July 27, 2011

What's it worth to you?

The yogurt shop near my home is packed most days right now.  In December?  Not so much.  Try to snag a last-minute seat on a fairly full flight and you're likely to pay far more than the passenger who booked months in advance.  But walk into a hotel at 10 p.m. and you might just negotiate an unbelievable rate since the room is about to go unsold.  And that $4 bottle of water at the outdoor concert in 95 degree heat provides value that makes you momentarily forget about the outrageous mark-up you are paying.

Books abound on pricing strategy for products and services, but ultimately what something is worth depends on how an individual calculates value.  Next week I will be joining 4500 other professionals who work in or care about the association profession for our annual meeting being held in St. Louis.  I have no doubt that I will benefit from my participation: renewed connections, new relationships, fresh thinking from educational sessions, and maybe some new speaking or facilitating opportunities.

That being said, I was intrigued to see how the sponsoring organization, the American Society of Association Executives (ASAE) calculated why someone should attend because the emphasis was almost exclusively on cost to make the case for value, and even then not all of the relevant costs were calculated.  Since several of my association colleagues will not be attending because they don't perceive enough value, I wanted to dissect this calculation a bit.  I think what we discover has merits whether you are involved in pricing or just everyday purchasing of products.

The primary comparison being made is between a webinar you can watch in your office and the multiple-day face-to-face meeting asserting that you get far more value for your registration fee for the St. Louis meeting when compared to the costs of a webinar.  It's an interesting choice because while many organizations still charge a decent price for webinars (including ASAE at $195), I receive several invitations a month to register for a free program, many featuring high-quality content leaders.  So for some, the webinar has already been commoditized and is seen as a freebie, potentially invalidating the entire premise of the calculation being used.

But even if the webinar comparison holds true for you, not all of the costs of attending the Annual Meeting are included in the calculation provided.  A webinar doesn't require me to get on a plane, stay in a hotel, take a cab or light rail to/from the airport, drive to my home airport and pay for parking.  Those costs for me in St. Louis will amount to $1200.  Add that to the $895 registration fee being used for comparison and now instead of saving me money compared to a webinar, Annual Meeting attendance is costing me a small amount.   Ironically, the chance to meet with hundreds of business partners in the exhibit hall is labeled as priceless. But some attendees (including a few of my non-attending association colleagues) deem it worthless because it is not an activity in which they need to engage.  They view the dedicated exhibition hours as time when they aren't getting education that might actually be of value to them.

Completely absent in the calculations are the increased time, energy, and  psychological costs anytime we are away from work or family for multiple days: falling behind while you are gone or trying to stay caught up late in your hotel room each night, depending on your partner or spouse to assume all family household responsibilities, and much more. So the way the case is calculated for Annual Meeting attendance actually backfires when focusing primarily on cost comparisons, but it does raise several questions any organization has to consider when trying to see you on what's something worth:
  • What are the total costs someone might associate with the purchasing decision you want them to make?
  • How does your target audience calculate value and how can you use their calculations in making your case?
  • What would your product, program, or service have to be like to provide so much value that its actual cost would be hardly considered?
For a large organization investing $2000/person to attend the major industry gathering of the year may be less of an issue, but for a small organization that could reflect a sizable percentage of the annual professional development budget for the entire staff.  $2000 for one person to attend one meeting or 10 webinars (using the ASAE price) per the course of the year in which the entire staff participates?  Understanding the criteria your intended purchasers use when making decisions is where the real insight into your perceived value can be found.

So three closing thoughts:

Our communications should focus on the real value that might be obtained from our programs or services even though we must craft our message with an understanding of the true and total costs involved.  After all, if you get one idea in an educational session and it could save you $5000, you just made a huge profit on your $2000 conference costs.

Consider adding one question to your valuation form that assesses perceived value in relation to total costs expended. The answers provide a simple metric about the overall state of your meeting that could be very useful in year-to-year comparisons and trend analysis.  

We have to ensure that value literally oozes in every single aspect of every single thing we do.  Publications should be edited ruthlessly to eliminate any text that is not meaningful. Meeting design must ensure that every educational session is top quality; that networking opportunities lead to true connections and problem-solving; and that social events are inclusive, welcoming, and make people proud to be a part of our community. 

And though it probably goes without saying, let me say it anyway: the very thing that once was invaluable at almost any cost probably isn't going to remain that way for much longer if you don't invest in refreshing, revamping, or reinventing it.

7 comments:

Anonymous said...

Jeffrey --

Good concept

Too verbose -- stopped reading twice

valuation -- marginal good

bp

Jeffrey Cufaude said...

I'm always sensitive to length and am sorry you found it to be verbose, but for some readers of the blog (those who subscribe represent a wide variety of organizations and interested) the additional narrative and examples might be informative.

Jeff Hurt said...

Jeffrey:

Thanks for articulating what many of us think about the true costs of attending an annual meeting as compared to ASAE's webinar price.

Your question about "what would your product, program or service have to be like to provide so much value that its actual cost would be hardly considered?" is a good one. And it's really hard to answer because often that value changes per person.

Jeffrey Cufaude said...

Jeff you make a great point about the answer changing for every person. Maybe some of us can informally answer it for ourselves when we see each other in St. Louis. There may be some good learning that emerges from individual anecdotes.

Dave Lutz said...

Jeff, great post! Positioning value based on CEU or education hours is a slippery slope. Value, as you describe, is often based on what the learner purposely puts into it. If a participant hits the ground in St. Louis without having a good personal learning plan (PLP) coupled with a networking plan for meet-ups (with suppliers or peers), they are bound to not get value out of their conference investment.

The best ROI calculation can be derived by challenging participants to make the most of their organizations PD investment. They should be encouraged to bring back answers for some of the toughest challenges the organization or department need to solve. They should be challenged to meet and build relationships with people that can help the organization in the future.

When both of these happen, a participant can point to last years success and get approval year after year.

Jeffrey Cufaude said...

Dave< I wonder how many orgs. really do sufficient prep and planning with conference participants about the organization's needs and how they can respectively scout out solutions, build appropriate relationships, work the educational agenda, etc. Individuals attending needs to see themselves as ambassadors for their organizations and prospectors searching for what they need.

David M. Patt, CAE said...

Great thoughts, Jeffrey. I'm going to the ASAE meeting in St. Louis despite it being very expensive (Based on cost alone, I wouldn't go).

Why? I get a lot of CAE recertfication points, I'll meet people in person whom I've only met online, and I'll pick up some good ideas from the sessions and the networking.

I attend once in each three year period (for recertification) and I choose the least expensive location. Traveling to St. Louis is cheaper than going to Toronto, San Diego, or Los Angeles.

So, see in St. Louie.