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Exhibition News September 2014
September 2014

Selling exhibition value
posted on: 10/9/2012 10:34:18
house hotel market vales rise
How can exhibition organisers tap into customer values to improve attendance and profitability across their trade shows? EN asks organisers for their views on the sales model of the future.

At the Exhibition and Convention Executives Forum (ECEF) in Washington DC on 30 May, Reed Exhibitions executive vice-president for North America Nancy Walsh, announced the organiser’s new pricing policy for exhibitors.

In a significant shift away from selling booths by square metre, the world’s largest organiser said it was adopting a new approach based on location, attributes and timing.

The RX Choice model, which has been rolled out only in the US, was conceived out of the understanding that not all space is equal, and that organisers sell the best spaces at the lowest prices all too often. Under the new structure, Reed customers can choose the location and booth characteristics most valuable to them based on what they’re willing to pay for, Walsh said.

Reed US is charging a price tag per booth that varies by location and optimises pricing and location options for each customer. Importantly, premium spaces are also retained at premium prices. The result? A higher percentage of rebookings, better exhibitor satisfaction and loyalty, customer retention and improved yield, Reed claimed.

“It just makes sense,” Walsh added during her keynote ECEF presentation. “We are willing to pay more for things we truly value. The option to choose is a value.”

Whether you agree with Reed’s new pricing model or not, value as a concept and as a sales tool is being transformed as exhibitors demand more bang for their buck. You can point to a plethora of reasons for this ranging from globalisation and maturity of the exhibition model, to the strong ROI metrics delivered by online marketing platforms and our risk-averse, economically challenged commercial world. Or you could simply call it common sense.

So what can organisers do to ensure their exhibition sales model meets the changing requirements, tastes and sophistication of their exhibitors and delivers better value?

Value-based pricing

Industry luminary and management consultant Jochen Witt identifies the shift to location-based pricing as a subspecies of value-based pricing, something his firm has helped several trade fair organisers embrace worldwide over the past five years. He believes the entire industry will switch to a value-based model in the medium- to long-term.

“Value-based pricing basically means customers pay for the value they get,” he explained.

“Attributes to determine the value might be different such as location, booking time, booth layout and so on. These are different from show to show. What is essential is determining exactly what the customer is willing to pay for what service.”

Witt pointed out pricing is usually determined using three methods: Competition, costs and customer perceived value. In his view, the most important is customer perceived value, a method frequently absent in the exhibition industry.

To help organisers understand the value-based approach and where they need to improve focus, Witt likens exhibition sales models to other industries with similar challenges and opportunities such as aviation, publishing, telecoms and retail.

For example, airlines operate in perishable goods like an exhibition, where a seat not sold by an airline is “lost forever”, he explained. To compensate, airlines employ yield management based on supply and demand. Irrespective of booking time, a flight at noon is likely to cost less than a flight at 7pm when everybody wants to fly.

“We already do a little bit of yield management in the exhibition industry, for example early bird bookings,” Witt said. “The question is: why do we grant early birds at all, when, and to what extent? Normally we don’t get a proper answer to these questions, as these kinds of ‘rebates’ are granted without proper analysis of customer perceptions.

“Even more: When the exhibitor receives an early bird, we in fact give two ‘rebates’. Firstly they get the discount in terms of money. But secondly we allow them to choose a location. Of course they want the best location, so the best locations are gone at the lowest price.”

Shopping malls meanwhile, have similar location qualities and concerns that compare to a trade show and venue floorplan, while publishing could also teach organisers a thing or to about positioning, the number of readers and the proportion of a target group reached by an ad.

“We have historically tried to deny there is different quality in locations, but everybody in the industry as well as the exhibitors know there is different quality depending on the location of a booth,” Witt continued.

The more our floorplans reflect the values a show brings to the exhibitor, and recognise that certain locations or positions next to the industry’s stars should be sold at a premium, the better organisers can implement price differentiation schemes and increase their profitability.

“Our floorplans today are driven simply by quantity considerations. We want to put as many stalls into a hall as possible. We should rethink that and focus on value considerations,” Witt said. “If the right methods and tools for location-based pricing are applied, the profitability of a show can be increased by 10-15 per cent at the beginning; then over time and with more experience, that profit increase will rise even higher.”

Lastly, the telecoms industry offers a strong lesson on how bundling low and high margin products and services can deliver dividends. “We do bundles as well, but we don’t do it with deep analysis of customer needs and customers’ willingness to pay,” Witt added.

Packaging plus

Imago Techmedia MD Hugh Keeble claimed location and premium pricing only add to the “increasing sense of disillusionment” experienced by customers at trade shows. He also doubted whether Reed’s new location-based model would reduce the cost for exhibiting, a vital factor in getting them over the line.

In a bid to tackle the issue of value, Imago provides package-based pricing for all exhibitors across its trade shows. Keeble claimed this also alleviated the issue of exhibitors competing with each other for dominance at an event.

Imago packages range from nine to 72sqm and include furniture, lighting, graphics, stand fitting, carpet and lead scanner. This year, the organiser will include online products within its exhibitor packages.

“The traditional market allows the cost of space to be doubled and trebled by ‘additional services’ and they wonder why people find justifying exhibitions difficult,” Keeble said. “We have never quoted a square metre cost and the interesting thing is our customers have never asked.

“Our package model provides a clear cost for participation, enabling customers to measure and demonstrate ROI.” Keeble found it “ironic” major players in the exhibition market are talking about using yield management and location to improve products rather than looking at ways for their customers to meet buyers in the most cost-effective way.

“In reality, none of these pricing issues answer the most important question: Does it add value to the visitor experience? I believe our ‘level playing field’ model does,” he claimed.

Event director for Counter Terror Expo (CTX) at Clarion Events, Phil Hunter, saw the advantages in a location-oriented model, but agreed any further complexity in selling show space could potentially deter exhibitors.

“Making a pricing structure too complex usually adds another barrier to what you essentially want to be a fairly fast and easy process once you have sold in the benefits and advantages of participating in the first place,” he claimed. “Once you have got to the stand price, you should be close to making the sale, so why make that part of the process more complex? I understand the desire to increase revenues, and looking at the pricing strategy is certainly one way of doing that, but it is not the only way.”

Hunter believed the focus needed to shift more onto other services that could add value to the exhibiting and visitor experience. For example, he pointed to CTX’s Meet the Buyer, VIP and International Delegation and Industry Partners programmes.

“Each of these are designed to match buyer needs with supplier offerings, and all of these [apart from a small admin charge for the Meet the Buyer Programme] are free of charge and aimed at adding value to our exhibitors within the price they already pay for taking part in the event,” Hunter said.

“I like to look at what we are doing on CTX as adding value to the exhibitors and visitors, while realising our revenue ambitions at the same time, rather than just increasing prices.”

Valuable content

EasyFairs also claims there’s nothing new in embracing a value-based approach and pointed out the organiser’s pricing varies considerably across its European portfolio. This is reflective of the strength of the show and local visitor markets, easyFairs UK and Ireland MD Matt Benyon said.

“Moreover, we design our floor plans so that every location is a ‘value location’,” he claimed. “Every stand module, which we sell as a complete package, is close to a feature or attraction such as the entrance, the catering areas, a stage or our learnShops theatres where seminars take place at the heart of the exhibition.”

EasyFairs also believes in the first-come, first-served principle and said this gave exhibitors better opportunity to gain greater exposure online. At the same time, having packaged options helps bring smaller players by removing the ‘hidden costs’ of exhibiting, Benyon said.

“At easyFairs we started out with a ‘no frills’ approach to trade shows, which enabled us to drive a very rapid expansion,” he said. “Now we are adding value by introducing much richer content programmes. That increases value to visitors, which increases visitor dwelling time and therefore value and satisfaction for exhibitors.

“Just a few years ago people were still saying that we’d never get companies to buy stands online.

Now online sales account for a large chunk of easyFairs’ business. In future, I expect to see some element of dynamic pricing like we see in airline ticketing and hotel accommodation online sales.”

While the approaches differ, it’s clear that identifying the value your customers perceive in your specific offering is the holy grail of sales. As Witt so adeptly points out, giving your exhibitors choice is key to success. By basing your relationship on that choice, organisers will be able to increase value for the exhibitor and as a consequence, increase both their revenue and profit. 

This was first published in the July edition of EN. Any comments? Email exhibitionnews@mashmedia.net

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