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.
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.
An association organizer was concerned that her staff was stretched to the breaking point trying to manage two annual events and was contemplated merging the two into one. She was interested in understanding the process for managing this change. Obviously, with so many factors at play, not to mention the potential for unintended consequences, I suggested that a better starting point should be to focus on the “why” rather than the “how.”
We counsel our clients to start by defining the specific goals and objectives that motivate them to consider a change. Freeing up staffing resources to focus on other important initiatives, which was this person’s primary motivation, may well have been reason enough. However, I cautioned the importance of fully understanding the potential financial implications. If the merger of events resulted in an overall reduction in revenue, would that be an acceptable price to pay for what you consider a “greater good?”
All too often we make decisions based on what we think (or worse yet, hope) will be the result. What it really comes down to is working through a series of “what if” scenarios, weighing the pros and cons of each and, ultimately, making informed decisions. In other words, limiting the potential for any “surprises.” This is definitely not a time for trial and error!
An association meeting planner who’s contract with a third-party exhibit management company was coming up for renewal asked me recently for advice on negotiating the new contract. The question prompted an interesting discussion.
How you approach any negotiation of this kind should really be driven by your goals and objectives, and how you measure “success.” If the management company is responsible for sales and not just logistics management, and assuming non-dues revenue is as critically important to your organization as it is to most others, a key measure of success would be you’re bottom-line revenue (i.e., how much you have left after deducting all the fees paid to this company).
When negotiating contracts, there’s a natural tendency to focus on fees. When it comes to sales, adding (or increasing) incentives might actually be more effective than negotiating a lower fee.
Of course, there’s no blanket approach to contract negotiations since each situation is unique. However, I think it is safe to say that you will want to place an emphasis on performance. Any company you contract with should serve as a true partner, focused first and foremost on achieving your goals and objectives, understanding that their “rewards” come as a result of succeeding on your behalf.
Anytime you can speak to customers, whether individually or as a group, you want to take advantage of it. With the (increasingly rare) exception of companies exhibiting at and/or sponsoring your events solely for the purpose of “supporting” your association, the decision to do business with you is just that – a business decision. The number of opportunities a given company is presented with each year is, typically, greater than their finite marketing budget can accommodate. So, tough decisions must be made as to where to invest those precious dollars. You are in a competition, and your success hinges on your ability to show why exhibiting at and/or becoming a sponsor of your event is an essential part of their overall marketing strategy.
You want to walk away from this focus group meeting with an understanding of the marketplace from your exhibitors’ and sponsors’ perspective. What are their goals and objectives? What challenges are they facing? Who do they need to reach with their marketing? How well does your attendance match up with their target audience? What role does your event currently play in achieving their goals and/or overcoming those challenges? And here’s the key one. . . what changes could you (reasonably) implement that would make your event essential to their marketing strategy? (The responses you get to this question should also give you insights into what you could do to drive even more of their marketing budget to your event.)
Finally, I would urge you to broaden the participation in your focus group. Current exhibitors and sponsors will give you great feedback. But you won’t get the full picture unless you also include past and prospective exhibitors/sponsors. When a company tells you why they don’t participate, they’re simultaneously telling you what it would take to make them a customer. (If you’re concerned that current exhibitors/sponsors might be adversely affected by the comments made by past/prospective companies, it’s fine to hold two separate focus groups.)
If you are currently outsourcing ad sales, the idea of bringing the function inhouse has probably crossed your mind. We’re often asked our advice on the subject. Assuming you are interested in maximizing the amount of revenue you realize from your ad sales program, determining which approach is likely to net you more – continuing to outsource vs. bringing the function in-house – is going to be a key factor in your decision.
All else being equal, I tend to lean toward bringing the operation in-house. But all things are rarely equal. Your current provider’s compensation (your “cost of sales”) is most likely performance-based: the more they sell, the more they earn. In this scenario, you have limited fixed costs (and possibly none). However, once you make the decision to bring sales in-house, you will be assuming considerable fixed costs. Even if you find some person(s) willing to work on a commission-only basis (and even if you do, you’ll probably have to provide a guaranteed minimum or at least a monthly draw – likely non-recoverable until they hit their stride), you need to factor in the cost of benefits.
A few other things to consider. . .
How many people does your current provider have working your account? If you bring sales in-house, how many people will it take for you to match your current provider’s performance?
If your in-house sales team were to merely match the gross sales achieved by your current provider, would you net more or less after factoring in all your costs?
How much experience does your current provider have selling advertising into your market? Can you find people with equal or greater experience? (Chances are the contract with your current provider prohibits you from hiring any of their employees. The people you are able to hire, regardless of their experience, will take time to develop the relationships that your current provider’s people already have – not a minor consideration, by the way.)
Do you have someone on staff now who is capable of managing an in-house ad sales team? If not, you may need to factor that additional cost into your budget.
Whether or not to bring ad sales inhouse is a decision only you can make. But how you answer these questions will likely be revealing.