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Here's a rough and ready forumla for determining your expected sales:
Sales = TA (Total Attendance) x CR (Conversion Rate)
There is nothing magical about this equation. But if you look at it this way, "CR", what we call "conversion rate" is where action is. We've already mentioned some of things you have to do to enhance your CR (conversion Rate): get more people to your booth, present your product in best light possible, have an attractive display, have persuasive product literature, have noteworthy handouts, have trained and motivated staff, etc., etc.
But here, for budgeting purposes, we simply want to take a wild guess at what your CR might be when all is said and done, or, as they say, "all other things being equal". For argument's sake, Let's say it's 1%. That means that if 1000 people attend show, you're going to get 10 sales:
1000 x .01 = 10 Sales
In some cases this would be phenomenal (the wedding photographer). In others, it would be miserable (the widget guy). If nothing else, this should allow you to create a "Target Conversion Rate" (TCR). Once you know what your costs for a specific show are, you simply have to take those costs and figure out how many sales you need in order to recover them.
So let's say you calculate your costs for Show A are $5,000 (including a pro-rated amount for one-time costs such as booth). And let's say you can relatively easily calculate your "gross profit" on each sale (gross sale amount minus out-of-pocket). Let's say in case of wedding photographer gross profit margin is 50%, and average sale is $2500.
(whirrr, buzzzz, click, kaching)
In order to recover his $5000 he will have to get 4 sales:
Breakeven number of sales (BS) = show costs (SC) / Price (P) x Gross Margin (GM)
or BS = SC / P x GM (I chose "BS" for a good reason)
or, in this case:
BS = $5000 / $2500 x .5 = 4
Stated in terms of sales per 1000 attendees, your CR in this case would be .004 or .4%.
Is it reasonable to expect a CR this high. Will you make 4 sales for every 1000 attendees at your typical show? Well that depends, n'est-ce pas? If you have 1000 warm and willing blushing-brides-to-be battering down doors of show, then perhaps 4 is a conservative estimate. If you have only 200 attendees, would this make your average CR go up or down. That also depends. A smaller show may have fewer exhibitors (less competition), will have a more intimate feel about it, will give you more time with each prospective client. And, of course it will cost considerably less than a bigger show -- but probably not all that much less, when all is said and done.
And then other factors having a bearing on conversion factor start becoming clear too: price of your service, attractiveness of your presentation, quality of your samples and handouts, etc., etc.
You really need more feedback on this CR thing don't you. It certainly wouldn't hurt to talk to friends and acquaintances who have trade show experience. Ask them about their success rates. Ask them how many actual sales they get from a good show. Ask them if they've ever calculated their CR -- number of sales per 1000 attendees. And check online literature for articles about typical conversion rates at trade shows. This is a very important part of creating a trade show budget. I will be compiling some of this information, eventually, and you may find it helpful.
Putting it together...
For argument's sake, let's say that your wedding photographer. Your product is competitively priced, your presentation is well put together, and your product is as attractive as next guy's. Is it reasonable to think you will get 4 sales from a show with 1000 attendees?
One would hope so. In fact, let's be a bit more aggressive. Let's target 6 sales. Let's pretend this is point at which you will consider going through all hassle of doing show. Anything less is just too much bother.
That means your TCR (Target Conversion Rate) is 6 / 1000 = .006 (or .6%).
This gives you a rough and ready tool for calculating profitably-potential of various shows. If Show B will cost you $3000 to enter, and it has only 400 attendees, then formula works this way:
No. of sales expected: .006 x 400 = 2.4 (round down to 2) x $2500 x .5 = $2500 gross profit.
"EEEEHHHHHHH" (Buzzer sound). No good. You need at least $3000.
To hit that number you will need a TCR of .75% (or 7.5 sales per 1000 attendees). Sounds pretty high, doesn't it. Well, you'll never know until you try. The quality of attendees to this show might be higher. There may be other factors too that make you want to weight one show higher than another.
The only way you can know for sure is by trying. That will allow you to establish a track record. If you think numbers almost add up, then take a stab. Go to a show or two, and when it is over do a careful analysis of your costs and returns. Then you can establish a reliable TCR -- a number you can seriously shoot for and expect to reach -- and then you're in business. Preparing a trade show budget for next year will be a piece of cake.
And of course, once you do commit to a show or two, your focus has to immediately shift to hitting (and smashing through) that Target Conversion Rate. Design a better display, have more impressive samples and portfolio books, fine tune your product, get some memorable handouts, memorize your sales pitch, take voice lessons, get a hair cut...
When copying or reproducing this article, or parts of this article, please give appropriate credits to Richard Hendershot, www.tradeshow-display-experts.com
Trade Show Tips: Creating your Trade Show Budget
Rick Hendershot is marketing manager for www.tradeshow-display-experts.com. The parent company, Canada Display Graphics, has facilities in Mississauga and Waterloo, Ontario, Canada, and ships trade show displays and custom vinyl banners across North America.