July 2, 2012 by Jeff Hurt
One of the purposes of a business to business event is to build and strengthen customer relationships.
Just as one of the purposes of a trade association’s annual meeting is to build and strengthen member relationships.
So how do you quantify the value this brings to your organization? How do you quantify the value of an event when the goal is to maintain and increase loyalty?
In the past decade, we’ve heard a lot about return on investment (ROI) and return on objectives (ROO) within the meetings and hospitality industry. Both of those metrics are a good start. And both require a lot attention and time to collect the right data to be able to accurately measure ROI and ROO. Too often, the time and labor involved in the data collection cause many to walk away with their hands in the air waving a white flag in surrender.
ROI assumes that money, or capital, is in short supply. Most healthy companies don’t have scarce capital. If the company can prove it has the customer, it can get the capital to meet that customer’s needs.
The scarce resource is the customer. That’s what it can’t make more of. It can’t manufacture them. Or outsource them. Or duplicate them. And as with any scarce resource, you can use up your customers.
More conference organizers need to be in the business of building and maintaining customer relationships. This is one of the greatest values business to business events bring to a company and is also one of the most difficult to quantify: building and maintaining customer relationships.
The most valuable asset of any organization is its customers. The most valuable asset of any conference is its attendees. Without them, there is no revenue. Without conference attendees there are no exhibitors, sponsors and other stakeholders. Without customers or conference attendees, you have nothing more than an expensive hobby!
If your conference is to remain competitive, you have to:
The challenge is that often your CEO, CFO and COO look at the expense side of the conference experience and feel that it’s costing more than it’s worth.
Your challenge is demonstrating that you create concrete value for the company. You need to illustrate that you’re getting current and future customers to pay the company more money.
So how do you do that?
Martha Rogers and Don Peppers developed a ROC metric, to measure the value of customer relationships. It can be applied to business to business and annual events as well.
ROC is a way to balance the current revenue we get from the customer with their future value to us. It’s not just the measure of the lifetime value of a customer, although that’s important too. According to Rogers, it’s the rate of change of customer equity.
ROC is the amount of money you make from a customer during a specific period, plus the amount of change in the customer’s value, divided by the value of the customer at the starting point. This equation uses the term customer equity to represent the sum of the lifetime value of all of a company’s customers, based on the current value of a dollar. You can use the ROC equation during a specific time period so you can measure the effect of specific conferences or events.
Ultimately, the only revenue any organization will ever have comes from the customers it has today and the ones it will have tomorrow. It’s the same for that annual event. Customer relationships are what bring companies money and make conferences successful. And that’s whay companies should be measuring.
What are some other things conference organizers should track when measuring ROC? What are some basic indicators you use to determine the value of a customer?
Filed Under: Business Model
big fan of peppers & rogers. like the emphasis on customer vs. cost savings. also like the emphasis on long-term thinking/planning.
roc reminded me of similar/same metric, customer lifetime value (clv).
the lifetime value formula is: total profit of an average client over the relationship’s lifetime (including all residual sales), less advertising, marketing and incremental product or service fulfillment expenses = lifetime value of the customer.
i doubt anyone in the industry was using either metric but i’d like to see the data using either one of these formulas.
one of the key findings from the recently released study on the business value of meetings by mpi was that meeting professionals fear measuring business and meeting outcomes because of what they might find. no lie.
those who fear what they might find and act (measure) anyways, find all manner of opportunity for improvement.
measurement, in all its manifestations, is a meeting professionals only friend. wonder what it’s going to take…
Thanks for reading and weighing in.
Wow, how sad that meeting professionals fear business metrics and meeting outcomes because of the truth that may discovered. We’ve got to get better at measurement than smile sheet evaluations and anecdotal information. More meeting professionals should be measuring ROC and CLV for sure!
[…] of their current attendees. They need to measure the value of their customer relationships, or return on customer as Martha Rogers and Don Peppers call […]
Your email address will not be published. Required fields are marked *