Budgeting by DesignNovember 1, 2017

The Art of Scrimping and Saving on Everything — Except the Attendee Experience By
November 1, 2017

Budgeting by Design

The Art of Scrimping and Saving on Everything — Except the Attendee Experience
An IBM conference attendee experiences the cognitive computing power of a Watson-powered robot. Credit: IBM

An IBM conference attendee experiences the cognitive computing power of a Watson-powered robot. Credit: IBM

Faced with rising costs due to both seller’s market conditions and inflation, many planners have had to ramp up their resourcefulness when it comes to budgeting. But it can take more than financial savvy to handle the challenges, as planners do not make their decisions in a vacuum. They must answer to the stakeholders that ultimately oversee meeting spend.

And when either significant cost cutting or budget increases are needed, planners may be in the position of explaining the situation to upper management. Conveying the budgetary challenges while assuring executives that the company can still manage to put on a cost-effective, quality event calls for strong communication skills. And if disagreements arise over how to meet those challenges, diplomatic skills also come into play.

“Costs are going up — costs for rooms, service charges, F&B — and we have to manage to those numbers. We try to build in a 5 percent increase each year, which is always met with resistance,” says Sharon L. Schenk, CMP, director of conventions and event management for Manchester, New Hampshire-based CCA Global Partners, a cooperative company. Many of the CCA executives have been with the company for decades and have seen their share of cost increases for the conventions, which are held twice annually for Carpet One Floor & Home and Flooring America, respectively. “So they’re pretty sophisticated and they do understand, yet at the same time, they expect us to negotiate and be more frugal,” says Schenk. “I can explain that this is what’s happening with the seller’s market or with airfare, and the answer is, ‘Well, we’ve got to find a way to cut. Come back with some ideas.’”

An Education Process

The dialogue can be similar for third-party planners conveying budgetary challenges to their clients. “It’s an education process that we’re going through with our clients,” says Teri Abram, president of Dallas, Texas-based EventLink International. “We need to make them aware that they not only need to start booking sooner and looking ahead, but that line items, particularly hotel and F&B costs, are going up.” The response can be an approval to expand the budget, or a call to “get creative” with the same budget, Abram says.

As Schenk mentions, sometimes a planner may have to explain how seller’s market conditions have driven up costs. Beth Becker, global meeting services manager for Downers Grove, Illinois-based MicroTek, sees that factor as underlying many of the cost escalations. “It’s not so much an increase in rates as it is the greater difficulty in negotiating those rates down,” she says.

“It’s also becoming more difficult to negotiate meeting room rental fees down or out altogether. We used to have a standard where we didn’t pay those fees because we were going to provide F&B and room block, etc., but in key cities it’s becoming more difficult (to avoid paying the fee).” Overall, she has found clients “pretty understanding” of cost increases resulting from the negotiating climate. “They know that we’re out there working on their behalf and as their experts, if you will. And we try to work with them to provide creative solutions,” she explains.

Site Selection

As opposed to trying to whittle down line item costs, the savings strategy can be based on the big picture of when and where the meeting is booked. Perhaps date flexibility can allow the group to achieve lower rates from a hotelier, or perhaps the site can be moved from a first-tier downtown to a suburban location to similar effect. Large meetings in some cases can be broken up and regionalized to reduce travel costs.

“We have a client that was looking to do an enterprise-wide training, so they were bringing in all of their employees in waves in order to train them, and we looked at how can we break that down and move that training more regionally,” Becker describes. “And the end result was several million dollars in savings. So you can see significant savings when you’re involved in a program at that beginning phase. Once it’s been settled and you have to move these people into this one location, then it becomes a little trickier.”

But even in that situation, there are plenty of potential cost-saving measures. For example, ground transportation costs can be pared down by working with the right partner. “We look for companies that will help us to coordinate the pickup (so as to) reduce those costs, when to send buses and how many people we can pick up at once.”

Working closely with the hotel also can accrue savings, and for that reason, Becker finds relationships with individual properties especially valuable. “Knowing the (hotel) people on a personal basis certainly helps us. Many times we’ll work directly with the AV people or with the chef to talk about recommendations they might have to help us cut costs,” she says. Schenk gives a few examples along those lines: “Maybe we don’t offer soft drinks on the breaks. Or we try to consolidate our breakout rooms so that we don’t have to add more AV.”

Don’t Scrimp on the Experience

The guiding principle for any cost-saving strategy should be to preserve the quality of the experience for the attendees, because that is the basis for ROI. It makes little sense to reduce the investment if one is also significantly reducing the return on that investment, i.e., the desired impact on participants.

“The most important factor for us in spending and cutting money is the experience for the participants,” Schenk asserts. “Our members are the bread and butter of our organization. If we have unhappy members, our membership drops, our revenue drops and our reputation suffers. They’re all entrepreneurs, and they leave their stores for two to four days and spend money to come to the convention. They need to be able to look back and say, ‘That was worth my time and money.’”

The importance of the attendee experience is not only observed when making budget cuts; it leads to an expanded meetings budget at many companies, including one of the world’s most venerable technology firms.

“We’ve seen the biggest jump in our budget (due to) the attendee experience,” says Colleen Bisconti, vice president, global conferences and events for IBM. A major investment in that experience will certainly be made for IBM’s inaugural Think 2018, a global business and technology event expected to draw about 40,000 attendees this March in Las Vegas.

What Would Watson Do?

Immersive experiences in particular will be integral to the show’s success. “We actually immerse attendees inside the technology through what we call ‘activations,’ and those are much more expensive to build than a typical expo hall,” Bisconti explains. “In the past, if you were going to showcase any kind of IBM software, it would be a pedestal or some kind of table with either a large screen or a laptop where a subject matter expert would show people a demo. Now, for example, we have a photo booth where you actually go in and engage with Watson (IBM’s cognitive system), so you understand the value and the power of Watson, not because somebody’s telling you about it.”

IBM also has invested in enhancing its conference app, also an important aspect to today’s attendee experience. “It used to be that we produced a daily newspaper (on the conference) in addition to the app. We did away with the newspaper, which was a significant savings, and we put (the savings) toward the app to make sure we are integrating Watson in a meaningful way,” says Bisconti. “We’ve seen an increase in app usage over the years, and the app’s gotten so robust that people don’t need the newspaper anymore.”

Abram has seen a great deal more of her clients expanding their budget for apps. “I would say probably 90 percent of our groups want an app, and this has just been within the last year; before that it was about 60-70 percent,” she says. “They want some sort of polling in their general session. The good thing is that there are some tools out there that don’t completely blow your budget. I see that area getting bigger, and as technology gets better, oftentimes costs drop.”

When Bisconti’s team wanted to integrate virtual reality technology to augment the participant experience, a little engagement with procurement was needed. “I didn’t think any of our existing vendors could deliver, so we went to procurement, which opens up a bid,” she relates.

IBM’s Budgeting Process

The overall budgeting process takes her team six to nine months, with weekly “state of the budget” meetings. For Think, the process began with building a business case for the C suite. “We looked at what revenues we expected and what expenses we expected to incur, and came up with what the event’s net cost to IBM would be. I first present the case to the CFO, and then to my boss, who is the CMO,” Bisconti says. “And then as you go through the planning process, things come up. Maybe a speaker is more expensive than we thought, and we adjust that amount with an internal dialogue with the CMO; I only bring things to her that I think are absolutely necessary. And every single budget decision we make is about the attendee; will it enhance the attendee experience? If the answer to that is no, we’re not going to do it.”

Naturally, there are occasionally disagreements among Bisconti’s team and other IBM stakeholders about how to allocate spend, including V.P.s of marketing across the business. “Oftentimes it’s because one of my peers is passionate about the part of the business that they own, and so they don’t think they’re getting enough coverage, or getting enough sessions,” she explains.

But the process to resolve these disagreements is a systematic, diplomatic one. “We work it out by having a dialogue. I also have a steering committee with representatives from all different parts of the business, and if there is ever an impasse, it goes to the steering committee meeting, and we talk it out there. And if we as a committee are not able to agree, or even agree to disagree, it would go up to our CMO again, although that has never happened.”

What’s Everyone Else Doing?

One way to make a case for expanding a certain area of the budget is to bring some data to the table about how similar events are benefiting from that kind of investment. For instance, a planner on the EventLink team recently was trying to convince a medical client to increase their F&B budget, Abram relates:

“We went through the attendee experience with them and what some of their competitive conferences are doing (in terms of F&B). We do that a lot actually, even sometimes with internal meetings if we’re fortunate enough to have access to information that might be online about what competitors are doing. We don’t want to copy competitors, but we certainly want to make sure attendees are getting the right experience,” says Abram.

Ultimately, the client agreed to increase the F&B budget by trimming some of the AV costs. “We talked about what they did and didn’t need (as far as AV), and were able to find some budget by going through that piece.”

Abram finds that dealing with procurement departments on spend management “can be a little tougher. I think they’re often under very strict guidelines and don’t have the ability to change those as much as a C-level executive might. Procurement definitely has their preferred suppliers, although sometimes we can get new ones through.”

It also should be noted that improving the attendee experience need not strain the budget, and such cost-effective ideas will certainly appeal to the C suite. “Sometimes it’s just the little things,” says Abram. “You may not have the budget to give them all great gifts and do all the things you might want to do, but sometimes if you just have staff that’s greeting them and helping them and making sure that their experience is easy, that goes a long way.”

Bringing on CVB volunteers, for example, is a cost-effective way to achieve this goal. Attendees also appreciate networking more than ever, and that usually can be facilitated with minimal investment. “It seems to be very consistent on surveys that what attendees want most is networking time, so we would likely continue to recommend to the client, let’s do 30 minutes here; it’s not going to cost you much,” Abram says.

“Some clients want to do matchmaking, and we might do various receptions that might require different venues, so it can create need for budget.”

Consultant to the C Suite

While all planners have some degree of autonomy on fund allocation with respect to the attendee experience, they are sometimes in the role of a consultant to senior management and their ideas. “I’ve had executives tell me we want to hire this particular speaker or entertainer, and I’m the one that has to tell them we don’t have the budget,” say Schenk. “This is the approved budget that you’ve given me to work with; where do you want me to cut? It’s kind of a back and forth thing. I have been able to convince them to spend a little more money, and I’ve tried to convince them to spend less money sometimes.” For CCA Global Partners’ incentive programs, it’s typical for Schenk to be on conference calls with the CEO, CFO and COO. “We all dialogue the potential offsite events and gifts, etc.,” she says.

Becker also sometimes finds herself in the role of a consultant on spend. “There have certainly been times when we’ve had to advise a client that we didn’t feel their directions or the decisions were going to support their objectives as well as some other approach would,” she says.

“In one situation, a client wanted to use a certain hotel that we didn’t recommend, and we ended up fielding a number of comments from attendees on why we had selected that property. It happened to be in the outskirts, not near a city, and people were traveling internationally, and they just weren’t happy with the location,” Becker relates. “But it was a venue the client wanted to use because it was close to one of the executive’s homes, so we made it work. Ultimately it is the client’s decision and we will support them.”

As Schenk puts it, the meeting budget is a “living, breathing thing,” even after it is submitted and approved by upper management. Various stakeholders propose new ideas as the event date draws near, and her team must evaluate those ideas and associated expenses in light of the overall budget. Indeed, the art of budgeting is not one that the planner practices in a silo; it is closely tied to the art of collaboration and diplomacy. C&IT

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