A decision I have been struggling with for months now is whether to hold a customer / client function / party / event in 2014. Applying both my analytical based and my belief’s based decision making skills, researching whether there is a return on investment (ROI) model for measuring the benefit of such events didn’t really help, in-fact it added to the angst of making a decision. My conclusion in the end was there is no measurable ROI and I cannot see how our past two events elicited any tangible or intrinsic benefits to us as a company on a backdrop of increasing financial investment and that I personally have come to dread our parties.

So knowing I would be given a new mantle of “party-pooper” within our organisation I decided, on balance, not to hold the party we had planned.

If you as a business are considering stepping into the client event / function / party space here is my advice:

  • Be clear on the purpose of the event, Why are you holding it? is it a party just to have a good time, no benefits required? or is it an event you expect will engender loyalty from your customers or clients? or an event to drive more direct engagement and leads?
  • Consider what impact you expect the event will have for your team? do they need to work the event? is attendance optional for them? are you OK with them knocking back the drinks with your customers or clients? will you ask them to network and seek intelligence from potential customers?
  • Is it an event people will look forward to attending? are you being creative with your theme or location? will they feel comfortable and relaxed or awkward standing around talking to strangers? what do the attendees expect from the event?
  • Set the budget as a per head budget and stick to it. Don’t let your team talk you into adding extras push back and ask them to be more creative, remember this is your money so you need to be getting the value you expect for your $$.

Is there an ROI model for party style functions?

In researching an ROI model I found there are some with tangible measurement suggestions for marketing events such as launches or for industry events such as conferences, but struggled to find one for a plain old party.

Here are links to some of the articles I found. Interestingly even the blogs and articles describing an ROI model often don’t quite go far enough to provide a tangible score, many focus on social media reach in marketing or launch contexts as well:

http://trackmaven.com/blog/2014/01/roi-of-your-marketing-event/

http://writing.attending.io/pieces/how-to-throw-the-world-s-best-startup-party

http://constellationcc.blogspot.co.nz/2013_01_01_archive.html

If I had a clearer picture in mind of what we wanted from our annual party this whole decision would be easier and trying to retrofit an ROI model wouldn’t have been necessary. Below is our event as a case study. One of many lessons learned in our journey bootstrapping our business. We might hold a party this year yet but it will be more relaxed, less disruptive and for me I hope more fun. I will keep you posted.

Background first:

Coming from vendor backgrounds Shane and I both hated customer and client functions, these were considered key relationship building time when you can catch your customer off-guard after their sinking a few free beverages. As consultants it was our job to network a room and gain as much intelligence as possible to feed back to our sales teams for followup in days to come. Usually only the perceived decision makers were invited, people we had nothing in common with. Those attending saw it was an opportunity to drink up on their suppliers dollar and usually tried to make it a very big night.

So when we started OptimalBI we thought about events we have been to or heard about that we enjoyed, for the most part these were more informal, with no overt pretence of selling and with a cross-section of people from a range of organisations. Our 2012 party was for all intents and purposes to celebrate our moving into OptimalHQ with the dual purpose of thanking everyone who had helped us get there so we invited our building owners, trades people, customers, friends, family, former customers, maybe contractors, maybe staff… you name it. The office was pretty empty so we held it there to show off the space, the budget was low and it was basically a fun night.

In 2013 our event grew and was even named (OptoberFest), the invite list didn’t vary but the budget doubled and as it had become a busy working office the level of disruption increased, effectively we lost 2 days of productivity across the OptimalBI team with setup and cleanup, we had about 100 people turn up (of 200 invited) plus approx 30 staff/contractors to OptimalBI. The event was fun for most, our team had a good time and many attendees turned it into a big party night. The theme was a good point of difference and we got some great photos. There was loads of beer leftover in the kegs so our team enjoyed a few days of post party beer which was great.

As the 2014 was planned the budget grew again to $7500 +GST, we need a liquor license and bar manager, the office is busier again so it will be harder to move our desks out of the way protecting our equipment and stuff, the two days of productivity loss across the entire team will remain consistent. Some of you reading this might think $7500 +GST isn’t a big amount, but if you are a small business owner you will understand just how much this cost plus loss of revenue adds up to.

What my no decision boiled down to:

2012 and 2013 were at the tail end of the GFC and austerity measures kicked in with many companies not holding boozy events (or moving to more selective groupings) so I knew that the OptoberFest was the only one most of our attendees were invited to however I realised a couple of weeks ago nobody had mentioned the event to me beyond the immediate next day thank you notes. Then over coffee a contractor who I know well, doesn’t contract through us and doesn’t buy from us, asked me whether we were going to hold the beer festival in our office again this year – I laughed and told him I was struggling to make a decision about that – he implored me to hold it as it’s the only time he gets together with other contractors in the market to find out what’s going on where ie: he uses it as his networking and next sales opportunity identification while drinking beer we have supplied.

He said to me “as long as you are getting something out of it, it must be worth having” and I couldn’t articulate what we were getting out of it.

Decision making process:

In trying to look at this from a number of angles I considered the pros and cons from three perspectives – our Staff, the Attendees and OptimalBI’s.

Staff perspective:

Tricky one as some people love these kinds of events and others hate them. The major standout is one of our team has a career aspiration to be an event manager so organising this is very important to her, unfortunately we are not an event management company so the consideration for her personal goals while important were outweighed by other factors.

Pros for holding a party for our team (not all of these are applicable to everyone) – opportunity to see customers, former colleagues and broader networks in an informal setting, catching up over a drink; opportunity to have a bit of a blow out with their current colleagues; reinforces the love of beer part of our culture; like to be part of a company who has big parties; can invite their mates along; something to look forward to in a busy year.

Cons if we held a party for our team (not all of these are applicable to everyone) – the need to be “working” out of normal hours; the need to refrain from drinking while expected to be networking with customers; don’t enjoy talking to strangers and find small talk tedious.

On balance I think the team will be disappointed we aren’t holding the event.

Attendees perspective:

When I was a buyer in a former life I actively avoided christmas parties or office opening functions as experienced sales people trying to make friends in this informal setting so I anticipate attending our Optoberfest would be the same for the people I consider to be our buyers as well. Note: The attendees we have invited in the past are not just customers as described earlier.

Pros for holding a party for the attendees – opportunity to see their colleagues in an informal setting; opportunity to catch up with other people in the industry (and identify next job for some); opportunity for a blow out when someone else is supplying the food and drink; networking, meeting new people and being part of something; for some this is the only office party they are invited to all year.

Cons if we held a party for our attendees – some would feel they have to come along to be seen or because we are important to them, when they don’t really enjoy these things; the occasional seller does slip in, the selling consultants as described earlier; some might feel they have to buy something off us (but no evidence of this).

On balance, based on nobody mentioning it to me in 12 months and the vast range of attendees we invite, I don’t perceive our actual customers will notice we aren’t holding the event.

OptimalBI’s perspective:

Here is where the ROI dimension comes into the equation. We have no tangible measurement of positive sentiment towards us from attendees without overtly asking them. While Shane and I are positive no sales or direct leads have come from the 2012 and 2013 parties we have never explicitly asked that question of our customers to validate our assumption here.

Investment wise @ ~$75 per head, there is no venue hire cost, we supply catered finger foods and beer/wine/soft drinks. We need to take responsibility as hosts serving alcohol, hold insurance for the building and potential damage or impact, ensure we consider OSH and First Aid, have adequate serving staff etc etc. Then as described earlier the cost of loss of productivity for our company in 2 days of no revenue, disruption to our workspace, security risk for our equipment and the need to clean everything post event all need to be taken into consideration.

If our focus is on thanking our customers for the same per head investment we would be able to go to my favourite restaurant for a good meal with wine and have them within the context of their normal business take responsibility for the license, staff, space etc without the productivity impact. My problem is we didn’t clearly define what we want to get from our party so without that purpose statement it is hard to balance the objectives.

Pros for OptimalBI holding a party – reputation as the company who like to have fun; many of our team members want to hold the party so will enhance their engagement; opportunity to say thanks to customers and supporters; opportunity to network with people in an informal setting; potential for positive sentiment towards us from our customers and supporters.

Cons for OptimalBI holiday a party – reputation we have too much fun and aren’t serious enough; cost vs value for our customers, we could spend the same on more coffee catchups and lunches or offer different benefits; disruption to our business; loss of revenue; some team members don’t enjoy the event will drive down engagement.

Conclusion:

As host I don’t enjoy the boozy construct, despite our attempts some people still drink to excess and don’t eat enough, so the level of effort, risk and exposure associated with keeping track of them is high. There are a number of other factors I find stressful, damage to our office, damage to our building, ensuring everyone is having a good time, logistics on the day, missing out on saying hi or talking to everyone there etc etc.

My plan now is to define clearly what we want out of holding an event or party, consider some more creative options to say thanks to customers, then validate this with customers. We are entering silly season soon so it will also be interesting to watch and see what other small businesses do this year. Happy sharing, Vic.

shane and vic