Thursday, July 26, 2012

Many of us often forget that annual meetings and conferences are actually a business.

When we are a member of an organization, we expect the organization to provide an annual meeting at the lowest cost possible so we can attend.

But are those member expectations justified? It really depends upon the business model of the event.

Defining A Business Model

A business model describes the rationale for how an organization creates, captures and delivers value.

It emphasizes a system-level, holistic approach to explaining how organizations do business. They seek to explain how value is captured and created.

The simplest way to define a business model is to answer, ?How do you plan to make money??

We often forget the making money part of the business model?especially for conferences. We forget that someone, somewhere is paying for the conference expenses. There may have been a registration fee that covers some of the expenses. However, in the case of the hosted buyer experience, the burden of the conference expenses fall on the host, its sponsors and exhibitors.

More Business Model Tough Questions

There are a host of other questions that follow the money making question. They include:

• Who is your target audience?
• What customer pain point or challenge do you help solve?
• What value does your conference deliver?
• How do you plan to reach, acquire and keep customers?
• How will your conference be different from competitors?
• How will you generate revenue from the conference?
• What?s your cost structure?
• What?s your profit margin?
• What are your fixed costs?
• What are your variable costs?
• What are your direct staff costs?
• What are your indirect staff costs?
• What are your overhead costs?
• When do you plan to make a profit?
• What upfront costs will you incur?
• How do you plan to pay for the upfront costs?

Three Types Of Conference Business Models

Most conferences and annual meetings fall into one of the following three business model categories.

1. Revenue Generating

Let?s face it. The majority of conferences exist to make revenue for the organization. In the nonprofit trade association world, some conferences? profit make up to 40%-60% of the organization?s annual budget. Without the revenue from the annual meeting, programs, services and staff would be cut and in some cases even disappear.

Most revenue generating conferences make a profit from registration fees, exhibitor booth sales and sponsorships. Conferences that don?t have a tradeshow component may depend upon high registration fees and sponsorships.

2. Break-Even

Break-even conferences make enough revenue to cover the conference expenses. The goal is not to make additional profit, just cover the costs of the event.

3. Organization-Funded

These conferences are completely underwritten by the host organization. Sometimes, the organizers even cover the attendees? airfare, lodging, ground transportation and expenses.

These conferences may be exclusive, invitation-only events for loyal and high-end customers. Often the organization wants to show appreciation for the customer?s support and loyalty.

Sometimes the conference is used to roll-out a new product or service. It may even be used as a content-marketing strategy with magnetic content to position the organization as a cutting-edge thought leader and attract new customers.

Or the conference is used to invest in customers and help them progress in the industry. It may be educational as the organization wants to get as many people instructed as possible to make positive change.

What would happen if conference organizers had to publicize the business model used for their annual meetings and conferences? How can conference organizers balance the expenses and revenue from all of its stakeholders more evenly?