ROI on the Rise
It’s in hot demand by those writing the checks. And now there’s ample data and research available to help prove the value of your events.
By Dalia Fahmy
The recession is gliding by Eric Rozenberg, CMM, CMP, president of Swantegy. He specializes in helping clients measure ROI. A few years ago, when he approached companies across Europe and offered to measure the value of meetings in euros and cents, many brushed him off. Now, they’re lining up for his services.
“When I used to tell people about what we were doing, they said, ‘That’s very nice, but we don’t have the budget or time for it,’” said Rozenberg, who has been helping European customers organize events for 13 years. “Now, with the economic situation, people are coming back and saying, ‘Remember that thing you mentioned, can you tell us more about it?’”
Measuring the value of events is a hot topic these days—research proves ROI is increasingly demanded by those who spend money on meetings, from Fortune 500 CEOs to delegates who register for US$49 a day.
But rarely is the right data available at the right time, and many meeting professionals end up fudging their ways through ROI discussions. If you haven’t collected years’ worth of data already, you probably don’t have the numbers to make your case now. And planners face many different situations in which they have to prove the value of meetings—and each situation calls for a different set of data.
Don’t be discouraged. There is a growing set of data you can rely on, from scientific studies published by universities to informal surveys conducted by professional associations.
Outside Research
If you lack the time or know-how to conduct your own research, scientific studies conducted by academic researchers offer a deep and authoritative well of data. In the past couple of years, a variety of groups have published studies on meetings and events, some directly (by measuring the impact of face-to-face meetings) and others indirectly (by, say, focusing on the ROI of business travel).
An authoritative 2009 study by Oxford Economics used a mix of hard data and opinions from 300 senior executives at U.S. companies to show that every dollar invested in business travel earned companies $12.50 in revenue. Face-to-face meetings allow companies to convert 40 percent of prospective customers, as opposed to just 16 percent without such a meeting.
Mary Boone, a communications expert and founder of Boone Associates, says the data back up a variety of arguments, but planners should use it selectively.
“This is a study I would use if you’re addressing suppliers who exhibit at your show,” Boone said. “It shows that people really prefer to do business in a face-to-face environment, and that face-to-face provides an opportunity to convert customers.”
The study is particularly strong because it didn’t just collect opinions, but also ran a statistical analysis of data across the economic spectrum provided by governmental agencies to quantify what kind of an impact business travel has on economic productivity.
Another convincing survey published by the Harvard Business Review and sponsored by British Airways, Managing Across Distance In Today’s Economic Climate: The Value of Face-to-Face Communication, asked 2,300 HBR subscribers around the world to assess the value of face-to-face communication during the economic downturn. The results were powerful: 79 percent said that face-to-face meetings are the “most effective way to meet new clients to sell business” and another 89 percent agreed that in-person meetings “are essential for sealing the deal.” Perhaps not surprisingly, 93 percent said such meetings are particularly helpful when negotiating with “people from a different language and cultural background.”
Another weighty study that measured the impact of face-to-face meetings came from Forbes Insights, a division of the Forbes publishing group, which surveyed 760 business executives. The Case for Face-to-Face found that the majority of respondents (84 percent) prefer personal meetings to “build stronger, more meaningful business relationships” and “lead to higher quality decision-making.”
Unlike other studies of this kind, the Forbes paper also elicited answers about the drawbacks of virtual meetings. Among others, 38 percent said that “technology-enabled meetings often result in disruption and delays,” and 49 percent of respondents said face-to-face meetings offer less opportunity for unnecessary distraction.
And then there’s Why Face-to-Face Business Meetings Matter, largely an academic review of existing literature on small group and organizational behavior research, published by Dr. Richard Arvey at the University of Singapore. Instead of simply examining one group of respondents, the study combed through years of existing psychological research. He found, among other things, that studies show “media rich channels” of communication, such as face-to-face meetings, are more effective when participants express feelings, when tasks must be coordinated or when one is trying to persuade others. He says studies also show that personal meetings let participants develop transparency and trust, and help them pick up nuances of organizational culture more easily. The caveat: This study focused on meetings of small groups, and the findings might not apply in the same way to larger gatherings.
Industry Numbers
Industry associations have studies of their own. One of the biggest such efforts, the annual EventView survey published by the MPI Foundation, the Event Marketing Institute and marketing firm George P. Johnson, is considered authoritative because its respondents consist mainly of top-ranking marketing executives at companies with $250 million to $5 billion in revenue. Late last year, respondents were asked to assess, among other things, the ROI they derived from event-based marketing.
The bottom-line result: A growing number of top-level executives at America’s largest companies believe that using events to market their products is one of the most effective forms of marketing out there.
In fact, 26 percent of executives say event marketing provides the highest ROI—up from 22 percent in 2007.
Executives say event marketing is so effective because it brings customers and companies face-to-face. And that, in turn, fosters relationships more effectively than other forms of interaction.
“When you are making a personal decision that involves a personal expense, or a professional one that puts your career or your reputation on the line, you want the ability to closely judge the brand’s integrity,” said David Rich, senior vice president of worldwide strategic marketing at George P. Johnson.
The numbers concur: 53 percent of those surveyed say event marketing is the marketing discipline that best accelerates and deepens relationships, trailed by a wide margin by public relations, at 19 percent.
While these results consist mainly of opinions—which may or may not convince your boss or clients to give you a bigger event budget—they do offer a valuable glimpse at what the competition thinks about events.
“Surveys like EventView are extremely useful with our clients in Europe, because they’re not as aware of the strategic value of meetings in North America,” Swantegy’s Rozenberg said.
In addition to the annual EventView survey, MPI also publishes a bi-monthly Business Barometer. Meant to gauge business conditions in the event industry, the Barometer’s main utility is in helping show how planners are deploying their resources and how they view the future.
In October, for example, the Barometer showed that only 42 percent of meeting professionals had a positive industry outlook, compared to 65 percent six months ago. However, it also showed a brighter assessment of current business conditions: 19 percent had a positive view on current conditions, up from 15 percent in August and just 6 percent in February.
Perhaps more importantly, the Barometer shows which business segments are paying off for meeting professionals and which are seeing the biggest losses. In October, 57 percent of respondents said they had seen the biggest decrease of activities in the domestic corporate market, as opposed to say, domestic associations or international corporations. Deployed strategically, meeting planners can use these figures to make a case for investing more money in one type of event than another, or for revamping meeting strategy altogether to compete better in a changed landscape.
Remembering ROI
While industry research and scientific studies doubtless give meeting professionals a significant advantage in proving the value of meetings, they can never replace the real thing: conducting your own studies.
Measuring the impact of the meetings you have organized in the past will not only give you data to present when you’re making your case for a bigger budget or for a more innovative design, it will also help you better analyze your own work so you can continue to grow and deliver consistently higher returns.
If you do decide to measure ROI internally—and you should, because that’s where your competitors are headed—it’s good to get some myths out of the way.
First, conducting your own studies is not as expensive or time-consuming as it sounds. Jack Phillips, inventor of the Phillips ROI Methodology (which helps companies across industries measure ROI), points out that once the measurement process becomes integrated in the event planning strategy, it’s almost second nature.
He points to the example of a planner at a medium-sized company who decided to measure ROI for the first time while planning a $1.4 million conference for insurance agents. The planner started by setting concrete objectives with help from executives, and then used those to create a questionnaire to measure whether objectives were met.
The total cost of setting the objectives, collecting and analyzing the data and briefing management was less than $5,000, Phillips estimates, measured largely in the cost of additional hours worked. In most cases, measuring ROI for events takes one to three weeks.
Hiring an outside company to measure ROI can be considerably more expensive, although Phillips says the costs pale in comparison to other expenses. He points to a conference call he once had with a maker of mobile devices, which was planning a $16 million consumer conference. When he pegged his estimate for measuring ROI at $45,000, executives balked. But then they realized that $45,000 comes out to less than 0.25 percent of the total bill.
“One guy spoke up and said ‘we’re going to spend that much on olives,’” Phillips recalled.
Another myth is that you must measure ROI for every event in order to have enough data to make your case. Phillips argues that’s simply not true. Although he recommends measuring participant reactions at all events and participant learning impact at 80 percent of events, he suggests measuring business impact 10 percent of the time and ROI 5 percent of the time. These samples of data are more than enough to give event owners a good gauge of effectiveness.
Finally, says Phillips, planners should stop fearing the process itself. It’s not mathematically complicated, doesn’t require a lot of tech savvy and inevitably carries more benefit than costs.
“Planners are always so busy and stressed and they see this as extra work during good times,” he said. “Now they see that measuring results is a good way to keep their jobs.” One+
DALIA FAHMY is an international business journalist.
Make Your Case
Even the best research into the value of meetings and events won’t help unless you know how to use it. In fact, simply citing data without first determining its relevance can hurt your cause.
“If you’re trying to make a persuasive case with research, you have to understand some basic things first,” said Mary Boone, a communications expert and founder of Boone Associates. Professionals should answer a series of questions before pulling out their data arsenals.
Who are the stakeholders you’re trying to reach—or put simply, whom are you trying to influence? It’s not just a matter of differentiating between internal and external audiences. You must also understand the perspective and priorities of the person you’re addressing. A CFO who has been instructed to cut costs, for example, has very different needs from a radiologist who is deciding whether to attend an annual conference.
What is your message? The same set of data won’t prove every case you’re trying to make, so depending on whether you’re trying to justify your position as an in-house corporate planner, or you’re an independent planner trying to convince a client to hold a face-to-face meeting, you should tailor the data you pluck from studies.
How reliable is the data? You should not only understand data points thoroughly, but also be prepared to answer detailed questions about how they were gathered.
Just because scientific research can help bolster your case, doesn’t mean you’re lost without it. Especially if you’re an internal planner who is trying to sway a corporate decision maker, you might have better luck relying on respected executives within your company.
“Internal opinion leaders can be very helpful in providing insights that validate what you’re saying,” Boone said. “The opinion of a person who is in a very good position to know and who is influential is in many cases worth more than a lot of statistics.”