How to Measure an Event’s Actual ROI
Running a live event is one of the most effective ways to engage and connect with consumers.
Now, is that statement true or false? It’s true, but without data to back it up, it’s really just empty words. Try this:
Running a live event is one of the most effective ways to engage and connect with consumers. In fact, according to a Bizzabo survey, 84 percent of leadership (vice president and C-suite) “believe in-person events are a critical component of their company’s success,” and that 95 percent of them feel that “live events provide attendees with a valuable opportunity to form in-person connections in an increasingly digital world.”
That carries a little more weight, doesn’t it?
The same is true for your specific live events. When it comes time to prove their value, it’s not enough to just shrug and say, “Yeah, went well.” You will need some concrete proof that shows the return on investment (ROI) for your event. However, sometimes that can get a little tricky.
It starts with defining what exactly you are supposed to be measuring.
There is a pretty straightforward formula that can determine an ROI for a live event. It goes like this:
You start by adding up your total expenses, including exhibit/event structure, travel, food, hotels, entertainment, marketing, etc. The next step is to calculate the gross profits earned from the leads generated at the show (determining this number will take some time and depends entirely on your industry’s sales cycle). Then, to determine the overall percentage of your ROI, subtract gross profits from your total costs, and divide that number by the total costs.
For example, you spent $100,000 on a trade show. Sales from that show generated $150,000.
150,000 – 100,000 = 50,000
50,000 ÷ 100,000 = .5
Meaning you had a 50 percent ROI from this trade show.
This formula is handy for determining a concrete, black-and-white ROI for an event, which is very useful for some occasions (certain trade shows, for example, can be measured in this fashion). However, there are live events, such as experiential activations, that require a much more nuanced evaluation.
The problem with this formula is that it only takes into account the direct costs and revenue, which doesn’t always tell the whole story. In fact, there are several …
Other Factors that Can Impact the ROI of a Live Event
Most event planners are familiar with the direct costs that impact their event: travel, venue, lodging, entertainment, food and beverage, etc. However, many indirect costs also affect your budget and, therefore, your ROI. These are costs like you and your employees’ salaries, any professional services you’ve utilized, and other resources.
Indirect costs are best measured using a technique known as activity-based costing. Initially utilized by the manufacturing industry, activity-based costing is an accounting method that properly proportions indirect costs based on the specific amount of time these resources put toward an activity.
Utilizing activity-based costing can help you get a better understanding of the impact that indirect costs have on your ROI. This technique used to be fairly labor intensive and hard on an accounting department but tracking software has made it much easier to implement activity-based costing.
If you want to really drill deep, you can also measure your opportunity costs. This concept is all about your limited resources, how you choose to allocate them, and how those decisions impact your marketing, overall budget, and profit potential. For example, let’s say this year you decide to earmark budget toward an experiential brand activation that in past years was spent on advertisements in trade magazines.
To comprehend the impact of opportunity costs, you need to know the value of the omitted activities. In this case, since you advertised in trade magazines for several years, you understand how much it cost and the amount it returned. Now, once you calculate the ROI of the experiential brand activation, you can compare one against the other and determine the opportunity cost.
This is all of the sales and profits generated by a live event. However, as previously mentioned, getting an accurate count of this revenue can take some time. The length of your industry’s sales cycle, your company’s specific marketing attribution model, and more will all impact how much money hits your event’s ledgers and when. As a result, the amount of revenue attributed to your event will continue to change over time.
This can be a hard concept to measure, but not impossible. It is all about selecting the right goals that align with the idea. Brand awareness is valuable because the more that consumers know about your brand, the more likely they are to trust you. Over time, that trust turns to loyalty, and soon, you will have converted consumers into brand advocates.
Since success for live events is not exclusively determined by money in versus money out, the evaluation process should be much more nuanced (and long-term) than the formula mentioned above.
The main issue when trying to measure the ROI of a live event is determining what exactly you intend to measure. A live event is fluid, you could almost think of it as a living entity that grows and evolves over time. As your event changes, your goals for the event may, and probably will, evolve, as well.
By going into your event knowing your goals, you can ask the right questions that will allow you to evaluate your live event’s ROI.
Building Brand Awareness
· Did you receive media coverage during the live event? How did it compare to a competitor’s media coverage or coverage you received at a past event?
· Did you create a dedicated landing page for the event? Did your web traffic improve? How much of that came from the dedicated landing page? Where did the remaining traffic originate?
· Did your social media mentions increase? Are you able to attribute the increase (or a portion of it) to the live event?
Improving Customer Engagement
· Did the active users for your product or service increase?
· How engaged was the audience at the live event? Did they ask questions? Did you receive many responses to your surveys (the number of responses can be just as telling as the answers themselves)? What did they say?
· Did your live event include product or service demonstrations? If so, how many were performed? What was the immediate feedback? Has that feedback changed as salespeople follow-up with calls and emails, and how?
· Did you ask people to register or sell tickets to the event? If so, how many people showed up compared to the number of people who enrolled or tickets sold?
· How many attendees had been to one of your brand events before?
· How many leads were generated by the event compared to the number of prospects?
· How many sales were closed in the sales cycle (or cycles) following the event?
By asking questions and delving into some of the more nuanced aspects of a live event, you will reveal a much more detailed and accurate picture of your ROI.