. A New Spin on ROI | Meetings & Conventions

A New Spin on ROI

Going beyond metrics to calculate a meeting's success

0817 Cover Story investment meetings ROI opener

Total direct meeting spend in the U.S. climbed from $263 billion in 2009 to $290 billion in 2012, a 6.5 percent increase, according to the most recent survey conducted by PricewaterhouseCoopers for the Convention Industry Council. If that same percentage increase held in the subsequent four years, meeting spend in 2016 likely topped $300 billion. But what has been the return on that significant investment? ROI is a much more elusive statistic.

According to event professionals polled in the 2016 Global Meetings & Event Forecast from American Express Meetings & Events, only 14 percent include ROI metrics in their meeting policies. At the same time, respondents across all regions predicted increases in their overall program budgets, and in larger increments than they predicted five years earlier.

At the root of the problem, says Issa Jouaneh, senior vice president and general manager, American Express Meetings & Events, "there still does not appear to be one consistent way meetings are measured." A number of industry entities are determined to change that.

Asking hard questions
Four years ago, frustrated with the industry's ho-hum attempts to determine even a baseline ROI, Kent Cisewski, a former executive with the Walt Disney Co. and with long spins at two large meeting and incentive firms, decided to strike out on his own. He founded the Fusion Performance Group, an Orlando-based third-party whose tagline reads, "What's Your ROI?"

"When you consider that meeting spend, and that includes incentives, is the second to fifth largest spend in corporations, you would think people would know what their return on investment is for a meeting and be able to tell you," says Cisewski. "But the industry isn't there yet, and that's a concern."

In an attempt to resolve that longstanding problem, Cisewski set about to make benchmarking ROI the centerpiece of his client sell. The company created a proprietary metrics program that analyzes and drills down into a client's data to see if their meetings spend is driving revenue, and then identifies and recommends additional opportunities for increasing their profit margin, such as tiered incentives that all employees can aspire to achieve.

"At the senior level, we have found that management wants to know their data. They are not afraid of it," says Tanya Perry, vice president of sales for Fusion. "But the reality is, to do a thorough ROI analysis, there is a cost to collecting the data in terms of stakeholders and man hours. And, quite frankly, it is scary for big corporations with regard to privacy and confidentiality. But that is where consultancy is critical. You have to align with the client, because you are both in it together."

For Kent Campbell, a C-suite life-insurance distribution consultant with one of the country's top five insurance providers -- and a Fusion client -- the laissez faire approach to ROI can be easily explained. "The short answer is, management doesn't really care if there is ROI, because heavy-investment meetings have always been about entitlement and expectation," he says.

Campbell, along with a select few senior executives from the insurance, financial and medical industries, attended Fusion's inaugural Thought Leadership Summit in Costa Rica last October, where tackling ROI was the main topic. "The average chief financial officer is not going to say, 'Let's implement a change in the way we approach our meetings or events,' especially if they are consistently hitting their revenue numbers," notes Campbell, who acknowledges that his own company's approach to achieving meeting ROI was off-kilter. "We weren't generating any new profit margins, and we weren't pushing the revenue needle. We were just rewarding the same group of high achievers year after year."

Fusion helped light a fire under the rest of the company's performers. "You have to move what I call the 'middle 60 percent' of employees," says Kent Cisewski. "In all my years in the business, I have yet to hear anyone else tell me they're focusing on that group. But that's where you will get the biggest lift, because it will create a new leverage point. I tell clients that if you can engage this group and get them to move by just 5 percent, you can really start shaking things up.  But it could take you up to two years to see the actual impact of this, so ROI isn't necessarily an immediate-gratification thing."

Incentive Travel's Big Disconnect
The Incentive Federation's 2016 Incentive Marketplace Estimate Research Study put spend on U.S.-generated incentive travel at $14.4 billion in 2015. That's more than the gross domestic product of the African nation of Zimbabwe and three times that of the Caribbean island of Barbados, according to the International Monetary Foundation's October 2016 World Economic Outlook.

Yet, according to the SITE Index 2017, conducted by J.D. Power, only 23 percent of corporate buyers and 24 percent of third-party suppliers said they almost always track the ROI on their incentive programs. Put another way, a full 75 percent do not track ROI at all. "Buyers and suppliers appear to be missing an opportunity to prove the efficacy of their programs," the SITE report concluded.

Julie Johnson, director of industry and media relations for Chicago-based SITE, told M&C that the association "is in discussion with Jack Phillips [chairman of the Chelsea, Ala.-based ROI Institute] about co-publishing a book with case studies and models on how companies can track ROI of their programs. However, it is still in the planning and information stage, and will most likely not be published until sometime in 2018."

Taking a different approach
According to research conducted by AMA Enterprise, a division of the New York City-based American Management Association, leadership has become increasingly out of touch with their employees and their organizations. The survey of 300 senior executives revealed that one-third operated within a "leadership bubble" most of the time.

"A key dimension of the leadership-bubble metaphor is not so much that employees don't think top management knows what's going on," said Sam Davis, vice president of AMA Enterprise, in his report on the findings of the survey. "It's that leadership doesn't even realize it has lost touch."

Rob Adams,
President and Chief Executive Officer,
Rob Adams, President and Chief Executive Officer, Bishop-McCann

Employee trust in their management and in their relationships with customers, not engagement or even revenue gains, should be the new metric for meetings-related ROI, says Rob Adams, president and CEO of Kansas City, Mo.-based Bishop-McCann, a third-party global event planning company with offices in Chicago, Minneapolis and San Francisco. "The industry is saying it's no longer good enough to just plan meetings," says Adams. "We need solutions that show a direct impact on the individual and company performance."

Just last month, Bishop-McCann formed a partnership with Santa Monica, Calif.-based Ofactor, a neuroscience-based company founded in 2014 by Dr. Paul J. Zak to help create a high-degree performance culture. Bishop-McCann is using Ofactor's Event Trust Survey, made up of 26 questions in eight key areas such as caring, openness, yield and expectation, as a tool to use before and after events. On the front end, the answers are used to design the focus of the event, and afterward to measure its overall effectiveness as well as improvements in key metrics.

"We see our industry still wanting to achieve overall savings and value, and we still believe this is critical," says Adams. "However, we also see a continued trend of clients wanting to know the impact to the individual attendee and organization as a result of the meeting." He points to research by Ofactor demonstrating that "high-trust" organizations, when compared with low-trust counterparts, have 50 percent higher retention rates, and their employees demonstrate 50 percent more productivity and 106 percent more energy and passion for their jobs.

Data will drive demand
There is no question that marketing and face-to-face events are intrinsically linked. A May 2017 survey conducted by Dallas-based Freeman of 1,000 marketing professionals worldwide found that CMOs and brand managers are allocating more resources to live events, as they see positive results from immersive, sensory brand experiences. More than one-third of those polled expected to allocate 21 to 50 percent of their marketing budgets to brand experiences -- everything from events and trade shows to hybrid pop-ups and virtual events.

Such findings buttress a 2016 report by New York City-based Forrester Research that found the average CMO allocates roughly 24 percent of the annual B2B marketing budget to live events. By 2020, the same study estimates, 3.2 million professional events will be taking place globally on an annual basis.

If the power of live events is so valued in the C-suite, it begs the question: Will the demand for an analysis of ROI follow such a heavy financial investment?

Tanya Perry, Vice President of Sales,
Fusion Performance Group
Tanya Perry, Vice President of Sales, Fusion Performance Group

"It's just a matter of time, and it will happen when there is enough downward pressure from the top," says Fusion's Cisewski. And when that pressure comes, adds Tanya Perry, planners had better be ready to show the numbers. "One of the critical things to senior management is financial ROI," she notes. "Right now CEOs have the data showing how many customers clicked on their ad, went to their site and purchased an item, because they have a data trail. We totally believe that you can do the same with live events."

Robert Perry, chief revenue officer and chief marketing officer for Toronto-based electronics company Mass Fidelity and a former senior executive with Secaucus, N.J.-based Panasonic Consumer Electronics, believes a more aggressive push for ROI is inevitable. "In most major companies, we look at meeting spend, and we understand that it is necessary," he says. "But we are always questioning whether the meetings moved the revenue needle. We are uncomfortable with the fact that we can't compare a dollar over here vs. there. We are so comfortable about the level of importance of the meetings, we don't feel we have to be analytical about the ROI." Nevertheless, Perry adds, "I believe that as business becomes more competitive and resources more scarce, we will absolutely have to have ROI-driven programs."

Measures of success
The general perception of marketing has changed from one of promotions, campaigns and parties to data-driven metrics, according to Michael Piddock, founder of London-based Glisser, an ROI and audience-engagement company based in New York and Seattle. He predicts this shift will force the issue of ROI to the table. "Events and conferences need to be measured with the same detailed, quantitative and systematic methodology that you apply to the rest of your marketing activity," he says.

Michael Piddock, Founder, Glisser
Michael Piddock, Founder, Glisser

Glisser uses a four-pronged approach to measuring event ROI: revenue, reputation, relationships and recall, as such:

 If you're seeking face-to-face interaction with prospective customers to explain and sell your product, your ROI will be revenue.

 If you're running an event with the goal of increasing the strength of your company, your ROI will be reputation.

 If you're creating a live experience with the goal of forming networks, your ROI will be relationships.

 If you're bringing together teams of employees, customers and/or suppliers to educate, train and improve their knowledge of a subject, then your ROI will be recall.

The outcome differs for each client, says Piddock, because it depends on their individual marketing and communications objectives. It is a system that he developed over 12 years running B2B marketing teams. "It's by no means complete," he acknowledges. "It represents an effort to push this issue front and center for marketers who are using a tremendous armory of tools and techniques to prove the value of other forms of marketing but neglecting events."