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Bad keynote speaker selection is one of the biggest ways to mess up an advisor conference. Across the board, advisor event committees are paying speakers the wrong amount of money (most of the time it’s too much) due to lack of a scientific approach to hiring.
The fudge brownie impact
It’s rare to see speaker selectors that put a great deal of effort into getting the right person. Many times they take the approach of least resistance as the decision gets made on name value. You’ll never get fired for buying IBM, right?
Are any advisors raving about how their lives were dynamically altered by any conference they’ve gone to? People pay more attention to whether they get the chocolate chip cookies or fudge brownies with lunch.
Human beings don’t retain much of what they hear and speakers operate in total ignorance of this. But the company is still on the hook for a huge fee. Learning and networking are the two primary reasons that advisors go to conferences, yet often they return home at a net loss having failed to gain a modicum of real value for time spent.
The amount of money you pay a keynote speaker should be approached scientifically for several reasons:
- A formulaic method makes the expense easier to document, budget and justify to management.
- It creates a discipline around the entire keynote-speaker hiring process, which illustrates the real value you are getting, and the speaker’s purpose at the conference.
- Correct pricing helps you avoid underpaying the speaker, which is often a harbinger of underperformance.
Here are some scientific approaches to consider.
The time and materials method
You estimate the total value of the speaker’s time and the cost of materials it would take the speaker to put on the event.
Example:
Speaker has to miss work for two days. Assume eight hours a day at $250/hour = $4,000.
Speaker takes four hours of time to prepare for talk at $250/hour = $1,000.
Speaker has to rent a chocolate fountain for special effect = $300.
Total fee to speaker = $5,300 + reimbursement for travel expenses
Advantages of this method:
- It provides a concrete way of arriving at the price.
- It rewards speakers who take time to prepare for the talk (not just use last year’s), devise methods to increase retention, and customize the talk to the audience.
- It makes speakers feel more at ease with bringing in special effects which liven up the experience because they know they won’t have to pay out of pocket. In one talk I am doing, my co-presenter and I plan to light an insurance policy on fire.
Disadvantages of this method:
- It may be hard to estimate depending upon the data quality. Not everybody is willing to pony up the truth about what they earn per hour or per day of work.
This may raise the price for speakers who have to travel longer distances (e.g. Boston to Las Vegas)
The comparables method
This is how it is done most of the time: a heuristic method that picks numbers out of thin air based upon going rates in the industry or reputation.
Example:
Last year’s conference keynote got paid $6,000. I’ll add 3% for inflation and use this same amount because this year’s keynote has an equally strong reputation as last year’s.
The top five candidates ranged from $3k to $8k. The one I chose bid at $6k which was reasonable given what the competition was charging.
Total fee to speaker = $6,000
Advantages of this method:
- Easier to justify to the boss because you can always say, “the speaker was paid in accordance with industry standards.” The boss probably won’t think twice. Done deal!
- Minimizes work and effort on part of the speaker selector.
Disadvantages of this method:
- No real basis for the expense other than industry norms and reputation.
- Does not promote preparation, customization, or incorporation of retention techniques.
The results method
A rarely used but highly practical technique, this assesses the tangible increase in profit to the company. In a sense, the speaker is paid based upon the amount of ROI their talk creates.
Example:
Keynote gives a talk to 100 advisors at a broker-dealer firm about social media strategies, which they can use to generate leads. Broker-dealer company predicts that at least one advisor closes a deal at $10k annual revenue. Theoretically, the advisor takes half and the speaker gets paid the other half in year one instead of the money going to the broker-dealer company. In year two, the broker-dealer firm makes back the speaker’s fee.
Total fee to speaker = $5,000
Advantages of this method:
- Easy to justify expense to boss.
- Aligns expense with benefits very clearly.
- Requires selector to clearly define the purpose of the talk.
- Focuses on talks that create tangible value.
- Encourages speaker to focus on helping audience retain information.
Disadvantages of this method:
- Less ideal for events where learning is not the objective. For example, the annual Bahamas event for top-producing brokers may be more of a reward than a training experience. The goal of the talk may be to entertain or motivate rather than impart skill.
- Because most speakers ignore the fact that audiences retain next to none of what they say, without proper retention techniques the learning outcomes of the talk will fail to be reached.
The zero-compensation method
Some companies don’t pay their keynote speakers because they can’t afford to do so. They may offer compensation in the form of opportunity by suggesting that the speaker will gain new business as a result of the exposure. This may or may not be true, but most people won’t ask for proof.
Example: Industry organization is a non-profit and offers speaker, who is a member of that same non-profit, free admission to the event in exchange for speaking to the group.
Advantages of this method:
- Do I need to say it? Obviously this is great if you can get away with it.
Disadvantages of this method:
- Lack of compensation is always a de-motivator. This is true 100% of the time no matter what altruistic little aphorisms anybody says.
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- Speakers often self-promote when they’re not getting paid because it’s their way of getting the most out of their time.
Consider lower cost alternatives
The reality is that some speakers simply cannot speak for free or less than what they dictate as their fee.
Years ago, before I had three kids over a span of three years, there were few instances of me nearly choking to death every time I got a pediatrician bill in the mail. I had the luxury of being able to speak for free. I was starting out and I did it for the experience. At this point, given the cost of hiring someone to look after my three kids (all ages four and younger), the cost of child care alone would preclude me from agreeing to speak for a dollar less than what I feel I need to get paid.
My point here is that whatever method you use (or combination of them), you may still come to an impasse with a speaker.
What can you do?
Consider lower cost options such as webinars. I’m in the process of hooking up a deal with a group that wanted me to come and speak live but couldn’t afford my keynote fee. So we’re going to do a series of webinars at a much lower cost.
This is a great solution:
- It saves me from having to travel and pay a huge child care bill.
- I’m giving the talk on a subject that I already have material prepared for, so the prep time is minimized.
- I know the organization well, so I’ll have to do minimal research on the audience.
- It’ll be recorded and available as a replay so that I won’t have to worry so much about creating retention tools.
Look, nothing beats having a live speaker, but sometimes it may not be the best option. Never sacrifice quality for the price; your reputation will suffer and it’ll be hard to get people to sign up for next year’s event. Know that there are a plethora of learning options available through technology.
Sara’s upshot
Using a scientific method of speaker selection based upon logic and data will give you more control over the value that your audience reaps from the talk. If you are a speaker selector looking for a forum where we discuss these and other topics about speaker selection, please request to join my LinkedIn Group called Rock the Stage.
Sara Grillo, CFA, is a top financial writer with a focus on marketing and branding for investment management, financial planning, and RIA firms. Prior to launching her own firm, she was a financial advisor and worked at Lehman Brothers. Sara graduated from Harvard with a degree in English literature and has an MBA from NYU Stern in quantitative finance.
Read more articles by Sara Grillo
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives
