How to justify the cost of an exhibit?
There are thousands of companies out there right now struggling with rising business expenses that are non-productive to their bottom line. One more added expense could put many of these businesses in the red.
So what is the justification for spending more money on a trade show display for your next trade show?
If you have studied your customer base, you can easily determine if buying an exhibit is right for your company. First off, let’s assume that you’ve gone through the exercise of determining that at your next show, a large percentage of your target audience will be attending and you have already committed to exhibiting this year. Last year you may have rented an inline booth and had OK results. You reconnected with old customers, strengthened current relationships and even added a few new customers to your list. The show paid for itself and the standard attitude everyone in your office had about it was that it was a moderate success, but not a real money maker.
What you have to ask yourself is this: With such a large potential for face-to-face contacts, why was your response at the show so ho-hum?
With this in mind, what could you do differently this year? You have meetings with marketing and sales and everyone comes up with great ideas. Everyone agrees that your company needs a larger space with better placement, a larger trade show display, more color, larger graphics, more giveaways, a new theme, custom flooring, brochure stands, a contest for attendees and more. All of these are great ideas worthy of the type of company you run! That is until the estimate comes in. Then the kindly CFO that attended every trade show meeting and was very supportive, uses his veto power and declines all of it.
What’s next? How do you overcome this obstacle? The answer lies in the way you justify any type of advertising. How much are you willing to pay for more customers and is it worth it?
Start by calculating what your customers are worth to you financially. Count how many customers you sold to last year and divide that into your sales. For example, if you sold to 500 customers last year and your total sales were $5 Million, then your average customer is worth $10,000. Take the value further by finding your average customer turnover per year. Simply take your existing customers for the past several years and decide what percentage returned to you every year. If you have a high customer retention rate, the value of any new customer is spread out over the years that you keep them coming back to you. If you use this scenario, this means that attracting one new customer at your trade show could end up adding $10,000 the first year plus all the years you keep the relationship going!
Now, let’s assume that your company gets 10% of customers by word of mouth. This means that if you attract ten new customers at your show, you will net one more through referrals, adding another $10,000 to your sales! You can add more to the argument for a new exhibit by increasing your odds of seeing existing & old customers by being more visible and interesting to them.
But how many potential customers can you attract at your show with your new exhibit? Most trade show producers will have market information on attendees and you can base your projections on the same information from the last show and your sales results. Let’s say that last year there were only 250 attendees that looked like your type of customer and you had lured only 75 of them to your booth (your were on a back aisle), quoted projects for 20 of them and made 5 of them your customers. This means 2% of your visitors became new customers giving your company $50,000 in new sales. For this year, let’s assume the same number of attendees, but you have a better placed booth, a bigger trade show display with more impact, entertainment in the form of a contest and a terrific new offer for potential customers. So you decide that because of all of this, you can increase your results by attaining at least 6%-10% or 15-25 new customers which converts to $150,000 to $250,000.
All that is left is to add up all of your trade show costs for the new exhibit. Compare them to what you spent last year to see what the net increase in spending is. If the cost versus rewards makes sense then you have justified the cost of a new trade show display.