introduction to roi methodology for meeting professionals elling hamso european event roi institute...
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Introduction to ROI Methodologyfor Meeting Professionals
Elling HamsoEuropean Event ROI Institute
©MPI Foundation/Fusion Productions 2005
Understand the basic ROI methodology
Understand the different evaluation levels
Isolate the effects of the meeting
Convert the effects of the meeting into $ values
Today’s Meeting Objectives
What is ROI?
Today’s Meeting Objectives
What is ROI?What is ROI?
% Return on Investment
X 100 50 % ROI=
What is ROI?What is ROI?
Sales Price € 150 000
Purchase Price € 100 000
= Profit € 50 000
€ 100 000
€ 50 000
Why do you need to know about ROI?
Today’s Meeting Objectives
Why ROI?
Sales Argument
Defend or get new budgetsSelling events through ROITalking the language of customerSponsor ROI
Competitive Advantage
Design events to improve ROIMore targeted events
Compare Improve
Agency offer ROI services to clients
To other eventsTo other marketing toolsBenchmarking
Show CompetenceTransparencyAccountabilityFinancial
“I need my people to think
like business people and
focus on the ‘business of
meetings’ – not the meeting
business.”
Chief Executive
Officer
Benefits of Meeting & Event ROI
MPI Pathways to Excellence
E
I
O
ducation
nfluence
pportunity
Provide education and recognition to the meeting planning profession
Make senior managers understand the value of meetings
Provide business opportunities for members
♫♫♫ Old MacDonald had a farm, ei, eio...
Can we measure everything in monetary values?
Questions about ROIQuestions about ROI
Is it difficult? Is it expensive?
Questions about ROIQuestions about ROI
Should we measure ROI for all meetings?
Questions about ROIQuestions about ROI
What is ’acceptable’ ROI?
Questions about ROIQuestions about ROI
Is it a well proven method?
Questions about ROIQuestions about ROI
• Refined over a 20-year period
• Thousands of ROI studies conducted every year
• 100 case studies published
• 2,500 individuals certified
• 30 books developed to support the model
• Adopted by hundreds of organizations in more than 40 countries
The Phillips ROI ModelThe Phillips ROI Model
Some Users of the Phillips ROI ModelSome Users of the Phillips ROI Model
AT&T Coca Cola General Motors Hewlett Packard Bristol-Myers Squibb Motorola PricewaterhouseCoopers Shell Oil Singapore Airlines
US Department of Defense NASA Government of Italy Government Canada
The Phillips ROI Model
Develop Evaluation
Plans
Develop Evaluation
Plans
EvaluationPlanning
Data Collection
Collect Data Before and
During Meeting
Collect Data Before and
During Meeting
Collect DataAfter MeetingCollect Data
After MeetingDevelop Meeting
Objectives
Develop Meeting
Objectives
© Copyright 2004 ROI Institute
1 2 3 4
CalculateCosts
of Meeting
CalculateCosts
of Meeting
Isolate theEffects of
the Meeting
Isolate theEffects of
the Meeting
Convert Data to Monetary
Value
Convert Data to Monetary
Value
Calculatethe Return On
Investment
Calculatethe Return On
Investment
CommunicateCommunicateresultsresults
CommunicateCommunicateresultsresults
Data Analysis
Identify IntangibleBenefits
Identify IntangibleBenefits
Reporting
5 6 8
7
9
10
© Copyright 2004 ROI Institute
Evaluation PlanningEvaluation Planning
Stakeholders’ needs
A stakeholder will say:
”It is important to me that this meeting is sucessful and meets its objectives”
Evaluation PlanningEvaluation Planning5 levels of measurement
Evaluation PlanningEvaluation Planning
The Chain of Impact
© Copyright 2004 ROI Institute
1. Participants react favorably to the meeting
2. Participants learn new skills or information
3. Participants apply new skills or information
4. A business impact is achieved
5. A return on investment is generated
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:90% of attendees will indicate an intention to implement new sales strategies within two months after the meeting
Answer:Level 1 - Satisfaction, reaction, planned action(intentions are always level 1)
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Decrease the amount of time required to complete projects by 5% within 6 months of the meeting
Answer:Level 4 - Impact(time may be converted to money)
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Participants rate the relevance of the meeting to success in their jobs as 4.5 out of 5
Answer:Level 1 - Satisfaction, reaction, planned action
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Use the new customer interaction skills in 90% of situations where they are needed.
Answer:Level 3 - Application
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Score 75 out of 100 or better on the new strategy quiz
Answer:Level 2 - Learning
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Rate the meeting as a good investment for the company with an average of 4.3 out of 5.
Answer: Level 1 - Satisfaction, reaction, planned action
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Increase sales from existing customers by 5% within 9 months of the meeting
Answer:Level 4 - Impact
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Achieve a 25% return on investment within the 12 months of the meeting
Answer:Level 5 - ROI
Evaluation PlanningEvaluation Planning
Assigning objectives to levels of measurement
1. Satisfaction, reaction, planned action
2. Learning
3. Application
4. Impact
5. ROI
Objective:Successfully demonstrate new selling techniques during classroom role play
Answer:Level 2 - Learning
Surveys (“smile sheets”)
The Tools
Level 1 Reaction, Satisfaction, Planned Action
Data CollectionData Collection
© Copyright 2004 ROI Institute
• 80% of attendees would recommend the conference to others.• Receive a speaker rating from participants of at least 4.5 out of 5.0• 50% of attendees will indicate an intention to submit an RFP to one or more trade show vendors within 3 months of the meeting.
Tests, exams, audience response systems
Level 2 Learning
Data CollectionData Collection
© Copyright 2004 ROI Institute
• Name two major sponsors of the event• 50% of booth attendees will list three product features
The Tools
Follow up surveys, focus groups, observation
The Tools
Level 3 Application / Implementation
Data CollectionData Collection
© Copyright 2004 ROI Institute
• Conduct a meeting with committee members to implement new association policy within one month of chapter leadership conference• 50% of attendees will make an inquiry for the software within 6 months of product launch event
Follow up questionnaires, performance monitoring, scorecards
The Tools
Level 4 Business Impact
Data CollectionData Collection
© Copyright 2004 ROI Institute
• Decrease customer complaints by 30% within 9 months• Increase membership satisfaction level by 10% in 6 months• Generate 1 million in signed contracts within 9 months of trade show
Net Meeting Benefit
Total Cost
The Tools
Level 5 Return on Investment
Data CollectionData Collection
x 100 = ROI
© Copyright 2004 ROI Institute
• Achieve a 5% return on investment using first year benefits.
• Control groups
• Forecasting methods
• Trend analysis
• Participants’ estimates
• Supervisors’ estimates
• Outside experts
The Solution:The Problem:
OtherInfluences
MeetingImpact
Tota
l m
easu
red
Im
pact
Data AnalysisData Analysis
Isolating the effects of the meeting
© Copyright 2004 ROI Institute
Data AnalysisData Analysis
Using control groups to isolate the effects of the meeting
© Copyright 2004 ROI Institute
Retail Merchandise Company – Interactive Selling Skills ProgrammeTwo groups of 3 stores matched on:•Store size•Store location (median houshold income in the area)•Customer traffic levels•Previous store perfomance
Weekly sales 3 months after training ($)
Trained group 12,075Control group 10,449Increase due to training 1,626
(ROI was in this case calculated to be 118%)
Data AnalysisData Analysis
Using participants’ estimates to isolate the effects of the meeting
Elements influencing sales increase:
Influence factor
Sales kickoff meeting
Advertizing campaign
New incentive programme
Product improvements
Other factors
Total
20%
15%
30%
25%
10%
100%
Participants’ estimates of factors influencing sales increase following a sales kick-off meeting
Confidence of estimate
Adjusted influence factor
50% (i.e. 10 – 30%) 10%
• Profit from sales
• Converting employee’s time
• Historical costs
• Internal and external experts
• Participants’ estimates
• Supervisors’ and managers’ estimates
• Staff estimates
The Solution:The Problem:
Data AnalysisData Analysis
Converting data to monetary value
© Copyright 2004 ROI Institute
Data AnalysisData AnalysisConverting data to monetary value
using participants’ estimates
Basis for Value EstimatedValue
Confi-dence (%)
Adjusted Value ($)
Improvement in efficiency of group. $1,500 month x 12 (group estimate)
$18,000 85% $15,300
Turnover reduction: Two employees retained per year. Base salary x 1.5
$36,000 90% $32,400
15% improvement in customer response time. Estimated value $1.100/month
$13,200 60% $7,920
Absenteeism reduction (50 absences per year x $150 standard value)
$7,500 85% $6,375
Examples of business impact converted to money after leadership training seminar
With permission from Jack Phillips, ’Measuring Return on Investment’ Vol. 2. ASTD Press, 1997
Data AnalysisData Analysis
Assigning costs
• Marketing Costs• Developments Costs• Program Materials• Facilitator/Speaker Costs• Facilities Costs• Travel/Hotel/Meals• Participants Salaries & Benefits• Administrative/Overhead Costs• Evaluation Costs• Taxes
© Copyright 2004 ROI Institute
€ Net Meeting Benefit
€ Meeting Costsx 100 = ROI
Benefits of meeting (1st year) €750,000Costs of meeting €500,000
€ 250,000
€ 500,000x 100 = 50%
Data AnalysisData Analysis
Calculating ROI
• Improved Image
• Improved Customer Service
• Reduced Complaints
• Reduced Conflicts
• Reduced Stress
Data AnalysisData Analysis
Potential intangible benefits
© Copyright 2004 ROI Institute
The Phillips ROI Model
Develop Evaluation
Plans
Develop Evaluation
Plans
EvaluationPlanning
Data Collection
Collect Data Before and
During Meeting
Collect Data Before and
During Meeting
Collect DataAfter MeetingCollect Data
After MeetingDevelop Meeting
Objectives
Develop Meeting
Objectives
Level 1 – Reaction & SatisfactionLevel 2 – Learning
Level 3 – ApplicationLevel 4 – Impact
ReportingReporting
1 2 3 4
© Copyright 2004 ROI Institute
CalculateCosts
of Meeting
CalculateCosts
of Meeting
Isolate theEffects of
the Meeting
Isolate theEffects of
the Meeting
Convert Data to Monetary
Value
Convert Data to Monetary
Value
Calculatethe Return On
Investment
Calculatethe Return On
Investment
CommunicateCommunicateresultsresults
CommunicateCommunicateresultsresults
Data Analysis
Identify IntangibleBenefits
Identify IntangibleBenefits
Reporting
Level 5 - ROI
5 6 810
7
9
© Copyright 2004 ROI Institute
www.EventROI.com
www.ROIInstitute.net
www.mpiweb.org
Want to know more?Want to know more?
The Bottom Line on ROI. Patricia P. Phillips. Atlanta: CEP Press, 2002.
Return in Investment in Training and Performance Improvement Programs (2nd Edition). Jack J. Phillips. Boston: Butterworth-Heinemann, 2003.
Measuring Return on Investment, Volume 3. In In Action series, Patricia P. Phillips (editor) Jack J. Phillips (series editor). Alexandria: ASTD, 2001.
*Available from www.amazon.com
Books on ROIBooks on ROI
14 – 15 December 2005, Copenhagen (in English)
20 – 21 December 2005, London (in English)
11 – 12 January 2006, Frankfurt (in German)
18 – 19 January 2006, Stockholm (in Swedish)
8 – 9 February 2006, Amsterdam (in English)
More information and registration on www.EventROI.com
2-day ROI Training Seminars2-day ROI Training Seminars
Thank you!
European Event ROI Institute
Elling HamsoVagsgt. 43Postboks 171NO-4302 SandnesNorwayE-mail: [email protected]: +47 90 12 24 18
Bernhard AggelerFlurstrasse 12CH-6332 Hagendorn ZGSwitzerlandE-mail: [email protected]
Telephone: +41 79 443 63 49
www.EventROI.com