In this guest post from our friends at Splash, Director of Content Marketing, Esther Chung, breaks down a key KPI by which even beginners can accurately predict event ROI.
When it comes to measuring the revenue impact of events, event marketers are struggling. Even though events command the highest share of marketing budgets and 69% of marketers consider in-person events effective, marketers admit they don’t know how to calculate the ROI of an event.
We don’t need to tell you that proving the value of your events is important. But if the main goal of your event is to drive sales, measuring ROI is the missing piece to the rest of your event career.
We’re here to help you take that first step to measuring ROI. While there’s a lot of KPIs (Key Performance Indicator) you can track in events (like lead generation, attendance, brand awareness), there is one metric that can actually both predict and drive the return on your events. Splash CEO, Ben Hindman, calls this the Opportunity in the Room.
This is one of our favorite metrics to track, and is perfect for ROI beginners: it’s easy to calculate, simple to understand, and shows the value of your events quickly before and after your event.
What is the Opportunity in the Room?
The Opportunity in the Room (OITR) is a KPI that shows the total potential value of the open opportunities at your event.
It doesn’t tell the whole ROI story (you would need to take into account event costs to really calculate the return on investment), but it provides a powerful snapshot of the potential pipeline that you’re driving. This is especially important if your business has longer sales cycles (looking at you, B2B), and it’s going to be awhile until you see tangible numbers.
It’s also a great way to get your team excited about your events (and to get them to drive attendance and more sales!).
But before you begin measuring the OITR or any other KPIs that connect your events to the bottom line, there are a couple of things to put into place first.
ROI Prep #1: Integrate Your Event Data
Do you have interaction data from all of your events (registrants, attendees, no-shows)? Has your sales team accurately added event attendees to opportunities that resulted from (or were influenced by) your events? Is your event data connected to the rest of your marketing stack?
When your event data lives in different systems — or worse, business cards, random pieces of paper, Google Sheets, etc. — it’s almost impossible to keep track of activity across all accounts.
You can’t report on metrics if your data isn’t in the right place. Make sure you’re properly capturing data and syncing it with your systems of records (CRM, marketing automation platform, etc).
ROI Prep #2: Gather Your Company Metrics
To accurately measure any revenue-driven metrics, you need to know how the rest of your company is measuring success (as well as know what metrics are important to your exec team or board).
Every company is different. Get your company’s info on:
- Average sales cycle: How long does it take to generate and close an opportunity? This will help determine when and if your events actually influenced an opportunity.
- Opportunity deal size: What is the value of each opportunity? This can help you forecast your ROI even before a deal closes.
- Conversion rates: What are the average conversion rates at each stage of the buying cycle?
Once you get this information, it’ll open the door to not just the OITR, but a lot of other powerful KPIs.
How to Calculate the Opportunity in the Room
Now that you have your event data and company alignment squared away, you’re ready to start calculating.
There are two ways to leverage the OITR:
- The (Raw) Opportunity in the Room: The total value of all the opportunities RSVPed to your event
- The Opportunity in the Room: The projected ROI of your event based on the likeliness of an opportunity to close
1. The (Raw) Opportunity in the Room
Let’s say you have three guests who RSVPed to your event.
Each guest has a prospect account and an opportunity number attached (this number is based on your average deal size and data you would be tracking in your CRM).
To get the Raw Opportunity Number, you would add up the opportunity value for all three prospect accounts.
Prospect Account #1 Opportunity Value
+ Prospect Account #2 Opportunity Value
+ Prospect Account #3 Opportunity Value =
The (Raw) Opportunity in the Room
Guest #1: $50,000 account
+Guest #2: $25,000 account
+Guest #3: $25,000 account =
The (Raw) Opportunity in the Room: $100,000
Before an event, we promote this number internally like crazy to get our sales team excited — and there are plenty of ways to do it.
Put the raw OITR number on your office screens or dashboards. Award cash prizes for the salesperson who drives the most opportunities. Preach about it at your sales and all-hands meetings.
2. The Opportunity in the Room
The actual Opportunity in the Room is an early indicator of your event’s ROI, minus any events costs or investment. You’ll need to know the conversion rates associated with each stage of the buying cycle and which stage your prospects are in (i.e. if a prospect is in a later stage of the buying cycle, they’ll have a higher conversion rate and higher likeliness to close).
Do the same calculation as the Raw OITR, but assign a percentage to each value.
Prospect Account #1 Opportunity Value (x conversion rate)
+ Prospect Account #2 Opportunity Value (x conversion rate)
+ Prospect Account #3 Opportunity Value (x conversion rate) =
The Opportunity in the Room
For example, let’s go back to our 3 guests.
Based on conversion rates at each buying cycle stage, we can determine that Guest #1 has a 50% likeliness to close, Guest #2 has a 75% likeliness to close, and Guest #3 has a 10% likeliness to close.
Guest #1 (50% opportunity to close): $50,000 account x 0.50
Guest #2 (75% opportunity to close): $25,000 account x 0.75
Guest #3 (10% opportunity to close): $25,000 account x 0.10
$25,000 + $18,750 + $2,500 = $46,250
$46,250 is the adjusted Opportunity in the Room, which is a better indicator of what your projected event ROI will look like.
Note: The Opportunity in the Room only focuses on the potential return, and not the investment. If you have a ROI goal in mind (i.e. ratio of 2:1), you can use the OITR to build out your budget, and ensure your ratio remains the same.
The OITR Will Change The Way You Throw Events
You can’t always change the number of guests who attend your event but you can always change the value of each guest. So, instead of figuring out how to garner more RSVPs and fill the room, focus on driving the highest value of opportunities.
This shift in mindset will not only maximize the value of your events, it’ll also optimize your event marketing. Once you’re focused on the opportunity number, you’ll start targeting high-opportunity-value accounts, as well as solidifying your relationship with the sales team.
At the end of the day, we know there’s a lot that goes into proving the ROI of your events. So if you’re ready for more, we break it all down for you step by step in our ROI guide for event marketers.