SELLING EXHIBITION VALUEHow can exhibition organisers tap into customer values to improve attendance and profi tability across their trade shows? EN asks organisers for their views on the sales model of the futureFEATURE24 www.exhibitionnews.co.ukFor 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 fl ight at noon is likely to cost less than a fl ight at 7pm when everybody wants to fl y. "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 fl oorplan, 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 fl oorplans refl ect the values a show brings to the exhibitor, and recognise that certain locations or positions next to the 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 PRICINGIndustry luminary and management consultant Jochen Witt identifi es the shift to location-based pricing as a subspecies of value-based pricing, something his fi rm has helped several trade fair organisers embrace worldwide over the past fi ve 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. t 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 signifi cant 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 A
FEATUREwww.exhibitionnews.co.uk 25market 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 fi eld' 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 the only way."Industry Partners programmes. Hunter said. VALUABLE CONTENTEasyFairs also claims there's nothing new industry's stars should be sold at a premium, the better organisers can implement price differentiation schemes and increase their profi tability. "Our fl oorplans 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 profi tability of a show can be increased by 10-15 per cent at the beginning; then over time and with more experience, that profi t 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 PLUSImago 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 fi tting, 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 fi nd justifying exhibitions diffi cult," 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 According to a new survey conducted with 117 registered ECEF attendees by research consultants Jacobs, Jenner and Kent, 56 per cent of organisers are open to new pricing models for exhibitors. The 2012 Pulse Survey found current strategies for diversifying the exhibitor revenue stream being explored are led by charges based on different sections of the exhibitor fl oor (18 per cent), followed by multi-year contracts (15 per cent). Other initiatives include charges based on when the space is paid for (10 per cent), reduced net square feet charges the EXHIBITION HEALTH CHECKin the benefi ts and advantages of participating in the fi rst 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 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 "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," "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."in embracing a value-based approach and pointed out the organiser's pricing varies considerably across its European portfolio. more space purchased (10 per cent), charges based on performance (2 per cent) and other non-specifi ed strategies (45 per cent). The Pulse Survey also found 60 per cent of respondents saw growth in total exhibiting space sold in the past year, compared with 48 per cent in 2011. In contrast, 14 per cent reported a decline, an improvement on the 21 per cent who saw a drop in 2011. In terms of overall show health, 58 per cent reported growth in the total number of exhibitors, while 64 per cent also claimed an increase in visitors, compared with 28 per cent who had similar attendance fi gures year-on-year. As a further indication of the changing nature of sales across exhibitions, 58 per cent of organisers also cited growth in event sponsorship.