Like most everything in life, the better the plan, the better the result. When planning your trade show display investment budget and the projected return on your investment it is ideal to have some firm logic to stand on to make these calculations. You must have a place to start your budget evaluation, in order to stay within a reasonable budget and earn great results. This way you are not shooting darts at a board in total darkness. In this article, I intend to provide a general, targeted guideline and logical progression that should help you determine how much to realistically spend on a trade show display, and how to conclude your potential return on your trade show display expense. Oh, and please keep in mind that a display can last years, meaning your ROI increases over time!
For this sample calculation we need to set up our beginning assumptions first. So, let s pretend that I sell solar panel systems for both home and business. Let s also assume that the expected audience size at the coming trade show is 1,000 people at a minimum. Further, I estimate that I can certainly gain 2% of that trade show audience as new customers. So at a 2% return, I should gain 20 new customers from that trade show display audience volume. All I need to know at this point is how much money one lifetime customer is worth to me, on average. From there, I can complete my calculation.
From my experience in solar system sales, I know that on average just one of my customers will spend $30,000 over the lifetime of that particular customer. Okay, but how much am I willing to spend to buy just one new customer? The answer: I am willing to spend up to 5% of one customer s total lifetime value to gain one new customer. This means that I am willing to invest $1,500 to obtain one new lifetime customer. Great! We re almost there.
Now I have projected that I will gain 20 new customers from the trade show event and I am willing to spend $1,500 to buy one new customer. So I could comfortably spend up to $30,000 on my trade show event (20 X $1,500 = $30,000). But I m not done just for good measure for the sake of profit margins I am going to subtract 50% from that total budget, so that I can be extra-sure that I will still be making money off of my new clients. Therefore, my final number is $15,000! Based upon the original assumptions, I should spend as a total trade show investment around $15,000 in order to get a nice display and earn a strong ROI for my trade show display.
By these calculations I am spending just $15,000 for the trade show display event, and yet I will gain 20 new customers that are worth $600,000 over the lifetime of each customer (20 X $30,000-value = $600,000). In short, I am spending just $15,000 to earn $600,000!
In review, here is the breakdown again:
In conclusion, in order to know your total budget (and projected ROI) for one trade show event, you only need to know the lifetime value of one new account, and the total expected attendees at the trade show. Then, using similar calculations, you will earn a strong return every time! And these calculations demonstrate the return on just the 1st (of many) trade shows. Always remember that your trade show display will last for many years, multiplying your investment return many times over!