To get a true calculation of event ROI, you need to take a deep dive into both the costs and benefits of running an event. Far more than simply adding up the direct costs to produce an event and the direct revenue it delivers, it’s important to understand the full spectrum of costs and benefits. To help you through this calculation, we've outlined the eight essential drivers of event ROI.
Event expenses can account for 25% or more of a company’s B2B marketing budget and internal meetings can add another 3-5%. The total costs to make events happen require a closer analysis of expenses at a granular level. Three different costs should be examined.
These are costs most familiar to event planners. They are the costs of hosting an event. Examples of direct costs include venue costs, food and beverage, travel, entertainment and rental equipment. Hopefully you are reconciling your budgets and have a good handle on direct costs.
Indirect costs offer a more complete view of the investments to run an event. They include salaries and overhead of the teams involved in staging an event as well as other shared expenses. Indirect costs are calculated using accounting processes such as activity-based costing, which assign attributed costs to products, services and events. To understand the indirect cost of your event, work with your finance team.
Events have an opportunity cost. Your organization chooses to deploy its resources to an event as opposed to digital marketing, or some other activity. These alternative sources of value comprise opportunity costs. To understand this cost, you need to know the benefits the other activities would yield as compared to your events.
Events can impact the topline and bottom line of an organization. Similar to expenses, it’s important to know how to measure the different types of benefits.
Direct revenue is the money made directly as a result of hosting an event. Examples include ticket sales, sponsorship dollars, registration fees, onsite product sales and advertising revenue. Direct revenue varies based on the size and scope of the event. This is the money you are hopefully calculating today to show the value of your event.
Organizations market and promote their products at events which drives future revenue. Onsite product demos and account planning conversations help fill the sales pipeline, fuel new sales, and increase customer renewals. As those new opportunities result in new business, the dollars can be attributed to the event as attributed revenue.
Some benefits, such as brand equity, are more intangible and cannot be measured through hard dollars. Brand equity doesn't deliver immediate monetary rewards, but event attendance has an impact on brand attitudes. Consumers like well-known and admired companies, which leads to doing business with that company. Brand equity can help propel Customer Lifetime Value, the long-term profit contribution from a customer. Your events should leave a positive impact on your attendees, driving positive brand equity.
Knowledge exchange is the accelerated learning that occurs during events. This interaction between customers, prospects and the company can help shape product development, increase learning, fine tune marketing, and speed receptivity to sales. Your events must create an environment to share knowledge, which leads to brand equity and attributed revenue!
For more information on how to gain the full cost and benefits picture of your event, Cvent’s eBook on “The Eight Essential Drivers of Event ROI” is available here.