It’s been a long time since I have chatted with Dave Lutz of Velvet Chainsaw, and I am glad I did recently. I was delighted to catch up with him given that he agrees that the top problems with events, in order of impact, are:
- Not making enough money
- Not getting enough attendees
- Not getting the right attendees
I asked Dave to select one of those issues to cover and he chose the money problem. Given that making a profit is easier done by focusing on revenue rather than reducing costs, I asked him about his latest thinking about generating revenue. The result was a great conversation that I hope you find valuable.
First, we talked about Sponsorship Revenue, followed by how to build a Key Account Program which helps increase revenue.
Velvet Chainsaw Revenue Study
Velvet Chainsaw recently did a revenue study and concluded that if you want healthy revenue streams, an event organizer should focus on raising sponsorship revenue to be at least 20% of a trade shows booth revenue, the other revenue categories being:
- Booth Revenue
- Attendee Revenue
- Visitor Revenue
- Advertising Revenue
Given the above categories, I would consider anything coming from a sponsor not attributable to advertising or booths, to be considered sponsorship revenue. Both Dave and I agreed that for most event organizers, it typically represents at most 5-10%, far short of the ideal target.
Dave feels that when the revenue is not well balanced in all areas, an event will sink faster when things get tough. Of course we all know that booth sizes at shows are shrinking as exhibitors are looking to spend less on drayage and other associated outside costs.
Furthermore, the study found that potential sponsorship money is never actually spent, and is very hard to get at with a ‘regular’ sales strategy. Building such a ‘special’ plan also represents an opportunity to grow an event with sponsors making big investments.
Sounds great doesn’t it? Would you like to get at that money?
But how?
You must develop an effective key account plan which develops a long term approach to building partnerships that are very lucrative and lock out the competition. Dave has written a post about such partnerships, offering some details about how to find synergies with the right partners and with the right elements.
What are the other conditions required? It certainly requires leadership from top to open doors (and keep them open). What’s most important to know is that Sponsorships at the level we’re talking about is:
Sponsorship is an ego decision- so you need to go high up the food chain.
Only 10% of all event organizers are doing this right
For the rest of us, what does Dave suggest?
Developing a key account strategy to get at this new revenue stream
- What are the rules of engagement? What are the limits of what you are willing to do and how ‘creative’ are you willing to be to meet the wants of future big buyers?
- What is your partnership strategy going to be? Who are you going to approach and at what level? Leadership is huge. You must have buy in and support from above. You are better off by ‘hitting the ‘home run swing’, ie Fewer but bigger.
- Stack the deck with the right people. Make sure that the people who are going to drive the action are profit-focused and creative. Picking a 9-to-5‘er who can’t strategize with a senior decision-maker could kill your chances.
- Borrow connections from stakeholders. If you don’t have the right connections yourself, get to the right connections through the connections you have: Fund raising is the best example of this- extending yourself through their Rolodex.
- Analyze your sponsorship menu to ensure that every property has some direct value to the attendees. Promotional opportunities fall short on making the emotional connection that a powerful sponsorship can deliver for a brand.
- Give sponsors a level of access they wouldn’t get otherwise. Perhaps VIP attendees and event organizer leadership and guests.
- Organize your sponsorship menu around investor objectives. Usually these include:
a. Thought Leadership
b. VIP Experiences
c. Attendee Experience
d. Promotional opportunities - Check in with your new major sponsors afterwards. Did you hit the ‘ego’ mark?
- Send proof on investment. Make sure you video and/or photograph the sponsorship and present such ‘evidence’ so you have a shot at doing this again.
Leadership is critical in building this Key Account Strategy and your leaders must be active in it throughout. It needs to be a priority with your board and bosses to be successful.
Give it a shot, you will be amazed at what you can achieve with the right effort!