Gauging the return on your events can be complex. The traditional notion of Return on Investment (ROI) of net income divided by the original cost of an investment results in some percentage increase or decrease in the amount invested.
Let’s apply that theory to events and meetings. Events such as trade shows and conferences generate direct revenue through ticket sales, paid sponsorship, and the sale of products and services. This revenue makes the “income” side of the equation easy to identify. Other types of meetings and events are not revenue generating. This makes the income side of the equation harder to identify.
To truly capture the return on events, we need to look at the benefits beyond revenue/income. You need to begin by assigning a better value standard to the benefits they deliver that goes beyond dollars. For example:
- Training Session: How can you measure the benefits of the learning delivered in a training?
- Executive Retreat: How do you quantify the return on this relationship-building, strategy development event?
- Product Launch: How do you gauge the value of creating brand awareness when you’re promoting the launch of a new product or service?
- Thought Leadership Workshop: If you invite a VIP speaker to share thought leadership content with your clients, how do you calculate its value?
Identifying All Costs
So what about the costs line? You need to take the same look at whether or not you are capturing the true cost impact, not just “direct costs”.
In some cases, direct costs for line items such as venue, travel, entertainment and hotel are straightforward. But what about the indirect and allocated cost such as staff salaries, shared services contracts, and overhead costs. If additional staff is sent to support an event, which group bears this cost? Does it belong with sales, marketing or the event team? How do you calculate the event time for these individuals versus their day job commitments? These examples underscore the need for a better formula to gauge event investment.
New Event ROI Formula
As noted earlier, since events provide benefits that go beyond direct revenue, we can replace net income with “Benefits.” Similarly, we can replace investment with “Costs” to capture all costs associated with an event, not just direct capital cost. Benefits divided by costs provide a more accurate formula to calculate event ROI.
More information on how to calculate event ROI is available by downloading part one of Cvent’s ROI Series, Defining ROI (and what’s different about ROI for events) here.