How to Think About The Huge Expenses of Events and Tradeshows
Events and trade shows. They’re expensive. You don’t get enough booth traffic. The folks that do come by are too junior. It sucks up days at a time. The air is convention-center nasty. Too much ice cream, too much alcohol, too many almost-all-dudes parties.
How can it be worth it? Even just $25,000 for the worst possible booth, plus tickets, hotels, schwag … and taking 3-4 people out of the office for days at a time.
No thanks, you might think.
But … you have to do the right ones. You have to.
Let me give a very visceral example. A good CEO friend of mine recently raised his very first $250,000. He’s got 15 customers, good customers, but it’s really early. And he was trying to decide whether to exhibit at Dreamforce — for $25,000.
That’s 10% of all the invested capital!! How could that make any sense?
And I said do it. And he is.
Let’s talk about why it’s a good investment:
- Trade shows / events produce a lot of so-called “leads”, but a lot of cr*p leads and long lead time leads. Lots of tire-kickers that waste your time that you can’t escape from. True enough.
- Any event that is large and spot-on for your product should get you at least one customer. Probably more, but at least one. Now, if your product is $10 a month, it’s tough to make that $25k back. But what if your product is $25k a year? Or more? You only need one. I did an experiment at the ’15 SaaStr Annual with a company I invested in, RainforestQA. A decent match with the founder-CEO-SaaS dynamic, but not as spot-on as all the other vendors. They closed 2 customers, at $30k each per customer — already. A more directly on-point (and somewhat larger) case study is Salesloft. They got about 100 leads and met dozens of existing customers. If your ACV is high enough, you don’t have to get out a calculator here.
- Importantly — events can be a key in-person “second” or “third” touch. Many leads need 2-3 touches, 2-3 contact points, before they close. Meeting with someone already in your pipeline at Dreamforce … can be magic. It’s not that the show generated the lead, but it was the additional touch necessary to close. This is some of the magic in the math of the investment.
- Big events are a terrific way to meet and reconnect with your existing customers. If you have Salesforce customers, and you exhibit at Dreamforce … you will meet your customers. You need to visit all of them … but often, you can’t. At the right trade shows, the bigger ones … they’ll come to you. This builds true, attitudinal loyalty. Which equals happier customers, more upsells, better retention. Think of big events as much a customer success investment as a sales / marketing investment.
- Events are important for the partner ecosystem. Partners all get together at events. You don’t need to do them for this reason, but again, it binds you together with your partners. Joint marketing, joint parties, etc. Partnerships also need to be built, maintained, and rebuilt with handshakes and face-to-face time.
- Trade shows are like peacock feathers — they are displays of success. The more successful the start-up, the bigger the booth, the better the display. Shouldn’t be true, but sort of is.
- You gotta be present. If you aren’t there, and the competition is … you sort of lose in continuing to build your mini-brand, and later, your brand.
The real problem with events and trade shows is you don’t really get a “better” deal the bigger you get, you don’t get scale benefits. The biggest vendors at Dreamforce this year will spend $4,000,000 or more (!) all in, including the biggest sponsorships, the biggest booths, the biggest parties, etc. So as a % of revenue, it never gets cheaper. In fact, the folks that put on the biggest and best shows and events know exactly how to get their pound of flesh.
So let’s go back to my friend — spending $25k of his $250k (!) on Dreamforce. Well, all of his existing customers will be there. All of his prospects. And his deal size is $25k+. You really don’t think he’ll get one more great lead? And another 10-20 decent ones for lead nurturing? And get some long-term upsell and customer retention from it?
Of course he will.
And on that note — we only have only THREE (3) standard / gold and ONE (1) platinum booth sponsorships left for ’16 SaaStr Annual (see below). That’s it! I know it’s early, but they’re almost all gone. Think about it IF you sell to founders / CEOs / execs in SaaS. If you do, we’ll have 5,000+ folks there. You really don’t think you can get one more customer? And take a bunch of your existing ones out to dinner? If it’s in your sweet spot – do it! But if it’s not, absolutely — don’t.