Every business owner or manager knows about return on investment (ROI). Some understand how important it is. Others know that having complete knowledge of ROI is more than important. It’s essential. This concept has been defined as a way to identify past financial returns and as a way to clarify potential returns. In most settings, ROI is the primary indicator of business success.
This value is generally expressed as a percentage or a ratio, which can be simple enough to arrive at. The key to using ROI comes from understanding what the numbers are telling you. Entire courses and books have been produced simply to teach people how to use ROI. To bring it down to a simpler definition, if your company has an expense, you’ve invested a certain amount in that item or area. You need to know what value you’re getting or you’re going to get from that investment of assets.
ROI can be determined from annual income in relation to original investment. You may also use this process to describe the cost of an opportunity, such as in the stock market or an investment in a company, for example. In another specific example, you can use ROI to measure the success of a project or an event. Money invested in an advertising program or marketing effort must be exceeded by the money generated for ROI to be acceptable.
This is essential knowledge when you want to know how to measure event ROI. If you present and/or display at a business-to-business (B2B) event, you may invest a significant portion of your marketing budget to do it correctly. For a basic result, divide net profit (your return) by the amount that you invested. To get a percentage, multiply the result by 100. If you spent £10,000 to present and display at an industry event and the specific activity from this event brought in £11,000, your return is £1,000. It’s obvious – your ROI is 10%.
While calculating ROI isn’t a perfectly precise measurement, if you keep accurate records and follow up the event carefully, you can get very close to an actual return. It’s certainly a far cry from being an educated guess. You can make this information work for you by starting your plan for an event far in advance. You should set one or two major objectives, such as gathering new prospects and placing your company in a new market. You’ll then need to keep the records and facts that feed into these objectives. Focused efforts help you keep your strategies and tactics in line.
If your primary goal is to give your business a shot in the arm by enticing existing customers to purchase more and to bring back some of the fringe clients, you should keep accurate records on the number of appointments scheduled as a direct result of event activity. Extend this to recording new-product demos to current clients and to revenue from current customers, all associated with the marketing efforts at the event. Start measuring your event ROI and you’ll know where your business stands and where it’s headed.