Measuring the results of your event-based and experiential marketing strategies doesn’t have to be rocket science.
Event marketing isn’t something you decide to do on a whim. If it is, then you clearly have a much larger marketing budget than most. In fact, Forrester had noted that event marketing costs more than any other channel used by marketers. It’s a strategy you develop with a distinct set of goals and objectives. Perhaps it’s to introduce a new product or break into a new region or demographic market. Perhaps it’s to generate leads, or increase sales of an existing product or service.
Whatever your goals may be, the data you collect should not only be the “canary in the coalmine” that alerts you to flaws in your event marketing strategy or shows you where your highest returns lie, it should also deliver the business intelligence you need to correct your strategy and optimize your return.. We’ll talk more about making data-driven decisions in our next post, but it all begins with understanding how to compute your return on investment (or return on experiential as the case may be)
While your marketing strategy may include some event-based activities that are designed to increase brand awareness and loyalty, for right now we’re going to confine our formulas for experiential marketing measurements to those numbers related to performance/impact and new customer acquisition/reach.
Can Your Experiential Marketing Software Do This?
The first formula is something we call okapi ROI™. It is a measurement that takes into account both the prospect’s likelihood of becoming a customer and the estimated value of that customer relationship. Assuming that you are using okapi to collect and collate data it will be relatively easy for you to compute.
We’ll start with a figure you should have already determined as part of your marketing strategy; the lifetime value of a customer. If you are an established brand this is typically calculated looking at historical data. You can also look to industry partners such as IRI and Nielson to provide this type of information. If you have recently launched your product or service this number is projected based on industry research and benchmarks that have likely been established as part of your business plan. In reality, and because we’re using ROI as a relative success metric, you can also start with your best guess and make changes to this number as more data becomes available.
Naturally, we aren’t going to attribute the entire lifetime value of a newly acquired customer to a single event. Unless your average sale is a once-in-a-lifetime purchase, in which case each sale is likely associated with a single decision point, you’ll divide the lifetime customer value by the number of years that customer is projected to be buying from you. The goal is to arrive at a number that represents the first year of projected sales value for each customer acquired, which we’ll call your “Annualized Customer Value.” Using this method, we’re making a couple assumptions. First, we’re using a straight-line method to attribute customer value. If your customer starts with a small purchase and then increases their purchasing over their lifetime (or vice versa) then the formula could be weighted accordingly. Understanding what the value is of this first year is important though because you’re going to compare this new revenue generated to the cost of the event you attended. The relationship between those two numbers is how we’ll calculate ROI.
But how do you know how many customers you have acquired from your investment in the event? Therein, as they say, lies the rub. Because the generic data you can purchase from the event organizer might tell you how many people were at the event (and the data you’re given by event organizers is often inflated), or even give some personal or demographic information for the people who were at the event, but it can’t tell you how many of those people interacted with your brand, let alone how many of the people who interacted with your brand were not already customers or are likely to buy from you in the future.
This is where your experiential marketing software comes in. If you’re using okapi you simply build two standard questions into the data you collect so that computing your projected ROI (the okapi ROI™ I mentioned earlier) becomes a snap.
The first question determines if they have ever purchased from you before. Because if they have they’re a valuable customer, but they aren’t a new customer so they are not included in the formula for your okapi ROI™. Once again, here is a place where the ROI formula can be tweaked to fit your exact needs. In many cases, interacting with an existing customer at one of your events might strengthen the brand loyalty and increase purchase intent even higher than it was before. Therefore, for some brands will choose to add revenue for existing customers, albeit a smaller amount, when designing their ROI formula.
The second question is actually a Likert rating scale that asks them to rate their likelihood of buying from you in the future. For rather obvious reasons, if they report that they are unlikely or extremely unlikely to ever purchase your product or service they also are excluded from the totals used in this formula. But if they have marked likely or extremely likely to purchase in the future then that is at least a good indication of purchase intent.
Calculating Your okapi ROI™
So now we have the number of people who interacted with your brand during the event, who were not a customer prior to this event, and who have self-reported that they are likely to extremely likely to be a customer in the future. That number, multiplied by the Annualized Customer Value, almost gets you the figure you want but we’ll add one last variable to help refine your ROI number a bit more.
We know that not every customer who says they’ll buy your product actually converts to a purchaser so the last number we’ll multiply by is Conversion Rate. This percentage value is the average number of non-customers who sample your product at the event that will eventually convert to a customer. Maybe you think that 50% of the people who stop by the booth will convert to an actual customer. Maybe that number is only 10%.
This is another number that will be challenging to determine if you’re a new brand; especially one in the B2C market. Because there’s no way to track the conversion of an individual consumer at your event back to them purchasing your snack bar as the local convenience store your conversion rate will, once again, be your best estimate. If you’re in the B2B world, then measuring conversion is significantly easier. Simply taking the number of leads in your CRM that eventually convert to paying customers will provide the data you’re looking for.
The great thing about okapi is your number could change over time (especially as brand awareness increases). But whatever you believe is a reasonable estimate for the percentage of people who actually will become customers is the number you’ll use as the variable in your okapi ROI™.
Getting Real About Results
Of course, that is a projection based on some educated guesswork and the feedback from event attendees. But if you keep asking the same questions, and evaluating every event by the same formula, you’re going to begin to recognize trends. And those trends will inform your strategy and empower you to improve your event ROI in multiple ways. You may be thinking, “how am I supposed to give this new ROI number to my management team when half the numbers are estimate?” That’s a fantastic and very valid question. In reality, I would recommend you either ask your management team to provide those numbers or you at least agree on them ahead of time. Otherwise, the ROI number that is generated will be less related to financial and will be used in a more directional nature to help you make better decision about which events to attend and which events you can skip next year. Not to be a tease, but that’s really a whole ‘nother article and we’ll get to that in our next post.
Here’s a hint, though. Increasing ROI is always about understanding how numbers relate to each other and what that relationship suggests is happening out there in the wild. In this post about tracking trends by using Event and Activity Types, we broke down some of the business intelligence that’s built into okapi to help you use your data to make better decisions.
So about that second ROI formula. In addition to projecting your okapi ROI™ and tracking trends, you can collect data that will help you compute your actual ROI as well. If you’re in a B2B environment where you are able to collect an email address during your event or sample opportunity you can import that data into your CRM and track each opportunity to its conclusion. In that case your actual ROI is pretty obvious. With okapi we can match the creation of a lead from a specific event back to the value of each closed opportunity thereby giving you an actual ROI that can sit next to your okapi ROI™.
This second formula is more difficult if you are marketing directly to consumers (B2C) because it may be harder to get actual data that directly relates to your investment in the event. In order to get regional sales figures you would rely on internal company reports or you might need to buy sales data from a company such as Nielsen or IRI. That data doesn’t come cheap, and it isn’t conclusive. You might be able to demonstrate a quantifiable increase in sales for the region, but to attribute the results to the event you’d still be making an assumption that if one needle moved and the other needle moved they are directly related, which may not be the case (especially if you’re using additional marketing channels in that area). Of course you can use coupons or other trackable incentives. However, coupons rarely have great conversion rates so using the number of coupons or other incentives redeemed might indicate a lower ROI than the actual number of new customers acquired.
The Bottom Line about Your Bottom Line
Even if you don’t have actual sales data available to you, if your okapi ROI™ is favorable and the trends you’re tracking keep moving in the right direction, then you can safely assume your investment is yielding a return even if you can’t quantify it with 100 percent accuracy. In this case, the exact dollar value is less important than the insights you’ll gather from having a single relative measure that works no matter which event or activation you’re attending. The information you’ll get from your okapi ROI™ is infinitely more meaningful than tracking the number of samples handed out, or the number of people who attended your conference session, or the number of people who entered the drawing for your giveaway.
Now for a little word of warning, if you begin presenting these numbers to your CMO or director and they’ll only ever worked in digital marketing, they may call your numbers “vanity metrics” because they’re not 100% attributable to sales. This is a challenge that is going to take some education. In reality, if you’re using these metrics to make better decisions then they are not vanity metrics – they are proxy metrics. The difference is that a proxy metric is directional in nature. It allows you to make decisions about your future activities. More often than note, this just takes some reframing. You may not be able to use okapi ROI in the boardroom (i.e. at the corporate strategy level) but you can definitely use it at the tactical (i.e. department) level to improve the results of your program.
Since okapi ROI™ can be viewed in real-time you can start making better decisions immediately after an event. Having that data instantaneously available might suggest you should do more local or regional events rather than larger national events. Or it could tell you that your product resonates much more with music listeners than sports fanatics. The possibilities are endless when you juxtapose okapi ROI with event and activity types or any other survey question (i.e. age, nationality, gender, household income, etc.)
Assuming you’re not doing event marketing just because it’s sexy and exciting, you want your investment to produce a return. More than that, you want to know if it’s producing a return and what to do if it isn’t. Using a comprehensive Event Program Management platform like okapi to collect, manage, and analyze your event and experiential marketing data allows you to not only compute your projected ROI, but to make better decisions in order to increase it.