Measuring Trade Show ROI

In today’s digital world, marketing managers are expected to be able to measure the exact return on investment (“ROI”) on pretty much every marketing activity they need a budget for. Trade shows are no exception. Yet somehow, most marketing managers are still getting away with not being able to demonstrate clear, measurable value and return on investment from their trade shows. I suspect marketing managers who do not master this skill in the very near future will soon be looking for a new job. After all, how can you justify asking for more budget for this year’s show if you cannot even quantify last year’s show’s success?

 When to Measure

In most cases, the ROI value you measure will change over time. This is because most trade shows are not about selling at the show but about collecting leads or nurturing relationships with clients, so the full effect of the trade show can take weeks, months, or even years to fully present itself, depending on your product’s average sales cycle.

But here is where it gets tricky: on one hand, you do not want to measure the effect of a trade show too early, before your sales team has had a chance to process the leads, turn them into opportunities, and convert them into sales. On the other hand, you do not want to measure the effect of a trade show too long after the show because by then the leads you met at the show will have been “tainted” by some of your other marketing activities like email campaigns, webinars, web site pages, and perhaps even other trade shows they met you at.

So, what is the right time frame to measure your trade show booth’s ROI? It really depends on your sales cycle. Here is a good rule of thumb: I propose measuring the effect of your trade show starting at the point in time when you have reached 150% of your average sales cycle since the show and no later than the point in time when you have reached 300% of your average sales cycle. By way of example, if your average sales cycle is 60 days long, measuring your show’s ROI will only start making sense 90 days after the show because very few, if any, sales will be closed before that. On the other end, measuring the show’s ROI later than 180 days after the show will become increasingly inaccurate because by then the leads you met at the show will have had other marketing touchpoints with your organization.

What to Measure

Each organization should decide on a relatively small number of Key Performance Indicators, or KPIs, by which to measure its success at trade shows. Here is a good list to start with. You will rarely need to measure and track all of these, but they are a good starting point to choose your KPIs from.

1. Number of Leads

   1. What it means: The number of leads you collected at the show

   2. Why it is important: This is a good metric of how effective your booth was at attracting and engaging leads. Generally speaking, the higher the number, the more effective the booth location, concept, giveaways, signage, and staff were.

2. Number of New Leads

   1. What it means: The number of leads you collected at the show which are new to your CRM system.

   2. Why it is important: If your goal at the show was lead generation, the higher this number, the better you achieved your goal. If the number of new leads out of the total number of leads is relatively low (say, lower than 50%), then this probably is not the best show for you to be collecting new leads at.

3. Number of Accounts

   1. What it means: the number of accounts (or organizations or companies) you met representatives from at the show.

   2. Why it is important: Many organizations send more than one representative to a given trade show. Most B2B vendors consider a target organization as a single opportunity to sell to, regardless of the number of contacts they met from that organization. So, you could have met 20 leads at the show, but if they represent only 120 organizations, then that is the number you should be really looking at to estimate your business potential from the show.

4. Number of New Accounts

   1. What it means: The number of accounts you met representatives from at the show which are new to your CRM system.

   2. Why it is important: Like the New Leads metric, this is a good estimate of the show’s lead generation potential. If most of the accounts you met at the show already existed in your CRM system, you should consider either changing your goal for this show in the future or finding a better show if lead generation remains your main goal.

5. Number of Customer Meetings

   1. What it means: The number actual sit-down meetings held with customers (or distributors, prospects, or whoever you were targeting at the show).

   2. Why it is important: Often, your goal at the show will be engaging prospects or customers rather than collecting new leads. When this is the case, you should set a target, monitor, and analyze the number of meetings held at the show.

6. Number of Qualified Leads

   1. What it means: The number leads you met at the show who met your company’s qualification criteria.

   2. Why it is important: If a decent percentage of the leads you collected at the show met your company’s qualification criteria - say 10% or - higher than it can be considered a good show with real business potential. If only a small fraction of the leads you collected at the show met your company’s qualification criteria, it could be a sign that you are collecting leads at the wrong show or that you are attracting the wrong leads to your booth.

7. Number of Opportunities

   1. What it means: The number of opportunities created from leads you met at the show.

   2. Why it is important: Opportunities are a good sign of business potential. If a salesperson in your organization decided to create an opportunity with one of the leads from the show, it is a promising sign that there is a good chance of doing business with that lead’s organization. Shows that create a few or no opportunities should be questioned and carefully analyzed before attending again.

8. Number of Won Opportunities

   1. What it means: The number of deals closed with leads met at the show.

   2. Why it is important: This is the best indication of the business value of the show. The more won deals you can attribute to the show, the higher your return on investment is, and the easier it will be to get a higher budget for this show in the future.

9. Total Dollars from Won Opportunities

   1. What it means: The dollar amount you received from won deals attributed to the show.

   2. Why it is important: This dollar amount will be used to calculate the show’s ROI.

10. Total Dollars Invested

    1. What it means: The dollar amount you invested in the show. Include any and all investments in the booth space, booth structure, giveaways, staff travel, product literature, and anything else you can directly attribute to the show booth.

    2. Why it is important: This dollar amount will be used to calculate the show’s ROI.

How to Calculate ROI

I propose two methods of calculating your trade show booth’s ROI: a conservative approach and a liberal approach. In my humble opinion, the latter is a more accurate representation of the show’s actual ROI, but my experience shows that the conservative ROI is an easier way when trying to convince management of the show’s contribution to your company’s business. For sake of completeness, I shall present both methods.

Conservative ROI

This approach is very straight forward. All you need to calculate ROI are two metrics: Total Dollars from Won Opportunities and Total Dollars Invested.

The equation for calculating conservative ROI is simple:

[Conservative ROI] = [Total Dollars from Won Opportunities] – [Total Dollars Invested]

By way of example, if you invested $200,000 in your booth and the business attributed to the show amounted to $500,000, your show’s Conservative ROI equals:

$500,000 - $200,000 = $300,000

Liberal ROI

While calculating Conservative ROI is quick and easy to understand and communicate, reality is often more complex. If you track all the opportunities created from a given show in your CRM system, you may notice that many opportunities were created, but they have not resulted in sales yet. Does that mean that the show was worthless? Probably not, because some of those opportunities may just be taking a little longer to close. And what about all those new leads and accounts you added to your company’s CRM system? Those have got to be worth something. But how do you place a value on them?

To calculate the more realistic, liberal ROI, you need a good history of past opportunities, average deal sizes, and the conversion rates between them. Do not worry if you do not have those just yet. Start collecting them as soon as you can, and within a few months you should have enough data to start working with. Since these numbers and conversion rates can differ greatly between companies, do not use the following example as a guideline or ballpark. Instead, look at it only as an illustration of the method you can use to calculate your own metrics.

Let us say your company’s average deal size is $50,000.

Let us also say that 1 out of every 5 qualified leads results in a won deal. That is a 20% conversion rate.

This allows us to place a value on a qualified lead: it is $10,000. Why? Because 5 qualified leads equal 1 won deal. Since the average deal is $50,000, this is also the value of 5 qualified leads, which means that a single qualified lead is worth one fifth of $50,000 or $10,000.

Using the same principle, let us try and place a value on a lead collected at the show. If your company’s history shows that 1 out of every 10 leads collected at the show will end up qualified, and we just calculated the value of a qualified lead to be $10,000, we now know that 10 leads are also worth $10,000. Or, in other words, a raw lead collected at the show is worth $1,000. That is all there is to it.

Using this method and your organization’s data, you can now calculate your organization-specific value of leads, accounts, qualified leads, and opportunities.

Once you have these estimated values, you are ready to calculate your trade show’s Liberal ROI. Here is the equation:

[Liberal ROI] = [Total Dollars from Won Opportunities] + {Estimated Value of [Number of Leads], [Number of New Leads], [Number of Accounts], [Number of New Accounts], Number of Customer Meetings], [Number of Qualified Leads], [Number of Opportunities]} – [Total Dollars Invested]

While this may look complicated at first, do not try to use all the suggested metrics at once. It is better if you choose one or two metrics you are comfortable with and have good data for and try estimating that metric’s value for calculating your initial liberal ROI. The value of open opportunities, not yet won, is a good starting point for many organizations.

Take Away Tips

Tip #1 – Measuring your trade show’s ROI is not a luxury; it is a must to justify your budget.

Tip #2 – When to measure trade show ROI highly depends on your average sales cycle.

Tip #3 – To build your ROI-measurement framework, measure leads, new leads, accounts, new accounts, qualified leads, customer meeting, opportunities, wins, and investment.

Tip #4 – Measure Conservative ROI to easily communicate the value of your show booth.

Tip #5 – Measure Liberal ROI for a more realistic representation of your show booth’s value.