Calculating the ROI of Construction Trade Shows

“If we get one or two good leads out of it, it’ll be worthwhile.”

How many times have you heard, said or thought this sentence when it comes to exhibiting at construction trade shows, events and exhibitions?

My guess is at least once per event you attend.

I wanted to take a closer look at that definition of success, what it equates to in terms of ROI and how it compares with using an online marketing channel, like SpecifiedBy.

A Quick Look at Construction Trade Shows & Events

Since launching SpecifiedBy in June 2013, we’ve attended and exhibited at a mixture of industry events and trade shows, with varying degrees of success.

It’s really tough to accurately quantify the benefits of these events, partly because a large portion of the value is in increasing brand awareness and familiarity. But unless you have the budget and are willing to spend tens of thousands of pounds on an extravagant stand, do you even get much of this?

My personal conclusion is that exhibiting at the various industry trade shows are not that valuable to SpecifiedBy — or certainly, we can achieve a lot more with less through other channels.

I’m sure there is a place within the industry for them, but I’ve experienced much more bad than good. It feels a tired format, surviving purely on the basis of, ‘we’ve always done it’.

Poor organisation, stuffy venues, speakers reading bullets points off slides with too much text, crappy wi-fi, gimmicky, attention-seeking tactics and sales people who either don’t want to be there or behave like they’re on a market stall, harassing passers by, desperate for any attention they can attract — this is the image I have of industry events.

The good news (or bad news depending on your position) is that the digital era, and the next generation of construction professionals coming through, has no interest in ‘how we’ve always done it.’

Whilst not wanting to get into how to fix the trade show format , these issues did get me thinking.

If I have worked out that they aren’t that great for SpecifiedBy, what is it that other exhibitors, building product manufacturers in particular, get out of them that keep them coming back and putting their hands in their pocket, year after year?

So I started asking people on the stands when I’ve attended various events, bringing us back to the opening line.

“If we get one or two good leads out of it, it’ll be worthwhile.”

The best anyone can give me is that when it comes to construction trade shows and exhibitions, “these events are always a bit hit and miss.”

Both of these lines have become a cliche, rolled out whenever anyone is talking about the success, or lack of it, at a trade show. Hardly justification for a marketing channel the industry spends millions of pounds on every single year, with next to nothing in the way of innovation or even tiny steps forwards at that.

It’s almost as if there is a ring-fenced budget within each company, solely for events and trade shows, and there is a resignation, and acceptance, that the best we can do out of it is maybe one or two leads.

So let’s have a closer look at the costs and potential returns of those leads.

Calculating Construction Trade Show ROI

As mentioned previously, calculating the ROI of exhibiting at events is difficult.

I touched on Brand awareness being one of these reasons. However, I will stick to my belief that unless you are in the <5% of the market who can splash tens (hundreds, even) of thousands of pounds, building extravagant, two-story stands, with a bar, a balcony and a jacuzzi, then the brand benefits are pretty negligible.

Other issues include actually being able to attribute a lead to a trade show. If the specifier didn’t actually speak to someone, or didn’t share any details, just saw your stand and took a leaflet, or only got in touch 6 months later, how do you really know?

Well, you don’t unless they tell you. Which they won’t.

So, for the sake of keeping this calculation nice and simple, we are only going to account for the core of the market, ie. those who pitch up with modest, standard exhibitions, therefore gaining little to nothing in brand awareness, and we are only counting leads and sales that can be specifically attributed to the trade show, ie. they had a discussion, exchanged details, named the show as the reason they have gotten in touch etc.

Cost of Exhibiting

Note: Numbers are based on some averages and estimation, and aim to demonstrate a point rather than be 100% accurate. We’ve also not included stand materials (banners, posters, samples etc.) on the assumption that they can be used multiple times. But you could take the cost of these and divide them by the number of shows they are good for.

• Average exhibition space / day = £700
• Two staff on stand / day = £250
• Travel, accommodation & meals for two staff = £300
• Marketing materials (brochures, business cards, pens, USBs etc.) = £500

Total = £1750 / day

Cost Per Sale

So, on the optimistic basis of 2 good quality leads in a day, that gives us a cost of £875 / lead.

For most building product manufacturers, any project wins are going to be worth much more than £875, but that assumes a 100% conversion rate from lead to sale, which is not going to happen.

This is where I think a lot of companies get the measurement of success at trade shows wrong — these leads are not yet sales. And the whole environment of a trade show is not set up for sales, it’s lead generation, so I would question the benefits of having out-and-out sales people there.

Assuming a generous conversion rate of 10%, from lead to sale, and not including the additional time and costs spent moving the lead along the funnel (which are not insignificant), the cost per sale (very different to cost / lead) comes in at £8750.

Again, for a lot of manufacturers, a single project will cover this. But if the conversion rate drops even slightly, or only one lead / day is achieved, or you have 3 staff instead of 2 on the stand, or it’s a slightly more expensive show, these costs can quickly start to spiral.

We won’t go through all of the individual calculations, but below are a few of the outcomes in different scenarios.

Cost per sale alternative scenarios

• 3 Staff = £10,125 per sale
• More expensive stand (£1200/day) = £11,250 per sale
• 7.5% conversion rate = £11,667 per sale
• Single lead / exhibition day = £17,500 per sale

ROI

Return on Investment = (Sale Value* — Costs)/Costs

*You could use your gross profit per sale for more accuracy.

For simplicity, let’s say the average sale order is £10,000. Assuming 2 leads per day at a trade show, at a conversion rate of 10%, gives us the equivalent of £2,000 sales / day at a trade show (2 x 10% x £10,000).

• ROI = (£2,000 — £1,750)/£1,750
• ROI = 14.29%

This means for every £1 invested in trade shows, the company in this example will make ~£1.14

Have a play around with this little calculator we pulled together and enter your own actual numbers to calculate your own, more accurate, Costs per Lead, Costs per Sales and ROI.

Is This Good?

Some companies will be happy to pay this for a lead.

And then be happy to pay for enough leads to convert a sale and be happy that one sale will cover the costs plus a bit more.

And then have enough cash in the bank to cover the cost of these leads until that sale actually goes through and payment hits the account.

And be happy with a ~14% ROI.

For us, it doesn’t work, but we’re a web company with a relatively low selling price. So it’s very much a case by case basis on whether the ROI of events, as an individual specifier sales and marketing channel, is any good.

However, the point is not just the cost / ROI of trade shows in isolation that is the problem.

I believe this channel falls apart for almost any size of company, with any type of products, when directly compared to other channels, in particular, online marketing channels, which can provide more leads, at as high a quality (and better) for a fraction of the price and effort.

Comparison with SpecifiedBy

So, how and why do trade shows and events compare with an online marketing and lead generation platform like SpecifiedBy?

Firstly, the ultimate goal for both is to put manufacturers products in front of an audience of potential specifiers. Beyond that, there are a few more subtle similarities:

• At exhibitions, product manufacturers create their branded stand, on SpecifiedBy they have their profile page
• At exhibitions, only a small percentage of all visitors will visit a manufacturers stand. On SpecifiedBy not all traffic will visit their profile or product pages.
• At exhibitions manufacturers have physical brochures, technical information & samples. On SpecifiedBy they have product pages with images and digital content to be downloaded
• At exhibitions, interested specifiers will have a chat, take some information and/or exchange details. On SpecifiedBy, interested specifiers will send an enquiry, ask a question, save a product to a project, download a file and/or follow a manufacturer.

There’s probably a lot more, but you get the point.

Importantly though, there are some big differences:

• SpecifiedBy is able to attract more traffic to a website than an event can host visitors on a daily basis
• Not limited to a one-off, single day / couple of days
• Not restricted by physical location
• No additional material costs to the company
• Very little (to zero) staff time required due to support and automation
• Specifiers can discover products quicker with categories, search & personalised reccomendations
• Manufacturers compete in an even playing field — smaller budgets don’t mean a smaller presence
• Less salesy, providing better lead generation
• Completely measurable and accountable

Let’s do the Maths!!!

Again, for simplicity, we’ll make some assumptions. I’ve included 2 days setup costs for a company to get their profile set up, although more often than not, we will do at least part of this for a company at no charge.

Costs

• Lead generation package on SpecifiedBy = £1,999 / year
• 1 staff member x 2 days for account setup = £250

Total = £2,249 / YEAR (Event cost was £1750 / DAY)

Leads

Average company listing (conservative)= 4 leads / month = 48 leads / year

Note: We’re not including specifiers who send direct enquiries or click through from SpecifiedBy to a manufacturers website. We’re only counting leads that are triggered when certain actions are taken by the specifier, demonstrating their interest in a product.

This gives us a cost of £46.85 / lead (versus £875 / lead for events)

Sales

Assuming the same conversion rate of 10% from lead to sale, as before, this gives us a much more reasonable and affordable cost per sale of £468.50 (versus £8750 / sale for events)

With an annual SpecifiedBy subscription, even if a company was only to generate 2 leads over the FULL 12 months (highly unlikely), our cost per lead and cost per sale would still come in at just under the costs for an event.

ROI

Return on Investment = (Sale Value* — Costs)/Costs

*You can use your gross profit per sale for more accuracy.

Again, lets say the average sale order is £10,000. Assuming 48 leads per year (4 per month x 12), at a conversion rate of 10%, gives us the equivalent of £48,000 sales / year using SpecifiedBy (48 x 10% x £10,000).

• ROI = (£48,000 — £2,249)/£2,249
• ROI = 20.34 or 2034.28%

This means for every £1 invested in SpecifiedBy, the company in this example makes ~£20.34 (versus £1.14 for events)

BIG difference!

Overview

SpecifiedBy Trade Shows

Total Costs £2,249 / year £1750 / day

Cost per lead £46.85 £875

Cost per sale £468.50 £8750

ROI 2043.28% 14.29%

So Why Do Companies Keep Exhibiting?

In the face of more cost effective options, why do we as an industry keep on paying to exhibit at these events?

Whilst I don’t believe many events are flourishing, and there is certainly less curation of exhibitors (if you’ve got the money, you’re in), they are attracting enough to survive year in, year out and new ones continue to spring up.

Here are a few of my theories on this phenomenon…

Because We’ve Always Done It

I mentioned this right at the beginning of the article as it is probably the biggest reason why companies exhibit year after year.

Quite often companies have been attending specific shows, or a specific number of shows per year, for so long, that it has become ingrained within the company.

As this gets passed down through each generation of management / staff turnover, soon the original thinking that lead to the decision to exhibit in the first place is so far removed that nobody in the company really knows why — other than they always have.

Everyone assumes that this has been a well thought out, planned decision (which it probably was at first), so don’t question the benefits.

Not Knowing/Understanding the Alternatives

The truth for a lot of building product companies is that if they removed exhibiting at events and trade shows from the marketing budget, they would have a sizeable chunk of money that they weren’t really sure how to spend.

It is much more difficult, and perhaps more of a risk, to step into channels that the company has not used before, particularly online.

But as more digital natives take up roles within these companies there will be more of an appetite to experiment and explore these new channels, much to the benefit of the company.

Poor Feedback to Management

Given that it is generally sales staff, supplemented by technical and/or marketing staff who attend and man the exhibitions, I would question if management are really getting the full story from each event.

Nobody wants to say they stood around all day doing nothing and speaking to nobody — even though they have no control over attendance.

So it’s very easy to say, “it was fine, a few leads to follow up with, we’ll not really know how worthwhile it was until we hear back from them.”

Poor Measurement

I’ve mentioned a couple of times already that it can be quite difficult to accurately measure the success of exhibiting, which ties in with the ‘we’ve always done it’ approach.

If you attend x number of shows in a year and you have a good year, everyone is happy and chances are you exhibit at those x number of shows next year, with very little accountability for the performance of each.

Old School Sales

It strikes me that most building product companies employ people who would be considered to be very traditionally trained sales reps. Given that specifiers are perhaps one of the most sensitive professions to a hard sell, I’ve always found this to be a bit strange.

Anyway, because of this, there is a lot of very traditional attitudes to selling in our industry…

“We like to meet people face to face. We can sell better when we speak to people. People buy from people. etc. etc.”

None of this is necessarily untrue, but trade shows aren’t sales opportunities. They are marketing and lead generation opportunities.

And online channels provide better, more cost-effective ways to do that.

The Inevitable Change

I believe construction’s dependence on trade shows and exhibitions will wane significantly over the next 5 years. In part down to the cost issues highlighted above and in part down to a more digitally savvy work force, who are comfortable experimenting with various channels.

But there is one more important and very simple reason, which already exists, that will see this big shift away from events — online suits specifiers better.

A survey by RIBA a few years ago showed that 85% of specifiers prefer to do their product research online.

More recently, we carried out our own research for our Specifier Insights Report (download a free copy here) within which, one of the first questions we asked specifiers was ‘Do you prefer to discover and research building products online or offline?’

That question was emphatically answered ‘online’ by 99% of specifiers.

This is backed up by the dropping numbers at events, big and small, all across the country. The only thing that I see keeping them alive is the educational content some put on — the seminars and discussions and presentations.

Some people who attend those may hang around for a little bit and stumble across a manufacturer stand, but it’s not the main reason they are there.

The Future of Trade Shows & Exhibitions

I still believe there is a place within the industry for good construction trade shows and events, of course there is.

We all still want to get out and meet people and learn about what is going on in the industry directly from other people.

However, the format needs a major refresh. The traditional approach and goals of many industry events and trade shows simply don’t stack up.

As a lead generation tool for manufacturers, there are much more cost effective channels which provide as good a quality of lead, if not better, than trade shows and events.

As a place for specifiers to discover new products and materials, there are more efficient channels — which for time-poor professionals such as Architects, is always going to be the winner.

I’m not saying don’t ever exhibit at trade shows and exhibitions, just take a bit of time to carefully evaluate the merits and ROI of each one and consider alternative channels for lead generation where you could most likely get much more for less.

Agree? Disagree? I’d love to hear your opinion. Leave a comment below.

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A version of this article was originally published at marketing.specifiedby.com which also includes a comparison to using Google Adwords.

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