Budgets & ROI

Money Matters

Nobody wants to say the dreaded “R” word, but it’s hard to deny that the economy is not exactly perky. A weak dollar, the housing slump and tight credit have all contributed to a sense that the economy is holding its breath.

But the uncertainty of our financial times doesn’t seem to have shown up in meetings and event budgets yet. Like last year, the majority of planner survey respondents’ budgets (70 percent) stayed the same. Only 9 percent of planners’ budgets report that their budgets had decreased, and the remaining 21 percent say that their budgets had increased. And compared to last year, the budget increases are more substantial; a few more planners have seen their budgets increase between 6 percent and 10 percent (31 percent this year, compared to 21 percent last year). However, like last year, the majority saw their budgets increase by a more sedate 1 percent to 5 percent.

If we are indeed in “R” times, it’s showing up more in requirements to justify expenses than in cutting those expenses. “I definitely have to be more cost-effective,” says Vicki Matrious, marketing coordinator for the Aveda Corporation. “We’re not doing as much travel, and the length of meetings is shorter now. Some meetings that used to take two days have now been cut down to one.”

Matrious says her budget isn’t smaller, or at least not by much. Instead, she just knows that she’ll be questioned more closely about expenses and that she should look for ways to keep them in line.

Connie Berget, an administrative assistant at the engineering department of General Mills, says that she hasn’t faced smaller budgets yet. On the contrary, her budget for a conference she was planning had increased by 50 percent over last year.

“It depends on the location and on the property, because of course there are big differences in pricing depending on what state the event will be in and which hotel or venue,” says Berget. “Budgets vary depending on what department you’re in, too; some departments spend more than others on meetings.”

Vicki Orwick finds that whether she sees budget cuts depends on the purpose of the meeting. “It depends on the event and the priority of that event,” says Orwick, an administrative assistant in the engineering department at General Mills. “On some events, like retirement dinners, I have some budget restrictions, and I’ve had to change the location of one dinner in order to meet the budget.”

According to Barbara Goin, director of sales for Mystic Lake Casino and Hotel in Prior Lake, budgets for her clients haven’t changed significantly over the last year. “They’re mostly the same, especially for meetings that happen regularly like annual or quarterly meetings,” she says. “I am seeing some pullback on holiday parties, though.”

Vendors report that their budgets have also survived any economic fallout, at least for now. But the margin was different on the vendor side than on the planner side. Only 48 percent of vendors report that their budgets remained the same as last year. A remarkable 42 percent of vendors reports that budgets have increased, nearly half of them reporting that they had increased by 6 percent to 10 percent.

“The biggest direct effect for me is in transportation costs. With the price of gas so high, if we put together a show and send it by truck to where it’s going to be put on, it costs us more to deliver that show,” says Dave Herman, director of marketing and sales for Big Event Productions in Minneapolis. “The indirect effect is when the slower economy affects clients and their budgets, because when companies trim back, one of the first things they cut is meetings.”

ROI: Before But Not After

The drive to be cost-effective is not a new one, and it doesn’t necessarily indicate a drive to cut budgets. Instead, budgetary restraints are supposed to help create economic efficiencies and prevent waste, not limit the planner’s ability to deliver what’s been asked of them. But sometimes it’s hard to keep that in mind.

David Peterson, owner of association consulting firm The Peterson Management Group, says he has an easier time discussing budgets with clients when he can help them to explain, not what they’re spending, but why they’re spending it. “I don’t just try to get them to add frills, I try to suggest ways to make the meeting better and help them build those ways into the budget,” says Peterson. “An ice sculpture or a martini bar isn’t necessary, but you can make the cost of an event secondary or at least less front-and-center when you give attendees a reason to be there.”

Judging by the responses to our survey, while the interest in ROI may be there, the follow-through doesn’t seem to be. When asked whether they were required to report ROI measurements for their meetings or events, 21 percent of planners say that they were. And of those few who were required to report on ROI, more than half of respondents from meeting planning services companies report on ROI, compared to only one-fifth of respondents from corporations.

Keep in mind, some of the events that our respondents conducted cost an average of $100,000 to $500,000. Of those respondents, 75 percent are required to report ROI measurements. Of those conducting events costing on average of $1 million or more, every planner reports ROI. Another possible interpretation of that data may simply suggest that most planners face a requirement to develop more sophisticated measures that justify the reason and cost of an event before it takes place, not to measure its success afterward.

Of the one-fifth of respondents who actually do have to report ROI measurements, most use post-event attendee surveys (78 percent) and budget or revenue reports (86 percent) to do so. Very few used on-site response systems or sales reports to determine the return on a given meeting.

Smart Shoppers

“Meeting planners have become much more savvy about value-add items in a contract or partnership,” says Devie Hagan, director of sales at Madden’s on Gull Lake in Brainerd. “They have to be able to show value, and that’s meant more effort on our side to build in value on top of the straightforward costs.”

Big Event Productions’s Herman finds that they can help their clients justify the costs of a meeting by finding ways to repurpose some content elements. For example, he says, when a client wants to produce a five-minute video for a marketing meeting to introduce a new product, it’s easier to justify that cost with more than one application. “With a little pre-planning, that video can also be copied to DVD and shown in the field or to channel partners,” says Herman.

Herman also suggests repurposing scenic elements and props from regular meetings when it’s possible. “Some annual meetings have the same setup every year, and if you plan for it, you can recycle some scenic elements so that the client doesn’t have to start from scratch and spend all those dollars over and over,” he says.

Survey data suggest that for savvy meeting planners who pay attention to details and know they have good reasons for the choices they make, neither cost-cutting nor requirements to justify costs have to mean low-quality events. Rather than being about money, budgets are about commitment, and at companies where the commitment to the value of meetings is high, there’s always a way to keep event quality high as well.

“Some companies realize that even, or especially, in tough economic times, it’s even more important for them to keep communicating with their publics—whether that’s clients, employees, or partners—and they continue with their meeting plans so that they can do that,” says Herman. “It’s just different responses to the same economic conditions, but everybody’s being more careful with their money.”