Event ROI Calculation: Top Five Questions

In our last post, we identified the costs and benefits involved in running an event. While some measures such as direct costs or direct revenue are pretty straightforward, other event ROI drivers such as opportunity costs, attributed revenue and knowledge exchange can be a bit more challenging to understand. Let’s dive into the most common questions we encounter as organizations try to get a handle on their event ROI calculation.

How do I identify indirect costs?

Unlike direct costs that are specific to an event, indirect costs cannot be directly attributed to an event. But they are the costs of the people, services, and other resources that go into event production. Examples include salaries for company staff at the event, pooled expenses, professional service charges (e.g. legal or accounting), rent and utilities.

How do you allocate indirect costs?

Event managers should work with their finance team to apply an accounting practice known as activity-based costing(ABC) to pinpoint their applicable indirect costs. ABC assigns activity measures such as hours spent, attendee numbers, appointment goals and exhibitor totals to products, services or events to calculate the level of indirect costs for an event. Each event is different and each organization treats indirect costs differently.

What do we mean by opportunity costs? 

Another key driver of event ROI is opportunity costs, an economic theory based on the scarcity of resources and the choices about where to deploy them. Opportunity costs represent a benefit, profit or value of something that must be given up to realize something else. Organizations have a single set of resources to plan, develop, market and execute an event. When these resources are deployed to execute an event, they cannot be used for other functions.  These alternative sources of value comprise opportunity costs.

Why does attributed revenue change over time?

Unlike direct revenue that is captured at a single point in time leading up to an event, attributed revenue changes over time. Companies use demos, training and educational sessions at events to market and sell their products. As customers and prospects attend those events, new opportunities enter the pipeline for the future. As these opportunities close, revenue gets attributed to the event.  Factors such as the length of the sales cycle, the degree of marketing and sales support, and your company’s marketing attribution model dictate the revenue attribution to an event.

How does knowledge exchange translate into a benefit?

Events provide education. At an event, accelerated learning takes place between customers, prospects and the host company. Customers and prospects share their experiences and likes/dislikes about a company’s products. Attendees share their responses to marketing programs and sales interactions, which helps shape sales and marketing programs to increase engagement and boost receptivity to sales. This increased receptivity to marketing and sales from your organization leads to future purchases and renewals with your customers. To help address additional questions you may have about the costs and benefits that are driving event ROI, please visit here.