Setting up a booth at a trade show is an expensive proposition. You must rent the space, design the display, promote it, stock the space, and staff it. Before you decide to get involved, conduct an in-depth analysis of the costs associated with each of these components.
Prepare well in advance. You are aware of this, correct? Maintain as much organisation as possible from the start — even before you reserve your space. You are aware of how meticulously modern brides plan their weddings. They begin planning the church, the reception, the dresses, the flowers, and the cake months, if not years, in advance. And, of course, there is the financial aspect. To be sure, you are the bride. Take out your planning book and begin compiling a list of everything you need to do to prepare for a successful trade show season — next year’s.
Even before you commit to one or two shows, you should carefully consider the costs and expected returns. This is why you should create a budget for trade shows. Whatever you may deny, everything has a price, and trade shows are no exception. Bear in mind that your objective is to generate sales, or at the very least opportunities to generate sales. As a result, you must view your costs in this light. Everything should be done with the prospect of a return in mind.
How to Begin Planning Your Trade Show Budget
Typically, the trade show budget serves as the starting point for your campaign. If you work within a budget, you have a better chance of controlling your costs. Of course, budgeting for things like trade show marketing involves some hocus pocus – especially if you’ve never done it seriously before and have no track record to rely on. Nonetheless, you should give it your all. This is not rocket science, and any research or analysis you conduct will help you perform better than if you “wing it.” Consider the following “brainstorming” process.
To begin, consider the following BIG questions:
1. Do I truly believe I can recoup my costs in a short enough time frame to make the venture “profitable” (make more than it costs)?
Answer 1. As with most promotion and advertising, you have no idea how successful it will be until you do it. To begin, you’ll need to total up all your expenses and then determine how many sales you’re likely to generate from this type of exposure.
2. Do I have any idea which trade shows are more likely to be “profitable” than others?
Answer 2. Trade show directories and reports can provide information on industry-specific trade shows. Typically, they will inform you of the number of attendees and, hopefully, their purchasing habits. Locate the pertinent directories and devise a method for selecting between shows.
3. Are there obvious ways to increase my “Conversion Rate” — the percentage of attendees who make a purchase from me?
Yes, of course. Having an eye-catching display is a good place to start. Choosing an advantageous location on the floor will assist. Proper setup of your booth will aid in the efficient “processing” of attendees. Having a lead-generation system in place will enable you to conduct more profitable follow-up. Distributing memorable handouts increases your chances of being recognised in the future. Educating your booth staff may make a significant difference.
Consider a few additional questions along these lines to help you get in the right frame of mind. Then you can begin planning your trade show budget.
Begin Planning – Choosing Appropriate Shows
Begin by compiling the following information (and any additional information that occurs to you along the way):
Locate a trade show directory for your industry (the best source is online), or research major trade show venues or exhibition companies. They will quickly put you on the right track.
Choose ten shows that appear to be the most promising — based on your “gut feeling” about their potential for your campaign.
Create a chart outlining the five or six most critical pieces of information about each of your most promising venues:
– Date – Location – Attendees – Geographic area served
– Market segment (who will be attending)
Calculate Your Show’s Costs
Now, add some columns to your chart to record the costs associated with each show:
– Cost of booth space – Other space-related expenses
– Travel expenses to and from the show – Rentals and purchases at the show (tables, power, etc.)
– Costs associated with booth staff housing – Costs associated with shipping booth display(s) and materials
– Rental vehicles are required
**Campaign Costs for Multiple Shows**
Now consider the “sales process” itself and compile a list of everything you’ll need to have a successful trade show experience. These are typically items that will be used for multiple shows; therefore, consider them “campaign costs” that will be amortised over a number of shows:
– Design and production of exhibit booths
– Product literature – Handouts – Employee training – Promotion of the show (free passes to clients, etc.)
If your campaign costs are estimated to cover four shows, take these costs and add 25% of the total campaign costs to the cost of each show. This should provide you with a reasonable estimate of the total cost of each performance:
The cost of attending a show is equal to the specific show costs multiplied by the pro-rated campaign costs.
Working Out Your Break-Even Point
With a reasonably accurate estimate of your costs in hand, you should be able to calculate an accurate estimate of your Break Even Point for each show — the number of sales required to cover your costs.
For instance, suppose you estimate your costs for Show A to be $3,000 (including a pro-rated amount for the one-time costs such as the booth). And suppose you can calculate your “gross profit” on each sale fairly easily (gross sale amount minus out-of-pocket). For instance, suppose the wedding photographer’s gross profit margin is 50% and his average sale is $1,000. This would result in him earning a gross profit of $500 on each sale.
To recoup his $3,000 investment, he must generate six sales (6 x $500 Gross Profit on each sale).
Conversion Rate Factors
What are his chances of making six sales at a particular show?
That is dependent. If our photographer attends a wedding show with 1000 eager and warm blushing brides-to-be battering down the show’s doors, then perhaps six is a conservative estimate. However, if the show has only 200 attendees, securing six sales may be much more difficult.
However, this also depends. A smaller show will likely have fewer exhibitors (less competition), a more intimate atmosphere, and will allow you to spend more time with each prospective client. And, of course, it will be significantly less expensive than a larger show, which means his break-even point may be significantly lower.
The same holds true for much larger shows: increased attendance (potential sales), but also increased costs and significantly increased (and more intense) competition. As a result, the “conversion rate” (sales per 1,000 attendees) will be lower. While there will be more people, they may be more difficult to sell.
Once you have a sense of what a “conversion rate” is, you can begin to see how other factors such as the price of your service, the attractiveness of your presentation, the quality of your samples and handouts, and so on all have an impact on it.
Each show and each product will have its own “conversion rates,” and the only way to determine your own business’s conversion rates is to conduct research, experiment, and constantly “tweak” your presentation.
It certainly wouldn’t hurt to speak with friends and acquaintances who have experience attending trade shows. Inquire of them their own success rates. Inquire as to how many actual sales they generate from a successful show. Inquire as to which shows have been the most profitable for them and how frequently they have broken even.
The only way to arrive at difficult conclusions is to attempt. This will enable you to develop a track record. Take a stab if you believe the numbers for a particular show almost add up. Attend one or two shows and then conduct a thorough analysis of your costs and returns. Then you can establish a dependable “Target Conversion Rate” – a figure you can aim for and expect to achieve – and you’re in business. Budgeting for next year’s trade shows will be a breeze.
Naturally, once you commit to one or two shows, your focus must immediately shift to achieving (and exceeding) that Target Conversion Rate. Improve your display, acquire more impressive samples and portfolio books, fine-tune your product, acquire memorable handouts, memorise your sales pitch, enrol in voice lessons, get a haircut…