularly difficult to solve – it really comes down to a simple financial analysis.

Your conference registration includes three luncheons and two receptions, all of which are available for sponsorship and, therefore, are subsidized in whole or in part.  So, your effective per-person cost is relatively low.  Your registration fees, on the other hand, are significant: As much as $1,825 for non-members.

So ask yourself these questions. . .

How important is the quality of your program in terms of driving attendance?  

How much difficulty would you have attracting the very best speakers (i.e., the kinds of speakers whose inclusion in the program might actually compel someone to register who otherwise would not) if you fully enforced the rule that non-paying speakers can’t attend any meal functions? 

Now I’m sure your answer to the first question is “Very Important,” right?  And you’ve already indicated that many of your speakers balk at having to pay, so that suggests enforcement of the “no-pay, no-eat” rule could affect decisions some speakers make to accept an invitation to speak at your conference.  

The expression “Tripping over dollars to pick up pennies” I believe is applicable here.  As (another poster) suggested (and I think she’s absolutely right), many if not most of your speakers are unlikely to attend the entire event anyway. Between that and the subsidization of your meal functions through sponsorships, the savings you’ll realize through enforcement of that rule can’t be justified given the potential loss of registration revenue.

My opinion (and it is just that, my opinion) is to waive registration fees for speakers and not worry about the few meals they may consume.  The goodwill alone might be reason enough anyway.

Who decides when your show is a success?

A question was posted recently on a trade show forum asking readers if there is a ratio of attendees to booths that can be used to measure an event’s success.  I felt compelled to respond although I knew my answer to this person’s question was probably not what they had hoped for or expected.  Here then was my response. . .

In my opinion, there is no ratio of attendees to exhibitors that would be meaningful in any way, let alone determine your event’s “success.”  OK, perhaps you could devise a formula (or adopt someone else’s rule-of-thumb) for determining success, but it would only be your (i.e., the show organizer’s) definition of success.  But I don’t believe that’s particularly relevant or useful.  The only measurement of success that matters (again, in my opinion) is your exhibitor retention rate.  Exhibitors (at least the ones that actually care about investing their marketing dollars wisely, which these days is most of them) decide whether or not a particular show is “successful” based on how they performed against their own goals and objectives.  

Most exhibitors are looking to connect with a specific subset of attendees.  If the folks they want to meet are there, you have done your job (and by “you” I mean you and your exhibitors because it is – or at least should be – a joint effort after all).  Most exhibitors would probably be delighted if attendance was limited only to those individuals who meet that company’s own, specific qualifications.  Aisles crowded with tire-kickers and others who are not (and will not be) interested in a given exhibitor’s products or services just serve to make the “haystack” larger and the “needles” harder to find.

The Problem with Traffic Building “Games”

We, as show organizers, are the kind of people who are natural problem-solvers.  It’s in our DNA.  So, when we sense that our attendees are not spending as much time on the show floor as we feel they should (or, more likely, when exhibitors come to us to complain that traffic is light), we feel compelled to address the problem – as we should.  But before implementing a “solution,” it’s essential to first determine what exactly is happening, why it’s happening, and what behavioral changes are desired.

When we are inclined to explore traffic building options, it’s usually because we’ve concluded that our exhibitors are not getting the ROI they need to remain loyal to our event and/or we instinctively understand the importance of continually striving to add value.  The operative words here are “ROI” and “value!”  Unfortunately, many traffic building efforts only serve to exacerbate the problem they were intended to solve.

If a show organizer has provided ample time (and by that I mean a reasonable amount of exhibit hours unopposed by other programming) but attendees are still not engaging with exhibitors to the degree that they (the exhibitors) feel is adequate, no traffic building “game” is likely to improve that situation.  I’m not suggesting that it won’t drive traffic to the show floor, because it most certainly will.  It just won’t improve the “quality” of the traffic.

If someone not otherwise inclined to visit the show floor is teased to do so by the prospect of winning some sort of prize, the result will be an endless stream of folks with no interest in the exhibitors’ products or services.  Unfortunately, there’s no way to determine on sight that an individual is not a true prospect but, rather, just interested in getting a sticker.  That wouldn’t be so bad if not for the fact that so many people pretend to be interested in exhibitors’ products or services even though they are not.  I know this from personal experience, both as a show organizer and as an exhibitor. 

Our exhibitors are business people who invest in our events with the expectation of achieving certain goals and objectives.  They have finite budgets and will quickly shift funds from events that don’t deliver to those that do.  Before I would ever implement a traffic builder of any kind, I would want to fully understand what my exhibitors’ goals and objectives were for my event and then determine (with the advice and counsel of my exhibit advisory committee) what strategies can best help them be achieved.

Advice on the Challenges with Collecting Registration Fees

An event planner sought help recently regarding challenges with collecting registration fees.  They allow persons to register and pay by check, but many such payments were still outstanding even by the start of the event.  This left them chasing payment onsite.  Making matters worse was the fact that many of these unpaid registrants became no-shows.  Here’s the advice I offered…

When someone registers for your event, they are effectively entering into a contract with you.  In exchange for the fee paid, you provide them with a “service” of some sort (e.g., educational content, access to the exhibit floor, meals, shuttle bus transportation, discounted hotels, etc. – whatever the case may be).  But there’s a big difference between this transaction and, say, a retail purchase.  If you were selling TVs, for example, and you agree to accept payment when the buyer comes to pick up the TV, it’s not a big deal if the buyer “no-shows” because you still have the TV and can sell it to someone else.  It’s not the same if someone who has registered but not paid no-shows.

Think about the guarantees you have to make that affect your costs.  For example, are any meals included in the registration fee?  (I doubt the hotel or convention center is going to waive charges for uneaten meals.)  When you start to itemize all the things you pay for on a per-person basis, the financial impact of no-shows can really add up.

In a perfect world, you want all persons to pay in full at the time the registration.  But, at a minimum, you want all accounts settled in advance of the first date at which you must make a guarantee or place a binding order for anything that is based on actual registration numbers.  Of course, it’s unlikely that you’d want to cut off registration that soon, which is fine.  But it’s critical that registrations made after a certain date be paid in full at the time of registration.  If you offer on-line registration, you should make sure your system can provide real-time credit card processing.  You mentioned that you allow payment by check.  Since that’s also an option for online payment, there’s no reason (I was going to say “excuse”) for any unpaid no-shows.  The only financial transactions you should be dealing with at your event are onsite registrants.

If you want to save yourself a lot of headaches and limit your financial exposure, a policy of not accepting registrations (or at least not counting them as “real”) without payment is your best bet. 

How High is “Up?”

A question was raised recently regarding the percentage of one’s members that should be attending an association’s annual conference.  The question was submitted by a meeting planner whose event attracted less than 15% of his members, and he wanted to know how his experience compared to others.  Here’s how I responded. . .

The percentages vary so dramatically from association to association that it’s impossible to establish any benchmarks.  There are simply too many factors at play.  So, unless you’re comparing your event to one that is very similar in focus and content, there’s little insight to be gained.  

Just the fact that you’re going through this exercise is great.  Everyone in your position should be asking if their event is living up to its potential.  And that is the operative word, “potential.”  The challenge is in determining what is possible.  You mentioned that about 14% of your members currently attend your event.  If the potential (i.e., the most you’ll likely ever get no matter what you do) is 20%, you’d have to conclude that you’re doing quite well.  In this scenario, attempting to grow by one percentage point over each of the next five years would be a challenging yet reasonable goal. However, if it were determined that the true potential for your event was, say, 50% member attendance, that’s an entirely different matter.

Chances are the potential for your event falls somewhere between those two extremes. But the strategies for realizing that potential will vary dramatically depending on the size of the gap that needs to be filled.  Without a deeper understanding of your event and your membership, I’m afraid I can’t offer specific advice.  But I hope what I have provided will at least give you a place to start.

Do you know the true cost of serving your members?

An association CEO mentioned recently that his Board had asked him what they were paying on a per-member basis to deliver services to their membership.  He told them he’d get back to them with the answer.  In the meantime, having never done such an analysis before, he reached out for advice.  It got me thinking. . . he is probably among the majority when it comes to not knowing precisely the true cost of delivering services to one’s members.  

Although my years on staff at a number of associations never included C-level responsibilities, I do have considerable experience as a small business owner.  And what I consider a universal truth is this: it is not possible to effectively run any business (including an association) without knowing the numbers inside-out.

Now, what you do with that information is another matter altogether.  In a traditional for-profit business, the price of goods or services you provide to your customers is based on some form of “cost plus” formula that ensures a reasonable profit margin. In the case of associations, it is very common (more likely the norm) for the total cost of the services delivered to one’s members to exceed the dues charged.  This is why non-dues revenue is so critical.

Frankly, the amount of deficit (i.e., the cost to serve a member vs. the dues paid) an organization is willing to accept is one only they can determine.  But it all starts with knowing the numbers (and as you go through the process of calculating your costs, in addition to all the obvious, quantifiable benefits you deliver to your members, be sure to look for all the less obvious things like the cost of acquiring and retaining members – things that are often overlooked).