Michael Stelzner [00:00:00]:
Expenses go through the roof, and this is why so many events nobody makes any money on. This is why so many events, they make all their money selling the sponsorships. But I would much rather charge $500 a person than $100 a person and know that I'm making $150 a person. No? Because then I'm profitable.

Jay Clouse [00:00:33]:
Hello, my friend. Welcome back to another episode of Creator Science. Today, we're diving back into a topic that I'm really optimistic about, but we haven't really covered in-depth. And that topic is events. I'm speaking with Michael Stelzner, the founder of Social Media Examiner and the man behind Social Media Marketing World, the industry's largest conference.

Michael Stelzner [00:00:56]:
In 2009, I was doing online events. My first physical event was in 2013, but I've been in the event space kinda since the beginning. We started online and we pivoted into physical events.

Jay Clouse [00:01:07]:
So what does the industry's largest conference mean exactly? Well, social media marketing world is absolutely massive.

Michael Stelzner [00:01:16]:
Pre COVID, we were 4 to 5000. Now we're around 2,000. It's still a big event. Don't get me wrong. It's just not as big as it was, you know?

Jay Clouse [00:01:23]:
At 5,000 people and ticket prices ranging from 100 to 1,000 of dollars, we're talking about several $1,000,000 in ticket sales alone here. But let's address the elephant in the room. Why did attendance go down? Well, it doesn't take that much thinking to remember COVID. I remember I was planning to go to South by Southwest, and it was the first major event that was canceled in March of 2020. But this is 4 years later. What does the event landscape look like now?

Michael Stelzner [00:01:51]:
The event space got just eviscerated because of COVID. Some events have just never recovered. I'm dealing with people that work for a business and they gotta convince a boss, you know what I mean, to pay for the thing. In the last year, there's been economical uncertainty, so a lot of people haven't had travel budgets and stuff like that. But I know Derral Eves event has grown. That's Vid Summit. He's gonna cap it at a1000. He's partnered with Mr.

Michael Stelzner [00:02:13]:
Beast and Sean McBride. And now I think they're growing, that event, mostly targeted at YouTubers. Events are not going anywhere. I think people desperately wanna connect with other people. And if you're brave and you go out and you start small and you make sure you focus on profitability, you could turn out to be literally one of the biggest events in your space, which is exactly what happened with me. I've been doing this for like 11 years, this will be my 11th year. You get to a point where you become untouchable, you know, where there's no competition, and that becomes ridiculously valuable.

Jay Clouse [00:02:47]:
And that's why I wanted to talk with Michael because he takes a very different approach to events. Before talking with Michael, I was told that events are not profitable from ticket sales, that you had to design events to make money during the event itself by selling products or bringing in sponsors. But he disagrees.

Michael Stelzner [00:03:04]:
Most of these events, you as the consumer are the product. Meaning, you get in for dirt cheap, and you start getting pitched at every corner. You walk down these passageways, and you feel like you're walking down, like, a bazaar where people are trying to pitch you to come into their little area. And afterwards, you get phone calls and emails nonstop from people that wanna sell you crap. That's just not what I thought was a good experience, and I knew that there was a possibility to try to create something very different. My philosophy is that the ticket should be the main source of revenue for the event. Therefore, just like any product, you need to build profit into your tickets. In the case of conferences, a really good profit margin is 40%.

Michael Stelzner [00:03:45]:
An acceptable profit margin is 25%. That means that you need to calculate all of your costs.

Jay Clouse [00:03:51]:
So that is what we're exploring in this episode. We get into the nitty gritty of the economics behind events, where things get expensive, how to save money, and how to make your event feel more like a fine dining experience than a marketplace. If If you're interested in running your own events, I think you're really going to love this, and I'd love to hear what you think. You can tweet at me at jclauss or find me on Instagram at jclauss. Say hello. Let me know what you think. But now, let's talk with Michael.

Michael Stelzner [00:04:22]:
Prior to this, I had founded another company which was basically my name, Stelsner Consulting, and I was a writer and I also was a creative director and we did a lot of trade show booth designs, annual reports, website design, logo design, a lot of creative work, and a lot of written work. And I had gone to a lot of events and I had noticed they were really kind of crappy, to be very honest with you. But I also noticed there were certain kind of experiences that happened at these events that were great that couldn't happen online. Right? Like the ability to get to meet people that you've listened to for a long time and the ability to kind of make connections more quickly than you can electronically using the internet. And I just always found them to be super valuable and it was kind of a part of my core way of doing what I did. I was also a speaker. My first book was called Writing White Papers, and I was speaking at a lot of different events and I noticed every time I came off the stage, I would get a lot of clients. And I just kind of noticed there was something magical and something untapped with the possibility of doing events.

Michael Stelzner [00:05:26]:
And I started virtual events because back then in 2009, nobody was doing them. And it was a very novel concept that you could somehow bring people together on the internet for a live experience. And everybody thought it was the coolest thing ever, you know? So I got in very, very early. Nowadays, we take all of it for granted, but it was very profitable. And I began to dream about the possibility of someday being able to do a physical event.

Jay Clouse [00:05:52]:
This is just my own personal curiosity. What was the tech stack for doing a virtual event in 2009?

Michael Stelzner [00:05:57]:
It was WebEx. I don't know if you ever heard of WebEx, but WebEx was the platform that allowed you to basically have everybody come together. And then we had to pay a lot of money for people to be able to dial in by phone if for whatever reason they didn't have high speed Internet back then. So we would get these massive bills, you know, like 100 and 1,000 of dollars for these people dialing in from all over the world, and then recording them was really challenging. We had to figure out a way to broadcast them to a separate computer and locally record them and post process them. And WebEx had this cool feature that allowed you to pre upload your DAC in case your internet sucked and then you could dial in by phone and you could narrate the thing and say next. And someone would be literally flipping the slides next. I mean, that's just how antiquated it was back then, to be honest with you.

Jay Clouse [00:06:45]:
You said when you were attending events around that time, you went to some pretty crappy events. What makes an event crappy? Or if you would rather do the inverse and say what makes an event really good?

Michael Stelzner [00:06:56]:
Well, let's talk about what makes an event crappy because most people are gonna relate to this if you've ever been to an event. First of all, you have no idea what to expect and you show up literally with no communications at all, and you just don't know where to go. And you look around and it's just like madness. Right? No one's there to help you. No one's pointing the way. There's no clear obvious times as when things happen. Things are delayed. Like, you show up in a room and there's another presentation going on.

Michael Stelzner [00:07:22]:
It's chaos. Or you're standing in line for like an hour and and the event's already started and you're trying to get your tickets because they haven't figured out the check-in procedure. Or they don't have any time between sessions. Literally, they put them back to back to back with no breaks in between, no time to go to the bathroom. And I could just go on and on. It's not a good experience. And anybody who's ever been to a fine restaurant or ever been to Disney properties knows what a fine experience is, right? You're greeted at the entry gate. You're given typically something.

Michael Stelzner [00:07:52]:
Now it's an app, you know, you're encouraged to download an app. In the olden days, it was a little piece of paper with a map. There's people all over the park that are there to help you. In the restaurant, you know, you've got multiple people taking care of you all along the way. And this is something that did not exist in the event industry. And the other side of the event industry that is the deep, dark, dirty secret is most of these events, you as the consumer are the product, meaning you get in for dirt cheap and you start getting pitched at every corner, you walk down these passageways and you feel like you're walking down like a bazaar and people are trying to pitch you to come into their little area. And afterwards, you get phone calls and emails nonstop from people that wanna sell you crap. That's just not what I thought was a good experience, and I knew that there was a possibility to try to create something very different.

Michael Stelzner [00:08:38]:
Have you ever been in an event like this? And can you relate to what I'm talking about? Either it was like a home show or a auto show or something

Jay Clouse [00:08:43]:
like that. That's the majority of shows. I mean, you have the the, like, expo floor. They they they name it with something that makes it sound, like, fun and exciting and and, like, it's gonna be fun. But then then they get on the mic and, like, please go visit the booth for our sponsors. What I haven't thought about before, though, is this analogy you're driving between fine dining or, like, a Disney experience to events. I love that as a mental framework to think about here's what this experience applied to this arena. How that would make the experience different.

Jay Clouse [00:09:11]:
I absolutely love that. Let's talk about then what you do differently. Like, what does a good event look like in your mind? And if you wanna use the specific examples that you guys do at Social Media Marketing World, that sounds great.

Michael Stelzner [00:09:23]:
Well, first of all, we communicate months in advance with people. Once they've purchased a ticket, we kinda get them excited about the fact that they're gonna be coming to the event. We let them know we've got like a Facebook group that can come in and start interacting with people. When we get to a certain point, we encourage them to download the app and start participating in meetups. We encourage our attendees to actually have their own little meetups. And we have a special section inside of our app where people can facilitate their own meetups. So you start to think about all the little niches, right, Like the YouTubers and the podcasters and the writers and the bloggers and the thissers and the thatters, you know what I mean? Or the people in the financial services industry or the educational space, right? So we get them pre planning activities that are extracurricular activities before they even show up. And then that gets them really excited to actually come to the event, right? Because they've already got someone they know when they show up.

Michael Stelzner [00:10:18]:
Because one of the things that I didn't mention is the worst in the world is to show up in an event and have nobody to tag team with you. The best thing is to have somebody at an event that you can have meals with, that you can debrief with, but that doesn't happen unless it's specifically coordinated. We've done things like networking for introverts pre classes where we'll have a webinar, and we'll invite people on a webinar ahead of time, and we'll say here's what to expect at the event, and here's how to take best advantage of it, and we'll have alumni of the event actually moderating and teaching that thing. They'll talk about things like what kind of clothes to wear, the fact that it's at a big convention center and you need to have not heels, but flats, you know, and how, because it's San Diego, it gets a little chilly at night. So you need to bring extra this or extra that, you know, just all the thoughtful things that anybody wouldn't even think to ask, but would wanna know before they step through the door. And then once they get through the door, we tend to have entertainment from the moment they step through that door. We've had this guy known as the High Five Guy for years, where he gives people high fives as they're coming up the escalators. We've had little people with signs going down the escalator saying you're amazing and all that kind of stuff.

Michael Stelzner [00:11:24]:
At the top of the escalator, we have photo ops, you know, where there's like our brand stuff set up like a San Diego beach and you can take pictures and selfies. This is all before you actually even check it.

Jay Clouse [00:11:34]:
You mentioned a second ago, for a lot of events, the attendee is the product. Right. And I think the implicit other side of that is you're saying at our event, the attendee is the customer and not the product. Previously on the show, we've only had one episode about events before and that came from a perspective of it's really hard to turn a profit on events from ticket sales. You should actually try to break even on ticket sales, but then try to sell something at the event in order to turn a profit or some people will say or have sponsors in order to turn a profit and you're taking a very different approach. I want to understand who that opportunity is available to and why that advice is inaccurate.

Michael Stelzner [00:12:17]:
Yeah. Let's talk about finances a little bit. This is where events can get in trouble with not truly understanding how much it costs to put on an event. But my philosophy is that the ticket should be the main source of revenue for the event. Therefore, just like any product, you need to build profit into your tickets. So if anybody's ever watched Shark Tank or you've listened to, like, Dave Ramsey or the EntreLeadership podcast, you know, they talk a lot about how, like on Shark Tank, they'll say, okay, if you're selling a physical product, you know, you need to double the price to the wholesaler so the wholesaler can double it to the retailer, right? So in the case of conferences, a good profit margin is about 40%. A really good profit margin is 40%. An acceptable profit margin is 25%.

Michael Stelzner [00:13:04]:
So, what does that mean? That means that you need to calculate all of your costs and your most expensive costs are food and production. Depending on the venue that you go with, they're gonna require you to buy food. So if you're in a hotel, the hotel will say, hey, we'll give you the free room, but you gotta buy our food. And it sounds like a good deal until you realize that they're gonna ream you on the food. They're gonna charge you, like, 30 to $40 for a lunch, a box with an apple, a wrapped up sandwich, and maybe a Coke. Okay, that very same thing you could go buy for 15 or $12, right? And they're gonna charge you what's called plus plus They're gonna charge you a gratuity fee and a service fee. So, there's an extra, like, 25% service fee that goes on top of that. So you've gotta really understand how much that food is gonna cost you if you're gonna offer food.

Michael Stelzner [00:13:51]:
In an ideal situation, you go to a venue where you don't have to buy food and there's no minimums. And you pay for the room because you will make more money paying for the room than paying for the food. And then you let people go off on their own and buy lunch inside the hotel or whatever's around, give a nice break. Production is the second most expensive thing. When I say production, I'm talking about all the electronics and the lights and the audio equipment and the staging and all that stuff that that typically, if you watch like any of these reality shows on television, like America's Got Talent, for example, they're spending 1,000,000 of dollars to produce one episode for 1 hour, probably $5,000,000

Jay Clouse [00:14:30]:
Crazy. Just to

Michael Stelzner [00:14:31]:
produce that one episode. And they've got all these set designers behind the scene. Now you start to think about a conference. You might have multiple stages. Right? Like in my case, I had 12 stages at once at the peak of my event. So now you're talking about a massive production bill because not only do you have the people that are handling the lights and the computer stuff, but you've also got audio text and you've got recording text if if you're gonna do recording and streaming text. So you really need to understand the production costs. And that typically you wanna outsource to a company.

Michael Stelzner [00:14:59]:
Those are your 2 biggest costs. Then your next cost is gonna be labor. And typically, labor comes in a couple of forms. It could be union labor. So, if you go to a venue that has unionized labor, they're gonna say for every person you have, they're gonna have a union person standing right next to them that's gonna charge 150 to 2 $25 an hour to do the exact same work because that's how union labor works. So in an ideal world, you don't wanna go to a convention center because you're stuck paying union labor costs.

Jay Clouse [00:15:27]:
You're saying I might hire an outside company with outside technicians.

Michael Stelzner [00:15:30]:
Which violates the union contract, and therefore, they have to have a union mirror literally standing right next to them the entire time. So you have to read the contracts and ask whether they require union labor or not. Now, that's generally only available at really big venues if you're gonna go to a convention center or you're gonna go to a really famous venue. If you're gonna go to some weird, random, abandoned hut or shack or something and transform it, you don't have to pay union. But outside of that, there's also operations work that goes into putting on a conference that goes on literally for months. So you have to think about things like signage, right? And there's cost to print that and manage all that. You've gotta think about things like check-in. And usually, you have to lease all this equipment, right, to set up a check-in area, right, and all of the experience that you go through with check-in and equipment.

Michael Stelzner [00:16:22]:
So typically, what a lot of people do is they hire an event management company, which is the way that solves all of this. And I'll tell you a short story. I was keynoting an event called Content Marketing World in the very first year. My good friend, Joe Pulizzi, who's the founder of the Content Marketing Institute, I was up on the stage, keynote, with a guy named Brian Clark. We were being interviewed, I think, by Joe. And I noticed Joe was calm, and I know you know Joe. Right? He was very calm, and I'm all, Joe, why are you so calm? He's all, oh, Mike. There are people, events people, and they do all the operational logistics, so you don't need to do a darn thing.

Michael Stelzner [00:16:58]:
And I'm like

Jay Clouse [00:16:59]:
I can hear him saying this.

Michael Stelzner [00:17:00]:
Light bulb went off in my head, literally. And I was like, you got to be kidding me. So that's what we did in the 1st couple years is we hired an event management company. Typically, they're gonna charge you 65 plus dollars per hour, but they're gonna hire all the people to manage all the processes so you don't have to. And if you go with an event management company, they will help you figure out everything I just talked about. And eventually, you get to the point where you don't need an event management company and you bring everybody in house, which is what I do. But, honestly, the event management company will be the best investment you will ever make because, you know, they can literally do it all. It's gonna be a big bill.

Michael Stelzner [00:17:37]:
We're talking a lot of money, but it'll save you a lot of the mistakes that would happen otherwise if you tried to figure it all out on your own.

Jay Clouse [00:17:44]:
You were listing off these costs, and I was having wedding planning PTSD. Of course. And and thinking like, okay. Yeah. I I can tell you how much it cost per head for a guest at my wedding. And if I'm applying that to an event

Michael Stelzner [00:17:56]:
Imagine a 2 or 3 day wedding. That's what we're talking about here. Right?

Jay Clouse [00:17:59]:
But you only know those costs after you've, like, done all of the work of planning it to know then, okay, how can I back into the value of this and start doing the pricing? So it sounds like the event management company can kind of look at your requirements, look at the spec of what you're trying to do, and give you a pretty close estimate, I'm guessing.

Michael Stelzner [00:18:16]:
They can manage your hotel block, your hotel negotiations. If you're gonna work with a hotel, typically they're gonna want a guaranteed amount of rooms. This is another quick thing to keep in mind. Be careful about taking on more than you can chew. Because if you think you're gonna sell X number of tickets and you guarantee the hotel this many room nights and you don't fulfill those room nights, guess who has to pay for those room nights? You do. So underestimate, which is what we did our very first year. We ended up having 1100 people. We weren't expecting 1100 people.

Michael Stelzner [00:18:45]:
So we just kept going back to the hotel saying, we need more. We need more. We need more. We need more rooms. We need more space. We need more this. We need more that. Generally, they're happy to expand, but they're never happy to contract.

Jay Clouse [00:18:55]:
After a quick break, Michael and I talk about how to reduce your costs and avoid some of the traps that most new event organizers fall into. So stick around. We'll be right back. And now back to my conversation with Michael Stelzner. So you were saying that sometimes the rooms are cheaper than free rooms and food, which kind of implicitly says that you are paying for the hotel rooms for your guests, or you're subsidizing the cost?

Michael Stelzner [00:19:22]:
No. What you're doing is you're guaranteeing the revenue for the hotel in exchange for promoting it. So the way it works is let's say you expect to have 250 people at your event, and let's say you expect 50% of them to be out of towners, okay? Let's say the average stay is 2 nights. So then you could say to the hotel, hey, I'm gonna guarantee you 200 room nights, okay? And the hotel makes about 80% profit on those rooms. And then you say, I want you to give me the best guaranteed rate so they buy directly from me and they don't go around me, you know? And then they'll give you a special code. Everybody's probably experienced this before. And then you do your best right after the ticket is sold to encourage people to buy the hotel room because that helps supplement the cost of the space. That's generally how it works.

Michael Stelzner [00:20:07]:
Because the space is given to you for free in exchange for hotel room revenue and food revenue. That's generally how it works.

Jay Clouse [00:20:14]:
Space like the meeting spaces, the rotation stages.

Michael Stelzner [00:20:17]:
Yeah, now a better alternative for a beginning event is to find an old dilapidated space that people do parties in, where it's literally just a big concrete shell, you know, and you bring in everything. Now that sounds complicated until you realize how much you're gonna save when you bring in food, because you can cater in your own food, you know? And, yes, you have to like like a wedding, you have to lease everything, the stage, the chairs, all that stuff, but you don't have to lease that when the hotels are doing it because they provide all that stuff. So that's kind of the balance. You know, the hotels have the built in space that's beautiful, and typically the chairs and the staging and all that stuff is standardly included, but they will get you on the internet. This is something to keep in mind.

Jay Clouse [00:21:01]:
What do you mean by that?

Michael Stelzner [00:21:02]:
Don't be surprised if you're gonna pay for 4 megabits per second up and down, which we both know is nothing. Right?

Jay Clouse [00:21:09]:
Nothing.

Michael Stelzner [00:21:10]:
Imagine paying $25 per head per day.

Jay Clouse [00:21:12]:
That's insane. What?

Michael Stelzner [00:21:14]:
It's insane. Yes. It's insane. And they will get you on Internet because they can because they have an exclusive lock on it. And that's how these things work. Right?

Jay Clouse [00:21:23]:
You say the hotel will or this non hotel venue?

Michael Stelzner [00:21:26]:
The hotels and the convention signers. They'll get you on the Internet. Like, I'm not even joking when I tell you we were paying a 100 to $200,000 just for Internet access that was ridiculous and broke all the time.

Jay Clouse [00:21:36]:
This is crazy.

Michael Stelzner [00:21:38]:
I know. This is why people don't get into events. So here's what I tell you. Don't provide internet access because everybody's got 5 gs phones. And we don't provide internet access anymore. People just sync their phones to their computers. Or don't worry about them having to have internet access. Now, you might need internet access just for your computers, and you can go buy these devices that allow you to bring in your own cell kinda thing.

Michael Stelzner [00:22:01]:
You can buy these little routers and plug cell phones into them and provide high speed access behind the scenes. But yeah, man, the expenses go through the roof. And this is why so many events nobody makes any money on. This is why so many events, they make all their money selling the sponsorships. But my philosophy is I would much rather charge $500 a person than $100 a person and know that I'm making $150 a person. You know? Because then I'm profitable, and I don't have to have sponsors. And selling sponsors is a whole another ball of wax we could talk about. We have sponsors at our event, but they're not the main source of revenue.

Jay Clouse [00:22:41]:
I'm gonna bookmark that because I had a question about that. Because, for example, I'll go to some events, and again, the Internet, and it's like, Internet sponsored by, and it's a company. And that's my only touch point with that company. It's, like, the Wi Fi is named their company. It has a line there. And that feels like, oh, this isn't taking away from this. But then I think but they did ask me to enter my email address to access that Internet.

Michael Stelzner [00:23:00]:
Right.

Jay Clouse [00:23:01]:
So they're getting some contact information, if nothing else.

Michael Stelzner [00:23:04]:
And, generally, the Internet sponsor isn't actually covering the cost of the Internet. It's just supplementing the cost of the Internet. That's important for people to understand. Even party sponsors don't cover the cost of the party. They only cover the supplement, generally speaking.

Jay Clouse [00:23:17]:
I wanna hit some more of these cost savings ideas because you mentioned a few already. You mentioned Yep. Using external venues that are not hotels or commitment centers.

Michael Stelzner [00:23:26]:
Right.

Jay Clouse [00:23:26]:
You've mentioned not offering Internet. You've mentioned going with a rooms approach with the hotel rather than the food approach.

Michael Stelzner [00:23:35]:
If they're willing to do it, you know?

Jay Clouse [00:23:37]:
If they're willing to do it.

Michael Stelzner [00:23:38]:
But here's what I found. Like, in a big city, they'll never do it. They'll always demand food because they can, you know?

Jay Clouse [00:23:45]:
What else do you see as ways that people can cut down or even anticipate high costs that might not be necessary?

Michael Stelzner [00:23:51]:
I mean, I think the event management company would be the first place to start. I would pay to have an event management company consult with you and just help you understand what these costs are, and I would ask them what are the costs. One thing I can tell you is that the event management companies typically get a compensation in exchange for doing the hotel contracts. They get a little kickback. So you can negotiate with the event management company and say, I wanna split the commission. And if they say no, then you say, okay, I'll go find someone who will.

Jay Clouse [00:24:19]:
Super smart. Yeah. How do I find the best event management company? I could Google event management company, but the the winner with the best SEO will be that.

Michael Stelzner [00:24:26]:
Well, the best way to do it would be to go to events in your local area and see who's managing those events. But, honestly, you can just Google event management company, you know, in whatever city you're looking at. But it kinda doesn't matter where they are because generally they'll travel. But in an ideal situation, you have the events management company in the city where you're gonna be hosting the event so that you can meet with them and they can meet with the vendors. But, you know, you just ask for referrals, you know, and talk to those referrals and ask people. The tough questions, would you hire them again?

Jay Clouse [00:24:57]:
So event management, any other cost saving ideas before I move on?

Michael Stelzner [00:25:00]:
Oh, one other thing I forgot to tell you. Ways you can save money is volunteers. This is the biggest way you can save money. You encourage your fans to sign up to be a volunteer. So, what you do is you tell people that volunteer applications are open, and we've got 50 slots available. You take a 100 applicants or whatever, just because you're gonna have people bail on you. And then you say, okay, here's what volunteers are expected to do. And you work like, let's say 35% of the time and you get the rest of the time to experience the event and you have shifts and stuff like that.

Michael Stelzner [00:25:34]:
This can radically reduce your labor costs. In exchange, they get a free ticket and they get some exclusive perks like maybe getting access behind the scenes to some of the speakers and stuff like that. That's a massive way you can save money. Getting people to buy tickets for next year on location is a revenue generating opportunity that can also help supplement costs. My personal philosophy is that it's far more expensive to get someone to come back after the event than it is while they're at the event. So give them a smoking deal. Give them your cost kind of deal. Let's say you're selling the event for $1,000 and it only costs you 5 $100.

Michael Stelzner [00:26:11]:
Sell it to them for $500 and let them know this is an exclusive deal that will expire on the last day of the event and do everything in your power to let everyone know about this deal and remind them, if you want it, it expires tonight at midnight. Send a lot of emails. This is free money in your pocket for an entire year, okay?

Jay Clouse [00:26:29]:
Oh, it's a cash flow benefit, you're saying.

Michael Stelzner [00:26:31]:
It's a cash flow benefit, exactly. And it can offset negative profit, but it can also every one of these people that come back is a marketing agent for your next event. Now, the best way to get them to buy is to offer them a 100% money back guarantee within a certain deadline. So, for example, at Social Media Marketing World, we sell the tickets retail for $2,000 for the all access ticket, And we offer on location the tickets for $697. And then after that, they jump up to like 7.97. And then at public launch, they jump to 9.97. So it's really, really steep discount. But we give them until October to get 100% refund.

Michael Stelzner [00:27:13]:
And that way, we don't remind them. We just tell them, hey, by October 31st, you can get a 100% refund. By November 15th, you can get a 50% refund. After that, you get no refund. And what ends up happening is most people don't ask for a refund, but having that refund as an option gives them the impulse to buy the ticket on the location. And then again, like I said, those people turn into marketing agents for the next event.

Jay Clouse [00:27:37]:
So good. You've mentioned a couple times doing events in your local area. I know you live in San Diego. This event is in San Diego. Is that the best approach for somebody?

Michael Stelzner [00:27:47]:
I strongly recommend for the first time you do an event, you stick to your local area, unless your local area is so hard to get to by airplane because you have to think about the customer. There's other things, not just the event. You wanna think about post event. Like, ideally, you wanna have a party or an unofficial meetup at a bar or something like that. If you know the area, you kind of know which ones are the ideal locations to do this. People love to like have an opportunity to hang out. So if there's a cool little bar, you can just take over the bar. Like, we've done that.

Michael Stelzner [00:28:20]:
In some cases, we've just taken over the bar. And that's different than, it's especially good if it's like on a Tuesday night or something like that and it's not exactly a prime night where the bar is gonna have a lot of people. Sometimes the bar is gonna say, look, you're gonna have to pay us to have a guaranteed takeover of our bar kind of thing. But I would strongly recommend it's local in the beginning. Otherwise, it's just gonna be really complicated for you to do a lot of the on-site thinking through all the things that need to happen. You're gonna have to be flying all over the place.

Jay Clouse [00:28:47]:
Talk to me about timeline. If I wanted to put my first event on and I made that decision, that commitment today, how far on the future should I start looking at this is when the event will actually be?

Michael Stelzner [00:28:57]:
Minimum of 6 months, ideally, 10 to 12 months. Because you have to have your costs figured out before you can start selling tickets, right? And it's gonna take you a long time to promote. So, you think about you gotta find somebody or some place, you gotta talk to those people. So you gotta start the hunt of finding a location that could take you a couple of months to find the ideal location and the ideal dates. Then you gotta figure out what your cost structure is, which means you gotta talk to an event management company or talk to a bunch of different vendors, that could take you a while too. Then you've got to begin doing your marketing, right? You're talking about design, creation of logos, all this kind of stuff could take a while, depending on what kind of creative assets you have available. All that's gotta be in place and figured out before you sell your first ticket, right? Because ideally the moment you sell the ticket, if you're gonna have a hotel, you have to say, this is where the venue is, and you have to provide travel details. So they'd know when to buy their tickets and stuff like that.

Michael Stelzner [00:29:54]:
So 6 months would be the minimum and the best venues are already sold out years in advance. And I'm not joking. Like I had to sign 3 year in advance contracts for some of the stuff that I've done.

Jay Clouse [00:30:05]:
But you probably don't have to pay upfront, maybe deposit.

Michael Stelzner [00:30:08]:
You have to guarantee the revenue, even if 3 years from now, the crap hits the fan. So this is why you don't wanna go for the big venues. You know, you wanna go for the simple ones in the beginning. Because I, trust me, when COVID came around, I had to take the city of San Diego as my bully pulpit to go to these hotels and get them to let me out of these contracts. It was crazy.

Jay Clouse [00:30:29]:
Your events are 3 days long. What makes that the right length?

Michael Stelzner [00:30:32]:
It started as 2 day events, and then eventually, I decided to do something really creative. I saw everyone else was selling these upsell workshops and I decided I was gonna make them free. But I was only gonna make them free with this new ticket called the all access ticket, right? So I ended up dividing my ticket. In the beginning, I just had one ticket, so then I came out with 2 tickets, a cheaper ticket and a slightly more expensive ticket. And the slightly more expensive ticket included the workshops. It was the only way to get the workshops. And it turned out, like, 87% of people went for the more expensive ticket, which increased my profitability. And the way that we do it is we have check-in happen in the morning on the 1st day and then the workshops are in the afternoon on the 1st day.

Michael Stelzner [00:31:13]:
So, that gets most people checked in on the 1st day. And our workshops are 90 minutes long instead of like 3 hours or 4 hours, But it gets people, like, kind of warmed up a little bit and getting to know each other. And then the next day is the main event where keynotes kick off and parties and all that kind of fun stuff. And also with our all access ticket, we also included exclusive access to our parties, which is another advantage. And eventually, we did recordings as well, which was another thing that allowed people to upsell and buy the all access ticket.

Jay Clouse [00:31:45]:
So you have, at this point, I believe, 4 different types of tickets. Do you recommend that people have multiple types of tickets, and how many is the right number if I'm doing my first event?

Michael Stelzner [00:31:59]:
Yeah. For my very first event, I had 2 ticketing options, a physical ticket and a virtual ticket. And the virtual ticket was only the recordings. Okay? So, my philosophy in the beginning was I had one ticket in type. I wanted it to be like a Disneyland ticket, one entry for everything. And then for people that couldn't attend, the virtual ticket was essentially the recordings of everything, not live. Then over time, as I mentioned earlier, I started expanding the event and my cost structure started going up and I needed a reason to raise rates while also having an economical option. So that's when we rolled out the marketer ticket and the all access ticket.

Michael Stelzner [00:32:38]:
And the marketer ticket is a good $500 retail less than the all access ticket, but it's also a good price anchor. If you understand the concept of price anchoring, you have a product that you don't expect most people to buy that makes the more expensive product seem like a bargain. Because the marketer ticket does not include the extra day of workshops, it does not include the recordings, it does not include the livestream, and it does not include the parties. And those are 4 big value propositions for a lot of people, and that's why they wanna buy that ticket. So, in the beginning, if I was doing this, I would not livestream because the livestream is gonna have big internet expenses, but I would record and I would sell the recordings. In the very beginning, I would sell the recordings to the attendees because the attendees did not get the recordings. And I realized eventually that wasn't smart. I realized because I had up to 12 simultaneous rooms going on, so I just decided I was gonna record and give all attendees all recordings.

Michael Stelzner [00:33:32]:
And I was gonna have the recordings be more for everyone who wasn't there. Because you wanna make your customers so happy that they wanna come back, and a lot of people do not include the recordings unless you pay extra. And I think this is a reason you can raise your rates a little bit is to say recordings are included, which can increase your profitability. So, today, I've got a streaming ticket, which is my cheapest ticket, and then I've got an on demand ticket, which is the recordings, and then I've got the marketer ticket. And then I've got the all access. Do not underestimate the value of having different kinds of ticketing eventually. Because I've sold 1,000 of virtual tickets for each of these events, but I have a massive audience as well. Right? So eventually, you get to the point where you can sell a crap ton of these on demand tickets because they really want the content.

Michael Stelzner [00:34:19]:
And some people can make more money on these on demand tickets than they can on the actual conference because it's almost a 100% pure profit.

Jay Clouse [00:34:26]:
After one last break, Michael breaks down his ticket pricing strategy and what his sales breakdown looks like between tickets. You're gonna wanna hear this, so don't go anywhere. We'll be right back. And now please enjoy the rest of my conversation with Michael Stelzner. Are you comfortable sharing the rough breakdown of what percentage of people buy all access versus marketer on demand streaming?

Michael Stelzner [00:34:50]:
So I can tell you that for the physical tickets, 80 some percent buy the all access ticket and the remaining about 13% buy the physical ticket. The people that buy streaming and on demand tickets are very different customers, and this is important for everybody to wrap their head around. When you market to physical ticket people, you've gotta, in your mind, calculate air travel and hotel cost and time away from work. So it's a harder sell. That's why you sell less of these kinds of tickets. Right?

Jay Clouse [00:35:23]:
Physical ticket meaning you will be in person, not it's a literal paper ticket.

Michael Stelzner [00:35:27]:
Correct. Correct. That's what I meant. Yeah. They're attending in person. The streaming and the on demand tickets, you can sell a lot of those depending on your audience, and they can be very profitable. I don't know the exact numbers, but I'm gonna guess that maybe for every 1,000 tickets that I sell, a couple to many 100, and it depends on the price of the product, will turn into either an on demand or virtual. But I think we probably sell at least 800 to 1500 of these tickets a year on top of the physical tickets.

Michael Stelzner [00:35:59]:
Yeah.

Jay Clouse [00:36:00]:
I also wanna underline that a lot of your attendees are buying through their company's budget. What percentage would you say that is true for?

Michael Stelzner [00:36:10]:
80%.

Jay Clouse [00:36:12]:
Okay. Because that's something I want people listening to this show to understand. It's very possible that maybe even a majority of listeners of this show their audience is a little bit more B2C and and so those ticket buyers would be coming out of their own budget which would probably impact the price point, but maybe not.

Michael Stelzner [00:36:33]:
It could negatively impact sales too, right? Because it's easier sometimes when it's not your money to persuade someone else to send you because it's gonna help their job. You know what I mean? So, like, we put tools together, like we have a whole section with letters and talking points on how to convince the boss. But when you're selling to a consumer, it depends. Like, are you selling to an entrepreneur? If you're selling to an entrepreneur, maybe you're wanting to have it be a little more expensive, right? Because you're gonna have to work on your value proposition and what's the outcome that could come from this. Like, for example, you know, there's a lot of financial service people that do events, right? And they can charge a lot more because there's a lot of upside from them picking up techniques that can help them do certain kinds of things. But it's not uncommon for an event in the business world to cost a couple $1,000 a ticket. In the consumer world, I think it just depends whether you're doing something that's purely entertaining or whether you're doing something that has a really big return on investment for the attendees.

Jay Clouse [00:37:34]:
Yeah. I mean, a lot of it it's weird to classify my audience because I feel like my model is more b to c, but those c's are actually, like, running very small businesses on their own. So it's still a business expense.

Michael Stelzner [00:37:47]:
It's b to e, business to entrepreneur.

Jay Clouse [00:37:49]:
Yeah. What is what is this new class people? I just made that up. Well, if I'm listening to this, I might be hearing this and say, that's great, Mike. But you have 100 of thousands of email subscribers, thousands of attendees. That's why you're doing hotels. That's why you're doing convention centers. Help me think about when it makes sense to do an event if I think I might be on the order of dozens or hundreds of attendees. Does this model still work?

Michael Stelzner [00:38:13]:
Okay. Yes, it does. And in that case, that is more of a potential half day event or an evening event, right, or a weekend event. And in that kind of situation, what you could do is you could just do exactly what we're talking about, work with the hotel, have it be, maybe you're just providing lunch for the people, right? And maybe they're checking in in the morning and you're just doing kind of a one day experience and they're out by like 3 o'clock or something like that. You're gonna have a lot lower costs. And all these hotels have rooms designed for any kind of size crowd. 50, you could do this inside your friend's house, you know? You could do this inside of a retail establishment. You could take over the backroom of a restaurant.

Michael Stelzner [00:39:00]:
I mean, literally, you think about these restaurants where they've got these private rooms. You could do that kind of a situation. Some of them have audio video built in. So, you know, you kinda know what your biggest expenses are. Now you just have to ask yourself, like, how much do you wanna charge? And you can get it all done in one room if you really wanted to.

Jay Clouse [00:39:20]:
I'm guessing time of year, location, and even day of the week probably plays into pricing or costs, I should say, as well.

Michael Stelzner [00:39:29]:
Yeah. If you're selling to local people versus non local people, you gotta think about travel. Right? So if you're in a city that's kind of a destination, you might wanna be thinking about the fact that they might wanna stay a few extra days and make a vacation out of it. So sometimes that's where having it on a Friday or a Monday might make a lot of sense so people can stay the weekend or come in early, but you can find good deals midweek. So a lot of times, hotels have space midweek because a lot of people don't like to do things on Wednesdays. So you might be able to get a better deal on a Wednesday. You can also find great deals on holidays. Joe Pulizzi chose Labor Day weekend if I'm not mistaken because it was the only time he could get cheap venue space.

Michael Stelzner [00:40:10]:
I'm doing my event on President's Day this year. So a lot of times it has to do with just there's certain days that people generally don't do events, but you could get away with it Mhmm. For your 1st year and you could get a much better deal.

Jay Clouse [00:40:23]:
So I'm thinking the more time you have to market this, the better off you are because that's the more potential for sales.

Michael Stelzner [00:40:29]:
100%. Better to sell it out early. Yeah.

Jay Clouse [00:40:32]:
When you're marketing the value of this, how much do you hinge your marketing capabilities on the identity of the speakers? Do I need to know the speakers before I really start marketing this in earnest?

Michael Stelzner [00:40:42]:
You do not need to know the speakers. You just need to know what the promised deliverable outcome is going to be. And it sounds like in many cases, the speaker is gonna be the person who's listening to this right now, right? Because they're already influencers. So, you gotta really calculate your value prop, and you gotta get that figured out. Marketing is not easy for selling events. It's exceptionally hard. So you just have to remember, like, it's gonna take time to sell tickets. It could take many months.

Michael Stelzner [00:41:07]:
And some people are gonna wait till the last minute to buy their tickets. So what I recommend is tiered pricing structures with deadlines for sales. Like, you know, we do this all the time where prices are incrementally going up every couple of days. But this gives you a reason to motivate people to buy early.

Jay Clouse [00:41:23]:
If you are gonna have other speakers, how do you incentivize speakers to commit to traveling to you and making this a part of their

Michael Stelzner [00:41:30]:
Well, you develop great relationships with them. If you are a podcaster, you have them on your podcast. Like, you know, so many of the people that speak at my conference have been on my show, right? And you really wanna make sure you ask people you can trust that you know are gonna be there for you. Hopefully, there's something that they can gain from the attendees that are in the audience. Maybe those people in the audience are their customers. A lot of the best speakers are people that are consultants and coaches that are used to getting up on a stage for free and knowing afterwards someone's gonna come up to them and ask them more about their services that they offer.

Jay Clouse [00:42:05]:
Is there any threshold of event size where you're, like, past this number of attendees, the cost, the format, the whatever changes drastically.

Michael Stelzner [00:42:14]:
There's massive scale with events depending on the venue. This is why sometimes working with a hotel is really advantageous because if they have lots of different room sizes and you sell a lot more tickets, you can go back and beg them to put you in a bigger room, you know? And it won't change the contract, right? Generally speaking, they're not gonna care because that means more food money for them, you know? So ideally, you get a space that's bigger than you need. So let's say the room can accommodate 250, you set it up for 50 and you can have the stage pushed up a little bit to make the room feel smaller. And then if you sell more tickets, you push the stage back a little bit. So, ideally, you get a bigger room than you need knowing full well that it's fine because I'll just have some round tables in the back that people can hang out at if we don't sell a lot of tickets.

Jay Clouse [00:42:58]:
We started this conversation talking about how a lot of crappy events have a ton of sponsors, and that makes the event goer the product. Is this a binary stance where it's like I don't do sponsors at all? Or are there ways in which you find sponsors can be additive and worthwhile?

Michael Stelzner [00:43:17]:
I think sponsors can be great as long as you do not Some sponsors are gonna tell you the only way I'm gonna be a sponsor is if you give me the contact information of every attendee. I strongly recommend you take a hard line on that because the moment you do that is the moment your attendees are gonna be angry at you because they're gonna be getting pitched at the moment they buy those tickets. You don't want that to happen. So what you do is you tell the sponsors, hey, you get to be at this great event that I'm doing and you get to be an inaugural sponsor. And in exchange for your participation, I'm gonna talk you up from the main stage. I'm gonna encourage people to go check out what you've got going on. But it's gonna be your obligation to collect leads while you're on location. Maybe we'll design a badge with a QR code on it ideally that someone can scan that darn thing and get that contact information.

Michael Stelzner [00:44:02]:
And I'm not one that says you shouldn't have sponsors. I'm just one that like, hey, the sponsors are a side benefit, they're not the primary benefit. You know, if I happen to have LinkedIn or TikTok or Facebook as a sponsor of my event, that's great. But it's not the reason I'm putting on the event. I don't want to have a dedicated expo hall just for them. You know, they can have a little area out in the hall, you know, where they can set their little booths up. Maybe I'll have a lounge that they'll I'll give them an entire room for a premium price and they'll create a little cool experience inside that lounge. But I really wanna optimize this for the attendees so that the attendees wanna come back.

Michael Stelzner [00:44:37]:
And so they wanna talk about it. Because the best thing about business with events is the returning customer. If you can get people to come back year after year, the return on investment, the lifetime value of that customer just goes through the roof. And you do that by making them the product, not the sponsor.

Jay Clouse [00:44:54]:
What were the surprise or unanticipated benefits of building an events based business outside of revenue?

Michael Stelzner [00:45:01]:
Honestly, it changes people's lives. I've just been shocked at all the crazy stories I've been told by people of how they met someone at the event and it completely transformed the trajectory of their career, or, you know, how they started a mastermind group together or a podcast, and even marriages have happened. Amy Landino met her husband at my conference.

Jay Clouse [00:45:26]:
That's amazing. Yeah.

Michael Stelzner [00:45:27]:
I know Amy. So, you know, and a lot of that kind of stuff happens as a result of conferences. And I just, I guess I underestimated the importance of people coming together and having a chance to talk. It's really kind of super valuable. You don't wanna sell that. You want it to be like an unexpected side benefit so that people walk away from that feeling like they want more of that and they wanna come back.

Jay Clouse [00:45:53]:
Yeah. But you've gotta sell, it sounds like, some sort of transformation or some discrete outcome.

Michael Stelzner [00:45:59]:
You sell the content. Right? The content is what people are buying. Right? They're coming to learn, in my case, about how to employ AI in their marketing or how to develop Instagram strategy or how to develop YouTube strategy from top YouTubers and stuff like that. They're coming there because they wanna learn how to accomplish something, but they walk away from there with so much more. They walk away with meeting people that are just like them, which are hard to find in real life. Right? And we found that we could try to sell that, but that never sells tickets. It just gets people coming back and gets people talking about the event.

Jay Clouse [00:46:34]:
We mentioned post COVID, a lot of events businesses were wiped out. Attendance hasn't reached pre COVID levels. What's your outlook on the future of events? Is it too late or?

Michael Stelzner [00:46:44]:
I'm very bullish and I do think that there's big demand. I think a lot of people, you know, we're recording this in late 2023. Late 2022 into 2023 was when events started having kind of their resurgence. And I do think that events are not going anywhere. I think people desperately wanna connect with other people. And I do think that if you're brave and you go out and you start small and you make sure you focus on profitability, you could turn out to be literally one of the biggest events in your space, which is exactly what happened with me. I've been doing this for like 11 years, this will be my 11th year. You get to a point where you become untouchable, you know, where there's no competition.

Michael Stelzner [00:47:30]:
And that becomes ridiculously valuable. And that just opens up all sorts of possibilities that you could not do if you didn't decide to just be brave and go out and start.

Jay Clouse [00:47:40]:
Yeah. I I I look at events in books as an opportunity in our current time that things are swinging back in that direction of this is actually a brand building tool, not just a revenue generating activity. It's like Right. You mentioned in the beginning, you know, virtual events were were novel. And Yeah. The pendulum of what is novel versus not novel swings back and forth. And I'm seeing things like doing in person events as swinging towards novel again or potentially novel again the way that you do it Instead of just putting out a ton of short form videos and threads, it might be a unique way to stand out.

Michael Stelzner [00:48:23]:
Yeah. Experiences are the key. Whatever you do, try to create an experience, something that people wanna take pictures of, that they wanna, you know, record. You know, maybe they wanna go live during whatever, but the better experience you can create, no matter how many people there are, the more people will really love you. And one thing that you cannot discount is the word-of-mouth value proposition of creating an incredible experience. Like every one of the people that has been to social media marketing world are now little agents, little marketing agents, you know, and they tell their friends about it. And we've got this massive amount of people that would love to come to this event but just can't afford it. That is the best marketing there is in the world when people say it's on my bucket list.

Michael Stelzner [00:49:07]:
And I'm telling you, they're not going anywhere. I mean, like, why do you think so many people are spending so much money traveling right now, right? Because they really want experiences. And that's why I think you pick a good city that's got some cool experiences, you could take people no matter where you are on a really cool little experience. You know, like I remember, you know, in San Diego, there's a lot of craft breweries, right? So, one of the attendees just decided randomly to put a craft brewery thing together. So, you can even encourage your attendees to like, step up and all of a sudden be agents of experiences, and it could be really fun.

Jay Clouse [00:49:50]:
If you wanna learn more about Michael or social media marketing world, visit socialmedia examiner.com. And if you enjoyed this episode, consider listening to episode number 144 of this podcast, where I speak with Barry Baumgartner about hosting the perfect 3 day event. Links to both are in the show notes. Thank you to Michael for being on this episode. Thank you to Adam Lockwood for editing this episode and Emily Clouse for creating our artwork. If you like this episode, tweet at me at jklaus or find me on Instagram at jklaus and let me know. And if you really wanna say thank you, please leave a review on Apple Podcasts or Spotify. Thanks for listening, and I'll talk to you next week.