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September 11, 2006

Return on event


Wining and dining top-performing employees at big events is a fun way to say thanks for all the hard work. But what's the real payback for marketers?


It's a soggy Saturday night in Niagara Falls, Ont., but the weather isn't doing much to dampen this party. Inside the plush-carpeted, cavernous lower levels of the Fallsview Casino Hotel, Nissan Canada is doing some celebrating. Its annual Club Excellence event-a VIP gathering of its top salespeople from across the country-is in full corporate swing, and a bevy of awards are set to be handed out after dinner.

On stage, the band plays Sinatra, while event planners wearing headsets try to keep things running smoothly from the sidelines. "Are you enjoying yourself?" asks a congenial Cynthia Richards, president of Event Spectrum Inc., the Toronto-based agency looking after the festivities, just as the night's MC, Canadian actress Jessica Holmes, introduces herself to the crowd with an uncanny Celine Dion impression. "Hellooooo!"

For the 180 or so Nissan faithful, whose business performance earned them the right to be whisked away on the company tab, the thank-you's don't end with dinner. The three-day program includes the flight in and out, a winery tour and tasting, unexpected gifts, plenty of cocktails-even a close-up ride by the Horseshoe Falls on the Maid of the Mist. A simple pat on the back, this is not.

In fact, marketers like Nissan are spending big money-in many cases well over a million dollars with each event-to recognize their best and brightest. According to the U.S.-based Convention Industry Council's 2004 Economic Impact Study, incentive travel in the U.S. alone topped out at US$122 billion.

And while it may seem like an exercise in human resources management, smart businesses have learned that it also needs to be about marketing their brand to their most cherished resource: Their own employees.

But in an increasingly ROI-obsessed world, employee marketing at events like Nissan's have not escaped scrutiny. Richards says that today, more than at any other time in the 10 years ESI has been in business, cost-conscious companies are asking how exactly employee events contribute to profitability, instead of inhabiting the grey zone of simply providing a good time and a short morale boost.

"How we answer that is by going in and asking them questions about what they're looking for," she says. "What are their success factors?" Most often, Richards says, the answer is increased sales. Pegging performance to rewards like elaborate vacations, cash and carrots like the Club Excellence can work wonders for sales. "There's a direct correlation."

But there are a growing number of other success factors to take into account. "It's not always increased sales," Richards says. "Employee loyalty is becoming a very big thing." Especially, she adds, in cities like Calgary, where a booming job market means marketers are competing harder to retain staff.

What's more, says Kim Naylor, executive vice-president of channel marketing for Toronto's Pareto Corp., a below-the-line services company with an events division Naylor founded, marketers have come to see their internal events in a whole new light.

"Typically, what you used to see was that a lot of companies would include the meeting portion of it because you got the tax break. And, I would say now, companies are looking at it as an opportunity to get their message across. People are relaxed at these events. It's now being seen as a really solid educational opportunity."

Naylor says one point she often makes with clients planning events is that they should take a look not only at the people attending, but also at those who didn't make the cut, and then think about changing the rules.

"Often you'll find that it's the same people going. You can't exclude those overachievers, but what about the rest of the group? If there's not going to be some kind of attainability for them, they're either going to leave or they're not going to be working to their full capacity because they can't see that pot of gold at the end of the rainbow," she says.

"Someone who's only doing $100,000 in sales has a lot more bandwidth. But my overachiever who's already doing four or five million, how much more does he have to lift? We really want to focus on that middle group."

Influencing that middle group is exactly what cellphone maker Nokia USA has done with an events program that both rewards its top sales performers and motivates them to train everyone else. With the help of Mississauga, Ont.-based marketing services firm OneMethod Inc., Nokia hosts as many as 30 training events in major cities from Los Angeles to New York. Venues of choice are usually lounges or chic hotels, like the Delano in Miami's South Beach, where as few as 15 hand-picked sales staff learn about new Nokia products by watching movie-style trailers or interactive DVDs while DJs play in the background.

At night, they're wined and dined at exclusive clubs. All the while, says OneMethod president Amin Todai, they're seeded with new Nokia products, brought up to speed on features and benefits, and then they go back to work in the stores as well-trained brand ambassadors.

"We'll train those 15 to 20 people, who are then incentivized to train hundreds more once they get back to the store level," Todai says, adding an online dashboard allows Nokia to track the number of people engaged in training programs post-event. "If you're the guy who's trained 10 people, versus the guy who's trained 700 people, you'll feel like a bit of a moron," Todai says. "It turns into a competition."

Todai says during the three or four months it usually takes for the program to run its course, as many as 7,500 sales representatives are trained. The old training program cost just half of the new one, but it only trained about 300 reps over the same time frame, Todai adds. "They used to do these straight-up training events, classroom settings with subject-matter experts training them individually, in the hopes that they would spread that knowledge. Those were never really effective. And there was no way of tracking it."

But tracking things isn't always so cut and dried, according to C.B. Wismar, vice-president of events marketing at Minneapolis, Minn.-based Carlson Marketing, who makes the point in a white paper he wrote on the subject of ROE: Return on Event. "Clearly, event marketing is widely regarded as an extremely potent means of strengthening relationships. However, it's a simple truth: Value measurement for events cannot be reduced to a formula."

Ron Moore, CEO of the Sonar Group, a Toronto-based marketing services firm that has produced events for companies like Investors Group, FedEx and CIBC, says whether the goal is increasing sales, holding onto top performers, boosting morale or simply giving your team a break from the norm, the overriding thought marketers should live by is simple: "If you're doing an employee event and don't have hard expectations of what it should achieve, don't spend the money."

Let's get lavish!

What does a seven-figure budget for an employee event buy these days? The average cost, according to Cynthia Richards, president of Toronto's Event Spectrum Inc., ranges from $200,000 on the low end all the way to $1 million and up. "A million dollars will get you a really good-sized meeting or product launch for about 300 people, a great destination with a very large multimedia presentation and lots of staging," she says. Two million dollar-budgeted events, the days of which are all but over, Richards says, used to include exotic trips to places like South Africa, Australia and Asia. "And it would all be on business-class travel."

Still, the amount of money spent doesn't always yield a better return. Richards recounts an event her team planned for an unnamed marketer in 2003 that worked with considerably less money ($500,000) but managed to elicit a million-dollar response. "Instead of the usual Caribbean thing, we put together a fabulous pre-Christmas shopping program in New York." Employees who hit a predetermined sales target won a trip to the Big Apple, $10,000 in spending money, a stay at the Plaza Hotel and a chauffeured limousine. "We closed Barney's for a morning fashion show and we had breakfast at Tiffany's-it was just a dream." Richards says the program was so successful, her team replicated it in Toronto, Montreal and Vancouver. Sales volume, she says, increased 23% over the target increase. "People's wives were calling us constantly, asking if their husbands had hit the target yet."

Kim Naylor, executive vice-president of channel marketing at Pareto Corp., says big and lavish events haven't totally disappeared-they're just not happening every year. "Some companies are going to biennial (events) as opposed to annual, so they're able to spend more money and do bigger trips because they're running them every two years or 18 months. It's not as often, but we are seeing it with a few of our clients."