March 2005
Shaking up sales at Advanstar

Many would say you can’t systematize the trade show sale. But Joe Loggia’s implementation of standards, benchmarks, productivity and market penetration measurements reduced sales costs by $6 million and increased sales to new customers by $4.5 million.

By Danica Tormohlen


Joe Loggia, President and CEO of Advanstar Communications Inc. (www.advanstar.com), knows how many calls it takes to close a sale. He also knows how many personal visits and how many marketing contacts each customer needs. He knows what it costs to make a sale to different customer segments. And he knows how much time salespeople should spend calling on new customers and how much time they should spend on existing customers. He even knows the optimal number of contacts a sales rep can make each day and the duration of each contact.

Even more important to him, Loggia can find out with the click of a mouse if Advanstar sales teams companywide are hitting these levels of sales and contact activity.

But it wasn’t always so easy. By the end of 2002, the company had grown quickly through acquisitions, and everyone was doing their own thing — which had always worked for them in the past. Loggia is the first to admit it was a mess. The company didn’t have a centralized customer database — it had 500 databases in six different software programs. And some salespeople had created their own databases housed only on their computers.

“We were at risk of losing data. If a rep’s computer crashed, all that data would be lost,” says Rick Treese, Chief Technology Officer for Advanstar. “Without these lists, our brands don’t mean much.”

On top of that, Advanstar, like most other publishing and show management organizations, was facing slowing growth rates, increasing costs, shrinking customer budgets, delayed customer decision making and pressure on the margins in late 2002. Loggia, then President and COO, faced some tough challenges.

“I wanted to use data, not anecdotal evidence, to make strategic decisions,” says Loggia. Not surprising since Loggia is a certified public accountant, who once served as a manager at the accounting firm of Coopers & Lybrand responsible for Fraud and Financial Investigations. “We were really only able to access financial data because we didn’t have a companywide system. We weren’t able to look forward or deploy our sales force effectively.”

His solution: overhaul the company’s sales and marketing processes, restructure sales and service teams, implement a new CRM system and build an easy-to-use reporting system that pulls data to drive sales. Not an easy task, especially for a company as large as Advanstar. “Fifty percent of CRM software fails because employees don’t use the systems,” says Georgiann Decenzo, Director of Corporate Marketing for Advanstar, who worked closely with Loggia and Treese on the overhaul. “That scared us.”

While other top-level executives may not have been so hands on, Loggia spearheaded the change. Why? “I believed it was critical to the future of the company,” he says. “The most important thing we do is customer interaction. And we needed to change how we interact with the market.”

It took more than a year to analyze the company’s sales and marketing process and implement new systems for the company’s 200 properties, including 58 trade shows and 76 trade publications, with 1,400 employees in 27 offices worldwide. But it’s paid off. Not only did Advanstar reduce selling costs by $6 million over two years, it also increased sales to new customers by $4.5 million in one year. Here’s how they did it.

Evaluating the current process
How do your salespeople spend their time? How do you evaluate and manage your exhibit sales team? How much is scientific vs. anecdotal? Do you have enough sales and support staff to increase sales and still service your customers? What service and support do your customers receive?

“We had a lot of people who just didn’t get called,” says Loggia. “We had three goals:
1. How do we get our teams into the market?
2. How do we change the customer experience?
3. How do we gain market research to help us make strategic decisions?”

MAGIC, a trade show for the apparel industry, where Loggia served as President and CEO before Advanstar’s acquisition, had many sophisticated systems in place so it served as the working model. The challenge would be to create a system that could be used companywide.

At Advanstar, sales reps also handled customer service and support, and sometimes customers didn’t receive the best service because reps were busy selling. But the sales reps didn’t want to let go. “We wanted the relationship to be with the company, not the salesperson,” says Loggia.

To evaluate its current process, Decenzo met with each group’s executive vice president (EVP) to come up with a strategic plan, which helped them get buy-in. “The first step was to examine their current customers and identify their potential universe,” says Decenzo. The complete list of customers and prospects would later be used to determine the number and mix of sales and service reps, as well as growth potential and sales goals.

Developing standards
“Establishing benchmarks was a critical step,” says Decenzo. Over eight weeks, they gathered as much external data as possible to compare against their internal process. While there isn’t much data available, they were able to pull some reports and surveys from the CARR reports (see sidebar on page 28), media and trade show industry associations and telesales industry reports, as well as personal contacts in sales and marketing at major companies. “Before the restructuring, we didn’t even come close to these numbers,” says Decenzo.

Advanstar developed what they call minimum service levels for each customer segment. “We determined the average number and type of contacts required to close a sale,” says Loggia. For example, the highest segment of customers, tier A, receive one personal visit a quarter and one phone call each month.

Each group then analyzed and segmented their market by dividing their database into four tiers (A-D). Customers were segmented based on sales potential and contact level requirements. Customers with the highest sales potential would receive the highest level of contact.

The next step: create the sales structure. For Advanstar, that meant the sales function would be made up of three pieces — field sales, telephone sales, and customer service and support. Territories were developed based on customer activity levels and the productivity levels of the reps. “We assigned territories based on what’s best for the customer, not what’s best for us,” says Loggia.

Every Monday, Advanstar’s sales managers are e-mailed six reports, including a tier penetration report (pictured); account penetration performance report; ancillary revenue report; expo report; publishing report; marketing services weekly revenue; and a productivity summary. The tier penetration report shows the percentage of successful contacts for each of the four customer tiers. A successful contact for a “Tier A” customer is a telephone call once a month and a personal visit once a quarter.

The number and mix of field and telephone sales reps and customer support varies from group to group. Each EVP determined their needs based on minimum service levels and their universe of prospects. “It’s dependent on the market, the customer makeup and the demands of exhibitors,” says Decenzo. “On a tech show with sophisticated marketers, exhibitors want to see reps more often, so we would assign more field sales reps. For a beauty show with 20 bellwether accounts, we would have fewer field sales reps.”

To give you an idea, for one Advanstar show that’s 180,000 net square feet, with 800 exhibitors and 10,000 prospects, there are three blended reps (who handle both field and telephone sales) and one customer service rep. For MAGIC, there are 15 sales reps in the Woodland Hills, CA, office, two in New York, eight international reps, seven customer service reps, three sales managers and a vice president of sales.

Determining software needs
“We weren’t implementing a new IT system,” says Loggia. “About 20 percent of the project was IT.” That said, IT is certainly a major part of the process. “I’m not a techie,” he says. “It had to be simple enough that I could use it.”

What were they looking for? Their top concern was the customer interface. “What’s on the screen while we talk to customers?” says Loggia. There are a handful of corporate fields that must be updated by reps, and each group can customize some fields.

Advanstar only reviewed middle-tier contact management systems because the higher tier systems, like Seybold, would have been too expensive. “We chose Goldmine because of its functionality and the openness of the platform,” says Treese. “We were able to build additional components, like billing and event management, that could be tied into Goldmine.”

For example, the system is tied into competitive show data provided by IMS (www.ims.ca), a database management company that tracks exhibitor participation in competing events. Advanstar sales reps can see which shows customers and prospects are exhibiting in and how much money they spend at those events just by pulling up the company’s record.

In addition, data reporting and analysis was a key component. About six months after Goldmine was introduced, Advanstar rolled out DataMart, a reporting system that uses off-the-shelf Microsoft software, customized to generate specific reports.

“It takes data from 15 sources and ties it together,” says Treese. DataMart generates weekly reports that are e-mailed to sales managers on Monday. Among the reports: an updated sales report by market category, where they are with pending conversations, number of calls to each tier, key customer report, churn rate, account penetration performance, ancillary revenue, and a revenue productivity summary. At the corporate level, Loggia gets weekly reports on conversion ratios (calls vs. sales), forward bookings, quality of customer base and pricing reports.

Implementation and training
Loggia says they had planned to increase staffing, but they actually ended up with fewer staff because of productivity gains. While there were no layoffs, there were shifts in management and sales teams. “We had a management skill set change,” says Loggia. “Sales managers have to be able to understand the reports and manage their teams based on these new reports.”

The new system was implemented individually by group, timed with where they were in the sales cycle. “You need to know it’s going to be painful,” says Treese. “There’s going to be resistance. From a CTO’s perspective, it’s important to find a partner on the business side, someone who will champion the project. Because if they buckle, it all falls apart.”

Loggia hired a consultant to help roll out the training. He and the consultant wrote the training presentations and materials, and Decenzo presented it to group sales managers before the rest of the staff. “If I had to do it over again, I would have had a bigger team doing the training and implementation. And I would have trained management twice, so that they could be more comfortable with the systems and be a resource for their reps,” says Loggia.

Sales support people were required to complete three days of training, and sales and marketing reps and managers completed one and a half days. Advanstar has implemented company guidelines and sales policies with which sales reps, support people and management must comply. For example, reps are required to document all contacts with prospects and sync their databases daily. Ongoing, there’s one person on staff who’s sole job is Goldmine training, and one person is dedicated to full-time Goldmine technical support.

Results
The transformation took one year and cost $2 million for the software, training and equipment. Original estimates were 5 years and $10 million.

In addition to reducing selling costs and increasing sales to new customers, 500 databases have been consolidated into one, which is updated daily and accessible companywide by more than 1,400 users in 27 offices worldwide. Users now have access to a centralized, synchronized contact management system that features a current view of every prospect and customer, as well as a complete history of all their interactions with Advanstar.

“We’re able to filter information in the database by market segment to analyze the trends in business,” says Laura McConnell, General Manager for MAGIC. “If one category is booming, we can move sales reps to work on that category. We can focus on resources.”

In addition, customers have a different relationship with the company. “Staff is more informed,” says McConnell. “They have information at their fingertips regarding the status of each customer’s account.” For example, staff knows when contracts are signed, amount of payments, receivable balance and sponsorship activity. “After contracts are signed, our service reps contact each exhibitor directly and go over a post-contract checklist,” says McConnell. “We prefer direct contact, and we try to reach them by phone five times before we use fax, e-mail or mail.” Reps review deadlines, freight maps, exhibitor manuals, etc.

Advanstar has increased penetration of the target base, and expanded its prospect base when necessary. “We improved productivity by helping the sales staff to focus on the right people in the right companies,” says Decenzo.

But it’s a work in progress. “We make adjustments every day,” Loggia says.

Sidebar: Evaluating the cost of sales in B2B markets
To develop sales metrics and performance standards, Joe Loggia, President and CEO of Advanstar, tapped research from Evaluating the Cost of Sales Calls in Business-to-Business Markets, a study of more than 23,000 businesses prepared and conducted by Cahners Research Reports. Here are key findings from the report that you can use to benchmark your sales efforts.
Download a complete copy of the free report at: http://www.carr-reports.com/PDFS/ evaluating_cost_sales.pdf.

More on expoweb.com 
Eexclusive Web-only content:

• What’s your selling cost? You’ll find average cost of sales from the EXPO Financial Benchmarking Survey, IAEM’s Cost of Doing Business Study and the American Business Media and SISO Publishing Cost Report.

What’s your selling cost?
To determine your sales cost, take total gross revenue divided by total sales expenses (generally includes marketing, promotion, sales salary and compensation, travel and entertainment, etc).

According to EXPO’s Financial Benchmarking Study, exhibit sales expenses (including promotion, travel and entertainment, telephone and all other sales expenses) average 8.7 percent of total gross revenue. To see the entire study, go to Financial Benchmarking Study.

According to IAEM’s Cost of Doing Business Study, exhibitor expenses (doesn’t include salary and overhead costs) average 8.6 percent of the show budget. To order a copy of the study, go to www.iaem.org.

For comparison, the average advertising and sales costs for magazines range from a low of 15.1% of total budget to a high of 22.7%, according to the American Business Media and SISO 2003 Publishing Cost Report. The report does include costs for trade show expenses, but the data includes all expenses, not just selling costs.To order a copy of the report, go to www.americanbusinessmedia.com.

• Market Segmentation & Analysis — A chart on how Advanstar analyzed and segmented their customers and targets

Market Segmentation & Analysis


For each show and publication, Advanstar analyzed all customers and targets within an industry to identify their best prospects for growth then segmented the target base to determine the customers’ marketing needs and service requirements.