Calculate Your ROI on Networking Events

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Would it accelerate your business to network more? How do you calculate the actual dollars gained from attending industry conferences, summits, trade shows, dinners, and networking receptions?

Join us for a step-by-step tutorial on how to calculate the ROI on the time and money you spend attending events. We have distilled the hard and soft costs into a free, downloadable excel template that allows you to calculate your return.

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Calculate Your ROI on Networking Events

  1. 1. How to Calculate Your ROI on Networking Events January  16,  2014  
  2. 2. How  to  Calculate  Your  ROI  on  Networking  Events   What is this webinar designed to do? •  This  webinar  +     Networking  ROI   Template  =  fast  and   simple  calculation   of  return  (%)  and   value  generated  ($)   •  Give  you  access  to  Axial’s  downloadable  ROI  excel   template   •  Go  through  the  mechanics  of  the  template   •  Walk  through  the  theory  behind  the  calculations   •  Take  you  through  a  start-­‐to-­‐end  calculation  with   detail  on  every  input   •  Calculate  the  %  ROI  and  $  generated  on  the  time  and   money  spent  attending  events   2
  3. 3. How  to  Calculate  Your  ROI  on  Networking  Events   Who is this webinar for? •  Intermediaries:  investment  bankers,  brokers,   lawyers  and  legal  counsel,  other  advisors   •  Product  Providers:  technology  platform  providers,   service  providers   •  Capital  Providers:  private  equity  funds,  mezzanine   funds,  commercial  lenders,  strategic  acquirers,   family  ofXices,  direct  private  investors,  other   investors   •  Company  Management:  CEOs,  CFOs,  COOs,  Finance   VPs,  Treasurers,  owners   3
  4. 4. How  to  Calculate  Your  ROI  on  Networking  Events   Leading the Webinar Kateri  Y.  Zhu   Marketing  Manager,  Axial     Kateri  Zhu  supports  Axial’s  marketing  efforts  to  investment   bankers,  advisors,  private  equity  funds,  mezzanine  capital   providers,  strategics,  and  other  capital  providers.  Prior  to   Axial,  she  was  a  private  equity  associate  responsible  for   evaluating  and  executing  take-­‐private  transactions  at  Mill   Road  Capital.  Previously,  Kateri  worked  as  an  investment   banker  in  the  Healthcare  group  at  Morgan  Stanley  in  New   York  City.  She  holds  a  B.A.,  phi  beta  kappa,  cum  laude,  in   Political  Science  and  Economics  from  Duke  University.   4
  5. 5. How  to  Calculate  Your  ROI  on  Networking  Events   Overview: The Question •  Types  of  networking  events:     – Conferences,  summits,  tradeshows,  roundtables,  dinners,   receptions   •  Exactly  how  much  is  networking,  or  the  lack  thereof,   accelerating  or  decelerating  your  business?   •  How  do  you  calculate  the  actual  dollars  gained  from   attending  networking  events?   •  Is  it  possible  to  quantify  the  return  on  new  contacts,   relationships,  and  interpersonal  interactions?   5
  6. 6. How  to  Calculate  Your  ROI  on  Networking  Events   Overview: The Answer •  The  answer:   – It’s  difXicult  but  it’s  certainly  possible   – We  started  by  distilling  the  hard  and  soft  elements  of   networking  costs  and  gains  into  the  calculator   •  The  warning:   – A  useful  return  metric  won’t  come  without  some  care  and   thought  around  the  assumptions   •  The  objective:   – Calculate  your  ROI  (%)  and  net  generated  value  ($)  on   attending  networking  events   6
  7. 7. How  to  Calculate  Your  ROI  on  Networking  Events   Font Colors in the Template •  Yes,  they  mean  something   •  Color  coding:   – Blue  =  input   – Black  =  calculation   •  All  the  inputs  have  been  cleared  out   •  This  means  that  your  job  is  to  input  your  Xigures  into   the  empty  cells   7
  8. 8. How  to  Calculate  Your  ROI  on  Networking  Events   Units in the Template •  The  template  is  formatted  to  show  units   automatically   – For  example,  type  “10000”  into  cell  C6  and  it  will  show  as   $10,000.00   – For  another  example,  type  “8”  into  cell  C8  and  it  will  show  as  8   employees   •  All  the  cells  have  been  formatted,  so  you  should  not   be  using  any  units,  dollar  signs,  or  symbols  of  any   type   •  This  means  that  you  should  complete  the  entire   template  with  your  number  keys,  0  through  9   8
  9. 9. How  to  Calculate  Your  ROI  on  Networking  Events   ROI defined •  If  an  investment   doesn’t  have  a   positive  ROI  or   there  are  other   opportunities  with   a  higher  ROI,  then   the  investment   should  not  be   undertaken   •  Return  on  Investment:  a  performance  measure  used   to  evaluate  the  efXiciency  of  an  investment   •  To  calculate:  the  beneXit  (return)  of  an  investment  is   divided  by  the  cost  of  the  investment   ROI  =  (Gain  from  Investment  –  Cost  of  Investment)            Cost  of  Investment   •  The  result  is  expressed  as  a  percentage  or  ratio   9
  10. 10. How  to  Calculate  Your  ROI  on  Networking  Events   Gameplan 1.  Estimate  the  cost  of  investment   2.  Estimate  the  gain  from  investment   3.  Put  it  together   10
  11. 11. Estimating the Cost  
  12. 12. How  to  Calculate  Your  ROI  on  Networking  Events   Step 1: Upfront Costs •  Determine:   – The  upfront,  cash  costs   – Input  the  registration  costs  and  sponsorship  fees,  if  any,   involved  with  snagging  a  seat  at  the  table   •  Example:     – Adam  Johnson,  investment  banker  at  XYZ  Advisors   – Attending  a  healthcare  industry  conference   – Goal  is  to  connect  with  past  clients  and  meet  new  ones   – Sending  3  employees  to  San  Francisco  to  represent  the  Xirm   and  paid  $635  each,  upfront,  for  registration   – Also  paying  $2,750  to  sponsor  the  conference   12
  13. 13. How  to  Calculate  Your  ROI  on  Networking  Events   Step 2: Travel, Rooming, and Entertaining •  Determine:   – Number  of  employees  attending   – Expenditures  on  air  or  ground  travel,  hotel  rooms,  and  meals,   drinks,  and  entertaining  on  a  per-­‐employee  basis   •  Example:   – Expect  to  spend  ~$570  on  a  round  trip  Xlight  for  each  employee   – Reserve  each  employee  a  hotel  room  for  $285  per  night   – Note  that  conference  is  providing  breakfast/lunch  and  budget:     •  ~$130  per  person  for  dinner  after  the  conference   •  ~$25  per  person  for  breakfast  meetings  the  next  morning   •  ~$40  per  person  for  lunch  meetings  before  the  return  Xlight   13
  14. 14. How  to  Calculate  Your  ROI  on  Networking  Events   Step 3: Preparation Hours •  Determine:   – Number  of  hours  each  employee  took  to  prepare  for  the  event   •  Example:   – Scheduled  a  2.5  hour  planning  meeting  three  weeks  prior  to   conference   – Expect  each  employee  to  spend  ~5.0  hours  on  the  phone  and  in   email  scheduling  meetings  for  the  conference   – Expect  each  employee  to  spend  ~6.0  hours  preparing  materials   in  the  week  leading  up  to  the  conference   – Scheduled  a  1.0  hour  check-­‐in  meeting  the  day  before  the   conference   14
  15. 15. How  to  Calculate  Your  ROI  on  Networking  Events   Step 4: Attendance Hours •  Count  only  hours   during  which  your   team  members   would  be  otherwise   working   •  Why?    Because  the   opportunity  cost   will  be  calculated   based  on  salary,   reXlecting  work   hours  only   •  Determine:   –  Number  of  hours  that  each  employee  spent  in  transit  or  attendance  which   they  would  have  otherwise  spent  in  ofXice   •  Example:   –  5  hour  redeye  Xlight  +  2.5  hours  commuting  to  and  from  airport   •  Counts  for  0  hours  since  team  members  would  have  otherwise  been  at   home   –  8  hours  at  conference   –  3.5  hours  at  an  apres-­‐conference  dinner  meeting  with  client   –  1  hour  breakfast  meeting  the  next  morning   –  3  hours  of  ad-­‐hoc  meetings  with  people  met  at  the  conference   –  1.5  hours  in  a  lunch  meeting   –  5  hours  on  a  Xlight  back  from  west  coast  +  2.5  hours  commuting   15
  16. 16. How  to  Calculate  Your  ROI  on  Networking  Events   Step 5: Employee Cost per Hour •  This  number   represents  the  cost   of  every  hour  each   of  your  employees   spends  preparing   for,  traveling  to,  and   attending  the  event   •  Determine:   – Average  cost  of  each  hour  of  employee  time   •  Example:   – Assume  average  salary  of  $100k,  49  working  weeks  per  year   (52  weeks  with  3  weeks  of  vacation),  5  days  per  week,  8  hours   per  day     Attendee          =                        $100,000  annual  salary                      =      $51  per  hour,   Cost/hour                49  weeks/year    x    5  days/week    x    8  hours/day              per  Attendee   16
  17. 17. How  to  Calculate  Your  ROI  on  Networking  Events   Total Costs •  Finally,  add  upfront   event  costs,  costs  of   attendance,  and   costs  of  preparation   to  calculate  your   total  networking   costs   17
  18. 18. Estimating the Gain  
  19. 19. How  to  Calculate  Your  ROI  on  Networking  Events   Word of Warning •  Calculating  the   value  generated  is  a   more  challenging   and  sophisticated   exercise  than   calculating  the  cost   •  To  help  structure   the  calculation,   we’ve  laid  out  four   ways  to   approximate  gain   •  This  is  the  harder  part   – Takes  more  care  and  thought  to  calculate  accurately   •  Goal  is  to  quantify  the  $’s  gained  from  networking   •  Four  sample  ways  to  approximate  the  gain:   – Investment  banker   – Financial  sponsor   – Company   – Service  provider   •  Not  exhaustive,  but  puts  numbers  against   interpersonal  interactions   19
  20. 20. How  to  Calculate  Your  ROI  on  Networking  Events   Step 7: Number of Interactions at Event •  Determine:   – What  your  interaction  of  value  is  when  it  comes  to  networking   – For  most  of  you  this  will  be  #  meetings;  however  it  may  be  #   conversations,  #  new  business  cards  collected,  or  another   interaction  type   – The  number  of  interactions  you  expect  at  this  event   •  Example:   – Banker  Adam  Johnson  from  XYZ  Advisors  sets  up  11  meetings   for  the  conference  and  5  meetings  for  the  following  day   20
  21. 21. How  to  Calculate  Your  ROI  on  Networking  Events   Step 8: # Interactions Needed to Compete •  Investment  bankers   often  attend  events   to  meet  with  past   clients  and  make   connections  with   new  ones   •  For  many  advisors,   if  they  can  stand  out   at  a  conference  and   follow  up   effectively,  their   chances  of  closing   on  a  new  client  go   up  meaningfully   •  Determine:   –  The  metric  of  greatest  relevance  to  business  performance   –  The  number  of  interactions  needed  to  make  your  desired  outcome   possible,  e.g.,  in  the  example  below,  Adam  is  rarely  in  the  running  for  a   deal  mandate  when  he’s  had  less  than  3  meetings  with  the  potential   client   •  This  is  often  called  a  “full  cycle”  both  in  sales  and  Xinance   •  Example:   –  Advisory  business  performance  is  often  driven  by  #  of  transactions,  or   deals,  advised  per  year   –  Historically,  Adam  has  found  that  he  needs  to  meet  with  a  client  3   times,  on  average,  in  order  to  be  considered  for  a  deal  (i.e.,  mandated  to   represent  the  client)   21
  22. 22. How  to  Calculate  Your  ROI  on  Networking  Events   Step 9: Win Rate •  Determine:   –  The  probability  that  you’ll  achieve  the  desired   outcome  (e.g.,  win  a  mandate,  contract,   investment,  etc.)  assuming  a  “full  cycle”   –  This  will  be  a  percentage  of  total  full  cycles   completed   •  Example:   –  Historically,  Adam  has  found  that  of  the   potential  clients  with  whom  he  goes  through  a   full  pitching  cycle  (in  this  case,  3  meetings),  he’ll   win  the  mandate  1  out  of  12  times   –  This  means  that  Adam’s  probability  weighted   meetings  per  mandate  is  36.0  meetings   22
  23. 23. How  to  Calculate  Your  ROI  on  Networking  Events   Step 10: Value Generated per Win •  Determine:   – The  average  amount  that  your  business  takes  away  from  a   successful  “win”;  this  refers  to  the  mandated  deal,  the  executed   contract,  the  closed  deal,  the  signed  LOI,  etc.   – This  will  be  a  $   •  Example:   – Across  all  the  transactions  on  which  Adam  advises,  his  average   advisory  fee  is  $120,000   23
  24. 24. How  to  Calculate  Your  ROI  on  Networking  Events   Total Value Generated 24
  25. 25. How  to  Calculate  Your  ROI  on  Networking  Events   Example: Financial Sponsor •  For  many  private   equity  funds,  a   major  milestone  in   the  deal  process  is   signing  an  LOI,  or   letter  of  intent   •  Fund  Partner  Ben  O’Sullivan  from  ABC  Capital  expects  12  1-­‐on-­‐1   interactions  at  the  upcoming  deal  professional  summit   •  Historically,  he  has  found  that  it  takes  him  9  management   meetings  to  properly  diligence  an  investment   •  Of  those  investment  opportunities  for  which  he’s  worked   through  9  meetings,  he’ll  ultimately  sign  for  and  win  only  1  of   every  8  deals,  or  12.5%   •  Thus  his  weighted  average  meetings  per  deal  is  72  meetings  (9  ÷   12.5%)   •  His  average  return  on  investment,  once  exited,  is  $2.0  million   •  In  the  Template,  under  Step  3,  link  Total  Generated  Value   (cell  I7)  to  Total  Generated  Value  under  Step  2  (cell  F36)   25
  26. 26. How  to  Calculate  Your  ROI  on  Networking  Events   The Endgame •  ROI  =  (Total  Gain  –   Total  Cost)/Total   Cost   •  Net  Gain  =  Total   Gain  -­‐  Cost   26
  27. 27. How  to  Calculate  Your  ROI  on  Networking  Events   The Endgame •  ROI  =  (Total  Gain  –   Total  Cost)/Total   Cost   •  Net  Gain  =  Total   Gain  -­‐  Cost   27

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