Extending the Customer
By any quantitative measure, the trade show industry appears to be booming. New shows are starting up every week. Cities throughout North America are expanding their convention facilities to accommodate more and bigger events. And a "gold rush" mentality has arisen as new players from management companies to publishing houses enter the market.
But the market isn't just growing; it's also undergoing dramatic change. To some extent it resembles an industry in the early stages of deregulation: After a long period of stability and predictability, there is now a proliferation of new entrants, greater consumer choice, and a movement toward regionalization and globalization.
Accompanying this frenzied activity is an accelerating rate of business failures.
In such an environment, the balance of power typically swings from the supplier to the customer. With an ever-increasing number of shows, exhibitors and attendees have far more selection now than in the past. Not only do they have more events to choose from, but other channels for trading and interacting. The Internet, for example, made trade shows a less essential component of some companies' marketing strategies.
Given the number and depth of supplier-customer relationships, one would think that service quality in the trade show industry would be extraordinary. Unfortunately, service is often mediocre or downright bad, making the trade show experience a far more difficult and inefficient one than it should be.
Consider the following:
Most "Trade Show 200" events are in their mature phase, with little or no growth.
Turnover rates of 40 percent or more among attendees and exhibitors levels that would be intolerable in any other industry are becoming more common.
Large "anchor" exhibitors have pulled out of well-established trade shows to start their own events.
More national buyers are avoiding trade shows, demanding that sellers come to them.
Labor unions have been fired, or their contracts re-negotiated, at prominent convention centers.
Business-to-business commerce on the Internet is estimated to be 10 times larger than consumer business, and most companies plan to expand this area.
Trade shows are failing at an increasing rate not only new ones, but well-established events as attendee traffic becomes diluted among competing shows and siphoned off by alternate purchasing channels.
As the trade show industry metamorphoses into a more competitive, dynamic entity, the old style of doing business will have to change. The attitude that once dominated "build it and they will come" is clearly obsolete. Every player in the industry will have to become more customer-oriented, and, at the same time, demand superior service from its suppliers. This means it will need better information about its customers, more open dialogue, a quicker and more efficient system for response and service recovery, clearer standards, and more accountability. It also means benchmarking against best practices used by leaders outside of the industry.
Trade Show Management Companies and Associations
The industry will have to move from its traditionally short-sighted and reactive stance to a more efficient, strategic one that focuses on customer loyalty and retention. And the various trade show players management companies, contractors, labor, etc. will have to abandon adversarial relationships and begin to work more cooperatively.
Before that happens, each of the players has its own baggage to discard and its own challenges to meet. Here are some of the changes that will need to occur.
Trade show producers live and die by attendance and buying power statistics, which they use to sell booth space to exhibitors. These statistics are, in essence, the Nielsen ratings of the industry. But the statistics are compiled by the show producers themselves, and are often overstated. Attendance figures can include any live body at the show, including students, spouses, maintenance workers, and the temps at the registration tables.
The result of inflated attendance figures is that exhibitors' expectations are also inflated, and the likelihood of dissatisfaction is high. Eventually exhibitors start looking at other options, such as competing shows or alternate marketing channels.
One management company recently purchased a show that had been advertising 20,000 attendees to its exhibitors and, after an audit, discovered that the actual figure was closer to 15,000. They could not communicate the real number to exhibitors, however, because it would appear as if the show were in decline. Like many other companies, they will be forced to continue the deception or risk exhibitor flight.
The irony is that overall attendance figures may not be all that important. It is value, not volume, that should be of most concern to exhibitors. Trade show producers should be helping their customers optimize the effectiveness of their exhibiting efforts, manage their expectations of the show, and measure their return on investment. Here are ways to do just that:
Do more than sell "real estate." Back when buyers wrote checks on the trade show floor or consummated deals soon after the show, it was easier for exhibitors to gauge their success. Now they are finding it difficult to draw a straight line between investment and return. In many industries buyers are pushing their purchases farther out from the time of the trade show. Near-term purchasing is no longer the reason many attendees come to events. They may be more interested in fact-gathering, investigating new technologies, or increasing their education.
With that in mind, producers should be helping exhibitors use their product more effectively rather than simply selling real estate on the trade show floor.
Build a customer-friendly infrastructure. Show producers are notorious for lacking an infrastructure that supports customers. Most producers' staffs are focused heavily on the sales and operations side. There is little dialogue with customers, and communication tends to be completely focused on selling the once-a-year event. Little is offered to help customers manage the process of exhibiting. Producers need to realize that, in the long run, their own success depends upon the success of their customers.
Expand your expertise. Show producers must also redefine their relationships with exhibitors to create show loyalty and ensure retention. They'll have to build stronger partnerships with exhibitors as they expand their expertise to encompass marketing strategy, industry trends, and purchasing behavior. Simply bringing buyers and sellers together at trade shows will no longer suffice. Show producers must become more knowledgeable about other marketing and trading channels and how these channels can be used in a complementary, continuous strategy of which trade shows are only one component.
Survey more carefully. Fortunately, show producers have access to an excellent database of buyers in every industry for which they produce shows. Unfortunately, these buyers are seldom surveyed adequately to gather the depth of information that is valuable to exhibitors. Attendees are queried principally about their purchasing authority, budgets, and magazine readership, with the purpose of selling next year's show to exhibitors. Management companies should be leveraging their access to buyers to gather far more in-depth information and positioning themselves as an essential strategic resource for exhibitors.
Pay more attention to attendees. The term "growing trade show" usually refers to the total amount of floor space booked. But in many cases it is only the exhibitor base that is growing, while attendance is flat or shrinking. The result is diminishing density of traffic, which can lead to the impression that the show is failing. A downward spiral can result, with both exhibitors and attendees pulling out.
One reason for the declining traffic is the dramatic increase in the cost of attending trade shows. There's not just inflation in the price of admission, but there's also a rising opportunity cost. Most people in business are working longer hours and wearing more hats. Under these circumstances the cost of leaving work for three or four days becomes extraordinarily high. Management companies will have to find new ways to add value to shows if they are to attract and maintain attendees.
Among the factors that add value for attendees are keynote speakers, networking events, and relevant educational opportunities. Shows that drop these components are making a mistake because these are the elements that create salient memories of the show and generate positive word-of-mouth. When it comes time to sign up for next year, a positive memory can make the difference between returning or staying at home or going to a competing show.
Hold suppliers to measurable standards. Trade show producers need to better define the level of quality they expect from their suppliers. They should bring suppliers into the process of establishing standards, measuring performance, and enforcing consequences. Too often a complacent or adversarial relationship develops among management companies and their suppliers, which puts the show at risk and contributes to inefficiency.
There's no question that constructing a trade show is a monumentally difficult and expensive logistical task. But at the same time, prices are high; in some exhibitors' minds, they're astronomical. Exhibitors feel that it is intolerable to pay such prices and still put up with late deliveries and pick-ups, rude laborers, damaged freight, billing errors, dirty carpets, chipped tables, and long lines for customer service. Exhibitors give high marks for contracting services if they simply get what they are promised. If you're serious about improving customer service, then the following changes need to be made:
Stop making excuses. Too many general contractors in the trade show industry have developed a culture of finger-pointing and rationalization. Too many managers and workers are resigned to doing nothing about delivery and quality problems because they believe that others in their organization will never change.
The party most frequently blamed is the customer. Contractors claim that exhibitors should not be annoyed at late freight returns because they ought to be aware of the challenges and adjust their expectations accordingly.
In a competitive market, putting the burden on the customer to figure out how things are done is a sure ticket to failure. Customer-oriented companies will find a way to solve the problem.
Complaining about problems to general contractors is often more frustrating than the problems themselves. The exhibitor must stand in an interminable line, only to be told that he should have been standing in a different line all along. After reaching a service representative, he is given excuses and explanations, but seldom timely or acceptable solutions.
Service leaders go looking for trouble. They send employees out to customers and solve problems on the spot. They create a response and solution mechanism that turns disgruntled customers into loyal ones. There is no reason general contractors can't do the same.
Expect labor to excel. There is a widespread belief that trade show laborers particularly union laborers are unmanageable, intractable, and generally don't give a damn. As a result, contractors simply hold their breath and hope for the best. If laborers are rude, if they run a forklift over someone's display, or if they deliver a booth to the wrong place, that's just the price everyone has to pay. You can't fire them and you can't bring in your own people, so there is no recourse.
General contractors need to search for creative strategies to address "the labor problem." One technique that has been used successfully is to bring all of the laborers together and show them photographs of the customers: "This is the show manager. This is the association president. This is the convention center director," etc. The contractor then conveys to the workers its goals: "We want to help make this show successful and easy for exhibitors so they will come back next year and pay us all to do this again." Workers are given clear goals: "We want 90 percent delivery of freight to the right location, 95 percent customer satisfaction, and no damaged displays."
With information, goals, and leadership, many workers can be motivated to provide good service. Labor should at least be given the opportunity to excel and to work toward a common objective.
With the ever-increasing level of competition among venues, convention centers shouldn't just wait for customers to ask for improvements. They should take the initiative to help shows succeed. Education for exhibitors and access to high-bandwidth Internet connections can make the show run more smoothly. Any improvements that would streamline delivery and pick-up of freight (including forming better relations with labor) would reduce dissatisfaction among exhibitors and increase the probability that the show will book the venue again. Here are other ways that centers can take the initiative:
Improve the food. It's a given that convention center food will be mediocre and overpriced, but many of the people on the trade show floor have no options. Convention centers must begin holding their concessionaires and contractors to a higher standard. To do this they need to set clear benchmarks, measure consistently, and enforce consequences when standards are not met. Other facilities that serve large, transient customer bases, such as stadiums and airports, are beginning to take these steps. There is no reason convention centers can't do the same.
Use innovation to address deficiencies. Many convention centers suffer from deficiencies of placement or design: location in run-down neighborhoods, insufficient parking, inadequate transit access, confusing street signage. Meeting planners may be impressed with the space and the city, but eventually they will tire of complaints from attendees and exhibitors who are afraid to walk to the parking lot or who are stranded for two hours waiting for a cab. As capacity grows, these deficiencies will become increasingly important factors to planners in choosing one facility over another.
As show managers seek to aid their customers with better and faster information, they will demand immediate access to registration data. The turnaround rate currently offered by many registration companies sometimes weeks is unacceptable. Access will need to be Internet-driven, with a more flexible system for filtering, querying, and drilling down data.
Not only should data be delivered faster, but the whole registration process should be more reliable and practically invisible once the show gets under way. Missing or incorrect badges, computer breakdowns, and software glitches create infuriating distractions for pre-registered exhibitors and buyers.
Labor unions, at long last, will have to start contributing to the solution instead of the problem. Long entrenched in the largest convention centers, they have had essentially no competition, and thus no real accountability.
This situation is changing. Added convention capacity will give large show producers more choice. Even if they cannot yet relocate their biggest shows to other cities, they can threaten to pull smaller shows in order to obtain concessions. With pressure from cities, convention centers, and show producers, labor will need to get on board.
Show producers and contractors talk about "the labor problem" in whispers, as if labor were the mad aunt in the attic. Exhibitors are not so reticent. They complain bitterly about union attitudes and their unwillingness to address problems. It is interesting that laborers are actually likely to receive high ratings for their skill level once they show up.
Yet labor will not improve service simply by being more polite. There are fundamental steps that need to be taken before a real difference will be seen. First, it must identify exactly who its customers are: Exhibitors? Contractors? Show producers? All of the above? Next, it must determine how each customer group defines good service. Then it needs to train, set standards, measure, and agree on some form of accountability.
Show producers are already measuring satisfaction with labor at different venues, and using the results to decide on show locations. General contractors and convention centers are also evaluating service quality and comparing results. They are finding out who is naughty and who is nice. If labor groups wish to hold on to their franchise, they had better be nice.
The ultimate question at this point is not, 'Will these changes happen?" but "Who will make them first?" and "Who will do it best?" The evolving competitive situation has exposed the weaknesses in the industry and made change inevitable. It is likely that some of the biggest and oldest players will not be able to adapt and will be replaced by new players. The next five years will tell. Now is a good time to place your bets.
Adapting in an Internet Age
Before the Internet, communication between buyers and sellers was difficult and costly. Corporations looked for the best ways they could find to communicate with their targeted markets. Many set up their own in-house sales departments, assigning geographic regions to their employees. These people would travel around their routes to meet regularly with prospects, give sales presentations, and close deals. Companies that couldn't afford in-house sales teams would contract with independent distributors or sales representatives. These independents would cover the regional territories and offer a wide range of products from various companies.
Buyers were quite often at the mercy of their local rep to find out what new products were in the pipeline. Competitive comparison opportunities were limited. Small and new suppliers often found it difficult to get their product news out to the industry.
This is where trade shows became so valuable. They became a crucial part of the industry's efforts to become an "efficient marketplace," giving buyers and sellers the opportunity to get together.
The trade show was the place to see what was new products that nobody had seen before. This was also where suppliers found out whether they had a good idea and could ramp up production ... or if their idea was a bust.
The trade show was the place to be seen, too. If your company didn't exhibit at the industry's major annual event, then you just simply weren't a player. And those small, new companies used the trade show as a springboard for making a splash in the industry.
Buyers came to the trade show to see new products, write orders, and take advantage of "show specials" promoted by exhibitors. They took advantage of hands-on demonstrations and were able to do competitive comparisons. They also had the opportunity to network with people and had access to timely information they would normally wait weeks to get.
When all this was going on, everybody was happy. Trade shows were the efficient marketplace because they were the only places where all this good stuff was happening.
The problem facing trade shows now is a big one. Pretty much all the reasons why a trade show is relevant and valuable to our markets are being attacked and rapidly addressed by the Internet. The efficiencies that trade shows have provided for years are being replaced by newer, cheaper, and more efficient efficiencies.
Even before the Internet, though, we started to see tectonic shifts in all industries. Large companies started gobbling up small ones to become bigger and more national. Consolidations, mergers, and acquisitions became common. More than one industry started to joke that their annual trade show would eventually end up with one exhibitor and one attendee! And while that's a joke, the fact remains that massive buying power is now in the hands of just a few people.
Communication became easier for both sides. Instead of traveling to see dozens of accounts and prospects, suppliers could now fly to one city for one meeting with one person who now had the same collective buying power. FedEx allowed companies to send information overnight and faxes made sending it even faster. Major suppliers even began looking for ways to set up partnerships and open lines of communication with major customers. Some even assigned full-time representatives to have office space inside of customers' facilities.
Major customers began wanting a jump-start on the competition. Instead of waiting to see what was new in the toy industry at Toy Fair in February, Toys R Us, WalMart, and Target demanded private meetings in October and November.
On top of all this change, what did the Internet bring to the game? It brought a new way for buyers and sellers to communicate. It brought a new way for suppliers to lower the costs of communicating and increase sales at the same time. And it brought a new way for buyers to gather real-time information about products, services, new developments, and companies in their industry.
In other words, the Internet brought a more efficient marketplace.
And what makes this trouble for trade shows?
Trade shows are trapped by the brick and mortar of convention centers. The Internet has no physical boundaries.
Trade shows are trapped by their small window of opportunity. Buyers no longer have to wait 362 days to attend a trade show to find out what's new. They want to know what's new right now.
Major corporations no longer have a need for an annual face-to-face meeting with top buyers. As one major Fortune 500 CEO said recently, "There are five customers who account for 90 percent of the industry's buying power. I can pick up the phone and get a meeting with any of them whenever I want. Why do I need to see them at a trade show?" And it's not just the major players that benefit. Small, new suppliers to an industry can communicate with their targeted market more efficiently and at less cost through the Internet.
Traveling to trade shows often requires two to three days out of the office. Buyers and sellers are more strapped for time than ever. They don't have time to walk miles of aisles hoping to discover some hot new product or find the solution to a specific problem. The Internet lets them search for these solutions on their own time.
Trade shows still have one advantage over the Internet face-to-face interaction. Although the trade show as it exists today will have to evolve, show managers don't need to be threatened by the Internet ... as long as they embrace all the advantages it offers.
Author: Steve Miller