The second of a three-part pricing series, this article focuses on improving the use discounts to boost attendance, engagement and room block pickup, while improving social and environmental performance.
This is the second of a three-part pricing series for meetings and events. The focus in this article is on improving how we use discounts to boost attendance, engagement and room block pickup, while improving social and environmental performance.
Imagine if we could make ourselves more financially stable and profitable, support strong communities and encourage sustainable behavior all at the same time. We can start by changing how we leverage the power of effective discounts.
This article will examine three issues: 1) improving event profitability and cash flow, 2) engaging more closely with meeting participants by addressing the social stigma that exists within our pricing models and 3) encouraging sustainable practices.
PART 1: PROFIT
The Trouble with Discounts
Association meeting planners today are in a tough spot – registrations come in late, and payments are due far in advance. It’s also easy and tempting for attendees to book outside room blocks, and our discounting strategies end up eroding our profits, not increasing them. Effective pricing strategies can counteract these issues, but only if we break from accepted norms.
The Elephant in the Room is a Bird: the Early Bird
Our industry relies heavily on early bird pricing to drive attendance, but the strategy isn’t working. Early bird cutoffs within four to six weeks of the event (as many are) don’t meet our actual cash flow needs, and the tendency to extend these rates sends the wrong message: In our haste to encourage more registrations, we signal to our target audience that we haven’t met our registration targets, and we frustrate participants who registered before the first deadline. We also build the perception (and it may be correct) that the rate will always be extended, so attendees stop taking the deadlines seriously.
Consider these alternatives.
Limited quantity-based discounts: By offering a limited number of tickets or registrations at a discount, you increase the urgency to register, as attendees compete for the special rates. You can coordinate this model with deposit deadlines by setting the quantity and rate for the special offer at levels that help you to raise the revenue you need by a specific date.
Multiple milestones: In 2012, the American Institute of Steel Construction (AISC) replaced early bird registration with a model that increased fees by US$10 per week. The results are shown in the table below.
Year18 Weeks Before the Event 12 Weeks Before the Event6 Weeks Before the EventFinal Registration201103271,5473,26320123217299633,587
The pricing model for 2012 was revenue neutral over the previous year, but the additional and earlier registrations brought important secondary benefits by increasing confidence from their exhibitors and sponsors.
"Every year, exhibitors would panic that so few people were registered, and then would breathe a sigh of relief when the show opened and attendees were there," explained AISC meeting planner Scott Melnick. More reliable numbers raised exhibitors’ confidence in the event and the trade show sold out faster.
Action-based discounts: Consider offering discounts to participants who take action to support your event or marketing goals. These could include special rates for top social media participation or for those who commit to volunteering for a pre-determined amount of time at your event.
When Free is Really Expensive
A second vital issue for our industry to address is how current pricing models build in the potential for "free riders" that increase our financial risk. Free riders pay less than their fair share of a common resource. The principal example is with attendees that book outside the room block. This can lead to associations not meeting their room block pickup requirements and attrition fees. The dilemma is in the fact that while we want to discourage free ridership, we want to embrace the free riders themselves. We want them to attend, and we also want them to book inside the block. Unfortunately, these may be mutually exclusive options for some prospective participants.
I see an important link between booking outside the block and meeting space pricing. We’ve been trained over the years to negotiate discounted or free meeting space, and yet this results in not being able to negotiate the lowest lodging rate, leading more people to book outside the block. Here are a few options for helping address this challenge.
Amortize the cost of the meeting space over all the attendees: By including the cost of the meeting space in registration fees, the costs are shared by all event participants, not just those staying in the room block. This ensures that those staying outside the block, as well as local attendees, contribute to the cost.
Offer discounts to those staying in the block: Another alternative that is used by some associations is to offer registration discounts to those staying in the block.
Work with your partners to extend packages and other rates to your delegates: We live in a world with dynamic pricing, yet, for the most part, we lock in rates well in advance of meetings. Instead of trying to compete with an official hotel’s online rates, make them your rates. If you’ve separated out your meeting space costs, it may be feasible to offer your delegates the best available rates at the hotel, including discounts such as AAA rates or family-getaway packages.
Identify and resolve the underlying issues: While the strategies above are designed to encourage booking in the block, a key step in developing your pricing strategy is to understand the underlying reasons why outside bookings occur. Is it because the rates are too high for many delegates? Do they have corporate rates negotiated elsewhere? Are the venue and/or rate viewed as extravagant in a highly scrutinized environment? Understanding this will guide your pricing strategy.
PART 2: PEOPLE
Taking the Stigma Out of Discounts
When it comes to meeting and event discounts, I see a fundamental flaw—we have a tendency to attach an unintended stigma to our discounts. Although some types of discount categories are not stigmatized (such as member vs. non-member), others carry an underlying message that some people are not able to afford the full value of the event. This message leads to the risk that those we are hoping will participate in our events will feel that their inability to pay makes them somehow worth less than others.
There is an opportunity here not simply to "spin" this, but to genuinely engage potential meeting attendees and prospective association members by placing a positive pricing lens on underrepresented groups that provide valuable voices to our communities and conversations. Consider introducing new pricing categories that show that the contributions of these underrepresented groups are worth more, not less and emphasize that the contribution of these voices is more than financial.
Examples of this could include the following:
Industry mentors: This pricing category could be offered to retirees. It doesn’t need to be pointed out that the baby boomers are starting to retire, and this could have a significant impact on event attendance if this group does not see an important and valued role for themselves. Associations that want to keep this significant group participating in events should begin developing strategies to ensure that this group feels appreciated.
Valued voices: Many events offer discounted rates to individuals from less affluent groups or regions. Instead of offering discounts based on their inability to pay the full rate, offer them preferred pricing in recognition of the rare and important voice that they bring to your event community. This reinforces the value of diverse contributions to an event and acknowledges that different perspectives together in a meeting enrich the experience for everyone.
PART 3: PLANET
Another critical discounts issue is that we only directly control some aspects of the total cost of attendance (TCA). While planners control budget costs and registration fees, other aspects, such as transportation, are not as easy for planners to control, even though they might be able to exert some influence. Fortunately, many elements of the TCA can be controlled through practices that also support sustainability. This means that by encouraging sustainable practices, planners can bring down the TCA and encourage greater attendance. The role for planners in this case becomes informing participants of how they can save, and a great way to do this is to develop opportunities to earn a registration discount by participating in sustainable practices that reduce financial risks or costs for planners. These savings can then be used to support the registration discounts.
Examples of the types of sustainable and cost-saving commitments that participants can make that save money for the association include the following.
- Participate in a room-share program: This can help reduce attrition risks for planners by having people who otherwise would have booked outside the room block stay in the official hotels.
- Bring reusable travel mugs or water bottles: This reduces the demand for bottled water, saving money and reducing registration fees.
- Sign up for vegetarian meals: In many cases, this can reduce your food costs. These savings can be passed on as a special discount for participants.
- Commit to walking between venues: By reducing the need for shuttles, planners will reduce costs and the event’s carbon footprint.
Concluding Thoughts
This article has reviewed various price-discounting strategies to encourage greater profits, social balance and environmental benefits. In the next part of the series (see November’s One+), we’ll be exploring new models for association membership and sponsorship. These models will examine customization for member and sponsor benefits to increase value to each of the stakeholder groups and improve profitability for the association. One+
Sobre la autora
Mariela McIlwraith is President of Meeting Change, a business consultancy that provides sustainable business planning for communities, associations and corporations, helping them to integrate corporate responsibility to improve business results. Mariela specializes in business strategy, pricing strategies for service industries and corporate responsibility. She has over 15 years of experience in the meetings and events industry and has worked in both Canada and the United States. She has consulted, presented, taught and written articles in the areas of event marketing, corporate responsibility, ethics and pricing. Mariela completed her Master of Business Administration (MBA) at the Sauder School of Business at UBC with a double specialization in Strategic Management and Organizational Behaviour and Human Resources. Mariela is actively involved in community projects, including Social Entrepreneurship 101: Africa, a Sauder School of Business Initiative designed to address youth unemployment and encourage the development of sustainable businesses though the delivery of business education to youth entrepreneurs in Kenya. She is co-authoring a textbook on CSR and ethics in the meetings and events industry to be published in 2012.
