Your Strategic Meetings Management Program means nothing if you can’t demonstrate its effectiveness. In the first of two columns on measuring outcomes, learn how to track cost savings and risk reduction/cost containment.
As you prioritize and implement the many “value and accountability” components of a Strategic Meetings Management Program(SMMP), it is critical that you validate their success to senior management and key meeting stakeholders. As I’ve said in previous Meeting Management: SMMP columns, transparent metrics to define, measure, benchmark, and report results is essential—especially since C-suite executives often question the value and impact of meetings and events.
That said, generating credible data on a meeting’s financial and attendee impact can be a slippery slope. In this column—the first of two articles on measuring outcomes—I will address cost savings and risk reduction/cost containment; in my next column, I’ll address return on event (ROE).
As our industry continues to claw its way out of the recession, and meetings budgets remain flat, there is still a big push to save money and reduce risk. Since most planners negotiate and sign contracts with hotels and suppliers, utilizing a negotiations plan and analyzing the countersigned contracts for each meeting is the most direct path to measuring real value. You can achieve cost savings by understanding the value of each meeting, assessing your leverage, and having a negotiations plan based on many revenue- management criteria, including room block/ peak-night pattern, F&B contribution, rooms-to-space ratio, and season. Of course, this requires deep dialogue and analysis with your hotel partners and validating the many negotiated cost-savings/risk-reduction components.
Once you have completed contract negotiations with the hotel, create a cost-savings report that includes the components listed in the table on p. 38. There are virtually dozens of cost-savings categories, and the key is to calculate accurate numbers that you can easily defend if a senior manager questions your math. Don’t focus on the total savings; concentrate instead on the accuracy of your metrics.
Risk Reduction and Cost Containment
Your negotiation plan also must address all hotel performance clauses, mutual accountability, and company legal liability language. The focus here is on defining your negotiated risk reduction/cost containment in the event of potential future non-performance. (See the table below.)
By creating and distributing a custom hotel contract (ready for signature), you can add more meeting value, generate real cost savings, and ensure risk reduction/cost containment. The custom contract— not an addendum—should address all contract components, including value-added concessions, hotel fees and surcharges, performance clauses, and specific company liability language.
It is critical not just to talk savings and risk reduction, but also to break down and report on all meeting results, values, and outcomes. When you deliver credible cost-savings and risk-reduction/cost containment reports to stakeholders, you’re helping validate your organization’s commitment and investment in the SMMP, and ensuring that everyone will continue to follow this business plan as you implement additional SMMP components. Meetings are big investments, and driving real meeting value will have a significant impact on your organization—and build your brand in the process. Take Away(h3) At What Cost?
Cost reduction is achieved on two different levels: direct cost savings and cost avoidance. Cost savings are realized via two different avenues: productivity gains, which are realized through process efficiencies; and improved sourcing and negotiation expertise, which (when combined with consolidated spend leverage) help reduce the actual costs for purchased goods and services. Cost avoidance, by contrast, results from improved risk-management controls over the potential costs associated with contract performance obligations and mitigation, cancellation fees, and other excess contractual liabilities.
— Professional Meeting Management, Fifth Edition
Read online or download “SMMP Implementation and Idea Guide,” a free white paper by Corbin Ball Associates, at www.corbinball.com/assets/SMMPWhitePaper.pdf
Jennifer W. Brown, CMP, is president of Meeting Sites Resource, a global specialist in meeting-site research and hotel-contract negotiations. For a complimentary copy of her sample “Cost Savings/Risk Reduction” report, contact her at email@example.com