CASHING IN ON CONVENTIONS.

How strategic outsourcing can help you reap greater rewards by improving the marketing and management of your next convention.

FOR MANY ASSOCIATIONS, CONVENTIONS ARE key revenue generators that support an expanding array of programs and membership values. If that's not the case with your organization, though don't despain-conventions and trade shows can be transformed into showcase events that lead to important gains in member satisfaction.

If a primary goal of an association convention or trade show is to be a physical manifestation of the organization to its members, then success is a high stakes game Association want to identify with organizations and that reflect a positive image. They also want their participation to pay off in continuing, as well as insight into the direction of their industry or profession.

The outsourcing advantage?

My interest in revamping conventions with an outsourced partner began with simple expediency. In both of my association management experiences, as the former executive vice president of the American Institute of Architects (AIA), Washington, D.C., and as current executive vice president of the National Association of Realtors (NAR), Chicago, I found that things weren't working that needed to be fixed without delay. And I did not believe that we had the capability internally to achieve our goals on our own without some outside assistance.

The performance problems we faced are familiar to many association executives:

* Our major conventions operated at a deficit and had to be subsidized by member dues and other revenues.

* Year-to-year attendance was flat or shrinking, as were exhibitor revenues.

* The convention was national in name only. In fact, many members were indifferent, and the event drew largely from the surrounding region. As a result, moving the convention to a new location each year was a necessity.

* Internally, we were too isolated to have a sufficient grasp of why conventions might fade, why they lost money or what they should cost to produce, or why members became indifferent.

I concluded that the first step toward reaching the goal of a growing and profitable convention and trade show was to rationalize the management process via strategic outsourcing. Since the time I made the transition from chief executive of a major publishing company to an association manager, I have introduced this strategy twice. In both cases, the results have been, and continue to be, remarkable by every measure.

A helping hand

Why couldn't we tackle these issues on our own? I think the reasons are common to many associations. Our staff had too little exposure to other markets and sectors of the economy and a limited exchange of new ideas to recognize what goals could be attainable. Vendor contracts tended to be renewed almost automatically thanks to ties to member organizations, providing little sense of the normal cost of services.

Internal convention and meeting staff often lacked the resources to carry out their assignments, including contracting, sales and marketing, and site operation responsibilities. As a result, staff members were distracted from concentrating on key functions that might enhance the performance of the association's meetings. As we restructured, these would come to include researching the postconvention views of both attendees and exhibitors as well as managing member evaluations of each of the educational sessions and meeting functions. Both member and exhibitor councils would emerge to advise them on convention and trade show quality and content issues.

Strategic outsourcing does not mean simply handing over convention planning and management to an outside vendor. It does mean identifying the functions best performed by internal staff and those for which outsourcing offers inherent advantages as well as opportunities. It also means recognizing that association conventions must vie for sophisticated exhibitors against savvy, for-profit trade shows. In today's competitive landscape, return on investment--not supplier loyalty--is paramount for a successful event.

For many associations, the end-to-end planning and management of conventions and trade shows is viewed as a core competency of the association staff. But the real core competency is member service, not show marketing and management. Association executives face the challenge of continually improving the content and appeal of the convention.

In confronting that challenge, association executives need to question the value of supporting internal capabilities that can be purchased--readily and more cost-effectively--in the marketplace.

A strategic outsource partner serves as a buffer between the association and suppliers and exhibitors. This goes a long way toward decreasing the politicization of a show (e.g., demands for preferential treatment or preferred program or exhibit-floor positions). And putting an end to any expectation of a deal creates a better value proposition for exhibitors: They can make decisions based solely on the marketing value of the convention and the expected return on investment.

Outsourcing is not a panacea. But it introduces a process to convention and trade show management that can enhance the performance of association managers.

The turnaround: American Institute of Architects

When Fred DeLuca, chief financial officer of AIA, first turned to an outside firm to manage AIA's convention in 1994, the annual meeting was in a continuing downward spiral. Only 35,000 square feet of exhibitor space was sold--a figure that remained static from year to year. In fact, the exhibitor retention rate had fallen below 40 percent. Members were charged $450 to attend the convention. Not surprisingly, fewer did so each year.

Last year in Philadelphia, AIA's convention had 130,000 net square feet of exhibitor space--a fourfold increase in six years--all sold at a substantially higher price than had been the case five years earlier. Eighty percent of exhibitors were renewals. Members no longer pay anything more than a nominal admission charge, and attendance has increased from 6,500 to 20,000. Most important, it has become a truly national show instead of one that relies excessively on local attendance. What happened to bring about such a dramatic transformation?

"The first thing [the outside firm] did was cut our costs sharply," says DeLuca. "They can buy vendor services at the lowest cost, where we didn't even know what prices could or should be, In the first year, we saved $150,000 on drayage and decorating costs alone. That proved only the tip of the iceberg."

Another important innovation, notes DeLuca, was the creation of an exhibitor task force. This vehicle enables exhibitors to provide AIA with feedback on the meeting's benefits and what changes they want to see. One recommended change was an increase in exhibit time. The program has been restructured to allow participants to spend more time on the exhibit floor, making the convention more attractive to exhibitors. Long a loss leader, the annual meeting now supports and enhances other AIA programs. "It all adds up to a much higher quality convention," he says.

AIA has also invigorated its marketing efforts. "We used to market the idea that 'this is your association and you ought to support it and be a member of the club,"' DeLuca explains. "Now we focus on the values and benefits members derive from participating in the annual meeting-- why you should be here. We do targeted marketing now, and not just to architects but to members of allied professions."

Beth Torrey, group show director for AIA and NAR from Hill, Holliday Exhibition Services, Boston, focuses on building revenues by creating better value for exhibitors and attendees. "AIA measures the success of a convention first in member satisfaction," Torrey says. "The yardstick of my performance is sales revenues and attendance figures. It's a partnership in which we each focus on what we do best."

The takeoff: National Association of Realtors

Since we first began outsourcing key elements of our biannual national convention in 1998, NAR meetings have grown dramatically. In two years, we have joined the ranks of the 200 largest trade shows in the United States. Convention floor space has nearly doubled. In the past year, our attendance grew by 43 percent, exhibit revenues by 36 percent, and sponsorship revenues by a stunning 95 percent.

Today, NAR's convention is a profitable activity. (It used to break even at best, and run a deficit often.) This creates a virtuous circle. With more resources to invest, the quality of every aspect of our conventions--from speakers to conference programs--continues to improve. As a result, attendance keeps growing and we're reaching more members.

How did we move so far in such a short time? First, we determined that we wanted our strategic outsource partner to be a professional management company, not just an exhibit floor manager. We wanted a firm that had a real grasp of the association's purpose and needs, and a vision beyond selling out the exhibit space. One of the primary values of outsourcing is working with professionals who can take a convention outside its traditional boundaries.

Our partners help us stay focused on the total experience of every participating member and exhibitor and on continually analyzing that experience and probing for ways large and small to enhance it.

In addition, we redeployed internal staff. Free from responsibility for many of the nuts-and-bolts issues of marketing a convention, staff members can devote more attention to the conference program and governance issues--the determinants of the quality of the meeting. One result of these changes was the introduction of a daily show newspaper, a guide that not only generates sponsorship revenues, but also enables attendees to use their time at the convention more productively. We're also able to focus on intensive research, including attendee demographics, so that we can introduce new programs that target the interests of underrepresented member segments.

An active partnership

Sue Gourley, NAR's convention and exhibition manager, is a keen advocate of the strategic outsourcing partnership, but she warns association staff not to become too passive.

"The challenge becomes to manage staff effectively who are working for you, but are outside your organization," she says. "You're still in charge, and you're still responsible for the outcome." Gourley manages an internal staff of 20, which would have been expanded had NAR not decided to outsource, she says. NAR still manages much of the convention process internally, including all planning and contract negotiations.

"One important insight we gained from outsourcing registration is that it's far more than a clerical process, she continues. "Registration makes the first impression on someone attending a convention, and long lines, delays, and glitches send a negative signal about what may lie ahead in terms of overall experience."

Making an informed decision

Can an outsourcing partnership benefit your association? Consider these questions, and the results will provide a useful roadmap:

* Are your conventions and conferences growing as fast as they could be in terms of attendance and floor space?

* Are your members satisfied with the values and benefits they're gaining from attending your conventions? If you're not confident of the answer, it's time to make some inquiries.

* How do your meetings match up against those of other associations of similar size and mission? Are your programs, speakers, activities, location, and exhibitors of comparable quality?

* Are you paying the best available rates in terms of vendor costs? Do you know what vendor costs should be?

* Are you targeting your conference marketing to the right audiences with the right messages to increase attendance?

* Do your attendees report positive experiences with registration, food service, parking--even access to telephones, e-mail, and bathrooms? If not, either the location or priorities are wrong.

* How many internal meeting and convention employees do you have on staff? How much are you spending per attendee on this payroll and operating budget, and how does it benchmark against what other associations are doing?

* Could your conventions and shows produce greater member satisfaction and revenue generation?

Once you evaluate your association's convention needs and the availability of resources, you will be better equipped to make a decision about forming an outsourcing partnership. Remember, the ultimate goal is to turn your convention or trade show into a profitable activity that increases satisfaction for members and exhibitors. If an outsourcing partner can help you achieve that goal, it's a worthwhile strategy.

Terrence M. McDermott is executive vice president of the National Association of Realtors, Chicago.