6 KEY METRICS TO ANALYSE EVENT ROI
ROI is one of the crucial determinants of any business, yet it is the trickiest to master! The Return on Investment is a financial ratio to calculate the return generated from an investment. While this seems straightforward with the ease of a formula, event ROI is much different from that. This is because most events and meetings don’t have a numerical value attached to results since they are intended to deliver a benefit to the attendees. For example: creating brand awareness, interacting with customers, or training employees. Likewise, many event expenditures are indirect costs such as travel, accommodation, and food.
To develop a clearer and more suitable equation for event ROI, we will look at it as the return of the benefit from the cost of the event – both direct and indirect. We’ve identified the essential elements of event ROI.
1. Direct Costs
These are all the costs associated with making the event such as venue rental, food, sound and lighting equipment, travel, decorations, as well as marketing and promotional costs.
2. Indirect Costs
All overhead costs such as administrative, salary, utilities, and rent are listed as indirect costs. They are classified as expenses that contribute to the organisation of the event like the marketing, event planning, and sales team.
3. Opportunity Costs
This is defined as the cost of the next best alternative if you must pursue another option. An example scenario is choosing an event that costs £100,000 with extra marketing campaigns as opposed to selecting the other option, which costs £50,000 without any promotional activity. The opportunity cost is £50,000.
4. Direct Revenue
All the revenues that arise from the success of an event. These include ticket sales, registration fees, product sales, exhibitors, advertising revenue, and merchandise sales.
Though monetary benefits help analyse the financial impact of an event, there is a myriad of intangible benefits that result in a successful event. Aside from generating revenue, events build relationships between customers and clients and help educate and inform attendees on certain topics. These are the benefits that participants aim to receive when they attend an event.
5. Long-term Revenue
Through sales and promotional activity at events, companies can create and maintain long-term relationships with attendees that help contribute to future sales and revenue. It also helps encourage customers to attend future events if the brands make a lasting impression. This brand loyalty contributes to profits generated from customer retention. This element has a significant impact on the benefit of an event and therefore is important to measure in the ROI.
6. Knowledge Exchange
During events, there is a knowledge exchange between attendees and the organisation. Engineers learn about customer feedback through product developments and marketers gain insight into industry secrets through marketing programs. The knowledge gained from attending events are not easily tangible compared to ticket sales but are equally as important in contributing to the benefit of an event.
Now that you’ve got all the elements of event ROI down, there should be no doubt in your head at the true value an event can bring to a company!