By Jack J. Phillips, PHD
The starting point to evaluate exhibiting is to understand the size and value of a potential audience for a planned exhibit. These two measures relate to the reason for exhibiting, which is ensuring that the right audience is there and that it's worth it. With so many possibilities to exhibit, this becomes an important issue. Many exhibitors represent small to medium organizations with modest marketing budgets. An exhibit can be expensive and must deliver an appropriate return on the investment.
The process begins with an analysis of the conference, sponsors, and participants, organized by job title and market potential. This assessment is not difficult, as the following example shows. Rounded numbers are used to keep it simple.
The American Dental Association (ADA) is having its annual conference and exhibition with an estimated 20,000 participants attending. Let's say your company provides software for managing a dental practice. Your goal is to determine the size and value of the potential audience. ADA estimates that 30 percent of participants are classified as decision makers when it comes to purchasing items such as software. The value of a particular visitor is usually judged by the position, job title, or role in their organization, although this can be misleading. Usually those individuals with the dentist, dental practice leader, or practice manager have some purchasing authority for software. With 20,000 participants expected, there are 6,000 potential decision makers (20,000 x 30%). Your market research suggests that roughly 25 percent of dental practices either do not have software, need an upgrade if they do have software, or would be interested in new, more efficient software. Given this information, roughly 1,500 participants (6,000 x 25%) could be interested in a purchasing opportunity. A typical purchase would mean at least $20,000 in revenue. With a 30 percent operating margin, a purchase represents $600 in profits. The size and value is now more clearly focused:
1,500 potential customers at $600 each = $900,000
If the exhibit reaches 40 percent of the potential purchasers, 600 would visit the booth. If 30 percent of potential purchasers who visited the booth purchased the software, a profit of $108,000 would be related (600 x 30% x $600). If the exhibit costs less than $108,000, the ROI should be positive.
The 2013 IDS brought in an estimated 125,000 visitors from around the world. According to Phillips' math, that means there were 9,375 "decision makers" present. At $600 in profits per purchase, a company could stand to make $5.6 million during the three days of IDS. (Photo courtesy of english.ids-cologne.de.)
Of course, this is only one measure of new accounts. A new customer may have additional value beyond the initial purchase. The lifetime value of a customer could be greater than the $600 profit on the initial purchase. Other products or services could be sold to existing customers. Also, there are the intangibles such as brand, image, and reputation. Just having a presence is valuable. All of these must play into the decision to exhibit at the conference.
Next month we will define the types of data to collect at the conference and beyond. Stay tuned!
Jack J. Phillips, PhD, is a world-renowned expert on accountability, measurement, and evaluation. Phillips provides consulting services for Fortune 500 companies and major global organizations. The author and editor of more than 50 books, he conducts workshops and presents at conferences throughout the world. His expertise in measurement and evaluation is based on more than 27 years of corporate experience in the aerospace, textile, metals, construction metals, and banking industries. He is chairman of the ROI Institute, Inc., and can be reached at 205.678.8181 or by email at [email protected].