As we all know, a business generally accounts for all its incomings and outgoings with a high degree of accuracy (well usually…). And part of that accounting is the marketing budget, which may be broken down into a bunch of separate activities: trade shows, seminars, website, entertaining, and the like. But, in my experience, that’s almost always where it stops. Rarely does anyone take the time to assess what the dollar amount spent on attending a marketing event led to in terms of benefit, let alone each particular event.
If you’ve been regularly attending a marketing event and don’t see any tangible benefit from it, is it worth continuing to attend? As we all know, probably too well, not all marketing activities will bear fruit. Hence the need for some form of evaluation.
So, What Is The Benefit?
Well that’s the problem; how do you work it out? There’s certainly benefit in being present at a trade show or seminar; it gets your company name out there, reinforces that you’re a player in the market, reminds people that you’re providing services in that sector, and so on. All those things are good, but they’re intangible. If that’s the extent of it, it’s really tough to put a value on attending the event. And that makes it difficult to compare the worth of one event against another.
How Much Does a Marketing Event Really Cost?
Let’s say you attend a seminar. The total cost was probably incurred in attendance fees, travel and your time. If you assign an hourly cost to your time, multiply that by the hours, and add it to the dollars spent, you have a figure as to what that seminar cost you. For example:
$200 seminar fee, $100 travel, eight hours at $100/hour – seminar cost $1,100. Let’s consider this as Figure A.
What Did You Get Out Of It?
Well, maybe there was a direct benefit. You met somebody and the following week you sold him or her a project worth $15,000.
But you also met some other people and nothing tangible has resulted from that yet. So how do you evaluate that benefit? Well, one way is to assign an estimate of the likelihood of getting work from each of the contacts you made. For example, assuming you made two contacts:
Contact #1: Likelihood of work 20%: Likely value of work $20,000: Potential $20,000 x 20% = $4,000
Contact #2: Likelihood of work 50%: Likely value of work $5,000: Potential $5,000 x 50% = $2,500
So an estimate of the potential benefit of the seminar is the direct benefit ($15,000) plus the estimated benefits ($4,000 plus $2,500), total $21,500. Let’s consider this as Figure B.
Estimated Benefit to Cost Ratio
For that seminar, using the figures above, the benefit to cost ratio is B/A, $21,500 / $1,100 = 19.5. And if contact #2 buys a $5,000 project six months later, you can rework the ratio accordingly.
If you do this as best you can for each event, you have a number with which you can compare the estimated value of one event against another. Maybe one seminar works out at 19.5, another at 12.2 and a third one at 2.4. The lower the number, the less cost effective the event.
Now you have an indicator to help you figure out whether your time and money committed has been worthwhile. And that may well be an improvement on what you had before!