f all the industries affected by the economic downturn in 2008 and the recession in 2009, the construction industry was perhaps hobbled the worst, experiencing what economists now call an all-out crash from which the industry has just begun to dust itself off. For builders and remodelers, a staggering $100 billion drop in construction spending for new residential buildings and improvements between 2008 and 2009, along with a $62 billion decline in nonresidential construction over the same time period, sent construction companies into a tailspin.
|Laura Garland, kitchen product manager for Moen Inc.'s wholesale product marketing team, developed a measurement tool for trade show assessment. The tool has strengthened the company's overall performance and earned her recognition for being both strategic and creative.
The unwitting backseat passengers in that industry crash were suppliers who provide materials to the building and remodeling industry - suppliers whose sales fell at the same precipitous rates as those of construction companies. A greatly reduced construction market meant the need for items such as windows, flooring, and fixtures was reduced by the same margin, leaving suppliers to figure out how to stay alive while the industry righted itself.
At Moen Inc., a supplier of kitchen and bath fixtures, executives were tightening the company belt because of the economic downturn, and the company's exhibit-marketing program was the low-hanging fruit. "We had to be smarter with every dollar we spent, and trade shows were a very easy target," says Laura Garland, who was a senior marketing communications specialist at Moen at the time. "It's difficult to measure the impact of exhibiting, and return on investment is hard to explain, but that's what you need in order to prove yourself to someone sitting in a corner office."
As the person overseeing Moen's exhibits, Garland believed that exhibiting was critical to the company's success, especially during hard economic times. But without any measurement tools to prove that, she powerlessly watched as the show budget was slashed.
The 2008 International Builders' Show (IBS) was the first to go. Other shows were being eyeballed for elimination as well, and people with a seat at the C-level table were ruminating about exhibit-related spending as a whole and wondering what tangible benefit it had for Moen.
Historically, Moen collected droplets of information from attendees at major shows, and none at all at regional shows. A survey the company used at large shows asked little more than whether an attendee would like additional information. Decisions of whether to return to a trade show were based mostly on the "vibe" sales reps reported following an event. For example, if the sales rep staffing the company's booth sensed attendees were upbeat and in a buying mood, Moen would likely return to the show regardless of how many leads were generated and what percentage of those leads ultimately turned into sales. Furthermore, those leads, while handed off to regional sales representatives for followup, were never qualified, and things such as press mentions and client meetings were just considered a byproduct of exhibiting that provided no tangible value for the company as a whole.
|Potential Sales Value
To predict the potential sales value of a show, Laura Garland created a profile that identified A, B, and C leads. Historical sales data helped establish average close ratios and average project values for each rank. Then, the number of total leads - adjusted according to each rank's average close ratio - were multiplied by average
project value, establishing a realistic
potential sales value for each show.
Knowing a good vibe wasn't nearly the collateral she needed to keep her shows off management's chopping block, Garland set out to turn that good feeling into real numbers.
Garland knew she had to devise a way to measure the potential value of the shows that remained on Moen's calendar after budget cuts or they too would be in jeopardy. Her thoughts turned to a direct-mail project she had worked on a year earlier. "With direct mail there is a lot of analysis on the return," Garland says. "I started asking myself how we could assign a value to a lead from a trade show the same way direct mail does."
Garland believed a new, better survey was the answer -
something that was brief but incredibly
efficient. "We wanted to know how many projects and what types of
projects attendees had," she says. "If we could understand how much business they were doing a year, we could rank them as A, B, or C leads."
Ranking leads was a new concept for Moen, but Garland believed it would help her understand the caliber of leads coming from various shows.
It would also better prioritize salespeople's time by allowing them to follow up with the best prospects first.
But there were many questions Garland had to answer before names on paper could be ranked by potential value. She needed to know which segments of the market had the highest profitability for the company, which job titles were the most likely buyers, and what the close ratio was of leads collected at past shows.
To create a valuation process and a survey to capture the necessary data, Garland approached senior account executive Lisa Schwabenlander at Derse Inc., Moen's strategic face-to-face marketing partner. Together they hammered out a formula to calculate the value of leads and shows overall. To find the variables to plug into that formula, Garland had to delve deep into territory far beyond the show floor.
|Cost of Client Meetings
According to data from the Center for Exhibition Industry Research, it costs an average of $96 per first meeting with potential clients at trade shows, and $1,039 to identify and visit new prospects in the field. Multiplying the average savings of $943 per initial client meeting by the number of new leads helped Garland identify the total savings compared to finding and following leads elsewhere.
First, to analyze the potential return from a lead, Garland had to understand the company's detailed sales history. She collaborated with a third party and others within the
organization to create an ROI analysis that identified the projected revenue for each fixture sold in the nonresidential and wholesale-residential markets, breaking them down into detailed marketing segments.
Once Garland understood the profitability for each market segment, she needed to prioritize Moen's target audience, identifying who would be considered an A lead, who would rank a B, and which attendees would be considered a C. Garland looked at the factors that made one lead more financially promising than another, such as in which market segment the person worked (and hence the profitability of sales), how many projects he or she did per year on average, and whether the person was likely to be a decision maker based on his or her job title.
Having identified the most and least profitable target prospects, Garland used that criteria to create profiles for her A, B, and C rankings. Garland and Schwabenlander then developed a branching-logic survey that, in five questions or fewer, would collect the core pieces of info needed to establish rank. The criteria used to separate lead prospects was then embedded into an algorithm that would automatically assign an attendee a rank based on his or her answers to the questionnaire.
But ranking leads based on their hypothetical value post show wasn't enough. Garland wanted to know what past leads had yielded for the company in terms of close ratio and project value. For example, how often did leads close from contractors who built multiple apartment buildings each year, and what was the average project value from those leads? What about the self-employed plumber?
The sales department helped her scour the results of past leads, using
whatever information was available to sort them according to how they matched criteria for A, B, and C rankings. Tracing the end result of each lead, Garland calculated the average
close ratio and project value for A, B, and C leads, and a valuation formula was born: The number of A, B, or C leads collected multiplied by the average close ratio for that type of lead, times the average project value per closed lead equaled the estimated per-show revenue.
In addition to projecting the value of each individual show, Garland sought a way to calculate the value of press exposure and the benefit to the company in terms of client meetings, sponsorships, and promotions at shows - things that had never been scrutinized before.
Data from the Center for Exhibition
Industry Research helped in estimating
the value of client meetings held at shows, as a 2009 study addressed exactly that question. In "The Cost
Effectiveness of Exhibition Participation Parts I and II," CEIR found that companies spent an average of $96 to make first contact with a lead at a show, compared to $1,039 for first contact without a trade show lead. Part of that expense was in identifying the leads, and the remainder was in traveling to meet with them. The study also surveyed 214 sales and marketing managers and found that 57 percent of the leads closed after a trade show were finalized with three or fewer sales calls at an average cost of $2,188. Without a lead from a trade show, 61 percent of closed sales required more than three meetings at an average cost of $3,102 for each closed sale. Using those stats, Garland attached a financial benefit to the at-show client meetings that had previously been taken for granted, and illustrated the associated cost savings for upper management.
Price Tag for Press Mentions
To put a price tag on the press coverage Moen Inc. generated at shows, Garland tracked mentions in magazines, blogs, and newspapers. Thankfully, Moen's public-relations staff already did this for the company's large shows. Using guidelines from the American Marketing Association, she identified the value of comparable advertising space in each of the publications that mentioned Moen as a result of its presence at the show.
Next, to understand the value of press exposure received when exhibiting, Garland collected information about what was being printed in the media during or after an event. At large shows, Moen's public-relations staff tracked the number and type of press mentions received, and for smaller shows, Garland estimated that 5 percent of the press meetings would result in some sort of mention.
She then turned to established American Marketing Association standards for guidance on calculating the value of press placement resulting from a show. In part, those standards measure what each published press mention would cost as purchased
advertising, establishing what the value was for each mention. Also, Garland calculated how much the company was spending on travel to meet with press it would have otherwise seen at the shows cut from its calendar. Those figures together gave her the value of press meetings at trade shows.
Finally, to calculate what each sponsorship and promotion was worth, Derse worked with Garland to develop a formula specific to Moen that established the dollar value of targeted impressions at $0.18 each based on a full-scale company analysis of items such as sales cycle, brand equity, and average number of touchpoints a customer encountered throughout the year. Using the $0.18-per-impression stat, Garland assigned
a value to each time a current or potential client viewed Moen's name via sponsorships and promotions, and adding up the total number of attendees at an event, for example, gave her a quantifiable figure to share with upper management.
Armed with a new, comprehensive formula to assess the actual value of any trade show, Garland put the entire metrics machine into motion, curious about what it would indicate regarding exhibiting going forward.
The new formula was fully implemented for the first time to evaluate the Kitchen & Bath Industry Show in 2010. Using leads from the previous year's show - and calculating them using A, B, and C rankings - combined with the respective close ratio and average project value for each, the estimated value of leads collected at KBIS was in the millions. And via the company's new measurement tools, Garland determined that the combined value of client meetings, press meetings, and impressions from sponsorships and promotions was worth nearly a quarter of a million dollars. All told, the measurement tool estimated the total-show value of KBIS was far more than the expense of exhibiting, an eye-opening discovery for managers who became more willing to say "yes" to future shows. For the first time in Moen's five decades, upper management understood the relationship of shows to the bottom line, and Garland had proof that her gut feeling about exhibiting was right on.
|Expense of Exposure
Garland worked with Derse Inc. to establish the value of exposure generated through sponsorships and show promotions. Using the value of $0.18 per impression, Garland was able to assign a value to each sponsorship and promotion by, for instance, multiplying the number of attendees at a sponsored Moen reception by $0.18.
Based on the validation she was receiving from management, executives agreed to return to IBS in 2011. Results from the show demonstrated, once again, that it was the right choice, with ample payback and savings on sales travel that otherwise would have been required to meet with clients in the field.
Garland's ability to demonstrate measurable success from exhibiting was transformative to Moen's exhibit-marketing mentality. Management made no further reductions to the show schedule in 2010 or 2011, and, in fact, funds from under-performing marketing efforts were reallocated to make the company's trade show presence stronger. In addition, Garland's metrics convinced management to agree to invest in a large, new custom exhibit as well as several smaller structures for regional shows.
While the measurement tool is credited with strengthening Moen's trade show presence, it also provides the ultimate litmus test for how the actual results compare to the show "vibe" reported by sales reps. It turns out that the two are fairly closely related. "When we were presenting the numbers, the results matched the energy of the show as reported by salespeople," Garland says. "But it was cool because for the first time we could actually prove it."
Cool indeed, and All-Star Award judges agreed. "This is an incredible argument for how cost effective shows can be," one judge said. "I can't imagine that any exhibit manager would ever see a budget reduction with this kind of financial proof of success."
But the real measure of success lies with Garland, who kept her department in tact - thanks to a host of metrics that added up to accolades and an All-Star Award. E