Analyzing Event ROI: Why and How
Nonprofit revenue is a bit different from manufacturing revenue, but you can learn something important from manufacturing industries, which is the value of carefully evaluating performance.
Today it’s a first principle in virtually every factory in the world: What you can measure, you can manage.
Why track event performance?
After your event, an accurate account of its costs and returns helps you understand what happened. By using objective information, and not just the good feelings everyone had, you can know what went well, what didn’t, and which parts of the event were most valuable in advancing your organization’s mission.
More important is tracking event metrics over time. This process will reveal trends beyond just one event that may be subject to one-time factors, like the blizzard of the century.
A set of measurements from several recurring events can show you which of your efforts are bringing the most return and which you should either improve or drop.
A simple and important ratio is cost per dollar raised. To find it, divide the event’s total expenses (including indirect costs) by the amount it raised. Nonprofits report a wide range in this ratio, and there’s no universal rule for it; the average is around $20 of costs for every $100 raised, meaning 80 percent of the total raised goes to the charitable purpose.
For a baseline, compare this ratio to your past performance and those of other nonprofits in similar circumstances, and review it for savings opportunities. But don’t automatically reject an increase in your event budget. If some well-directed spending increases your event’s net revenue, it can be a win even if your cost-per-dollar ratio goes up.
How much did your audience cost you?
Divide your overall cost by the number in attendance and you’ve got your cost per attendee. For a stable organization in normal times, that figure should decline with time—the result of a growing volunteer base, greater efficiency in promoting events, and better deals with vendors and sponsors.
But a higher cost per attendee might also be a deliberate choice, one you accept in hopes of reaping major benefits—bigger donations, a broader footprint in the community, or a new deep-pocket corporate partnership.
While you’re studying attendance, determine whether the right people were there. Of your steadiest patrons, who didn’t show up? Take their absence as an opportunity to meet them for coffee, report on the event, share information about future events, and then solicit a donation. You may even uncover why they didn’t attend the event.
If the relevant numbers have been recorded, you can see how many attendees participated in your fundraising vehicles. Again, a multiyear graph can help you see what works best with your audience—a silent auction, a raffle, or maybe a celebrity pitch.
Bids, donations, and purchases
Analyzing these transactions can provide a wealth of useful information. For example, you can learn when your guests were spending most actively, both before and during the actual event. This information is easy to find when you offer guests the opportunity to bid using a mobile device.
Did your host make announcements about bidding during the evening? Did you send guests texts during lulls in the program? These verbal and text cues should have spurred increases in bidding activity. If they didn’t, or the activity seemed modest, look over the content of the announcements, and consider how to improve the pitches.
What’s moving, what’s not?
Be sure all your packages are pulling their weight. If some garnered no bids or buys at all, figure out why: excessively high starting bids and confusing combinations within a package are prime suspects. Next year you may decide to reduce these no-bids by adjusting the package, promoting them better, or dropping them for more attractive packages.
Knowing your audience is fundamental to drawing conclusions after an event. Operatic boxed sets may fly off the tables at one event; season tickets to a pro football team at another.
If you examine every event metric to learn what succeeded and what fell flat, you’ll make better decisions before the next event.
Financial analysis is a core competency for our firm. We can help you turn event numbers into information and information into action.