From renting floor space to designing and building your booth, the costs involved in exhibiting at a tradeshow can quickly add up. Even a small tradeshow can cost your business a five-figure sum, particularly if it's located in another city.

Because tradeshows require such a significant investment, it's essential to measure not just how much you spend on a tradeshow but also how much you earn as a result of the event.

We recently surveyed business owners and marketing managers and found that almost 50% don't measure the ROI of their tradeshow activity.

Measuring the ROI of your tradeshow marketing is slightly more complicated than tracking and measuring online marketing ROI. However, with the right strategy and tools, you can get a clear picture of how much profit your next event produces.

In this brief guide, we'll break down the process of tracking your tradeshow ROI into an easy four-step system that any business—from a partnership to a large enterprise—can use to learn how much profit each of its tradeshows is producing.

Step 1: Define your metrics and marketing goals

Iconic management consultant Peter Drucker, known to many as the inventor of modern management, had a great quote about measuring ROI that far too many marketers seem unaware of: "What gets measured gets managed."

Many businesses make the mistake of setting vague, incalculable goals before tradeshows and other events. Without a clear and quantifiable goal, it's impossible to tell whether your tradeshow was a success or a failure.

Before every tradeshow, set yourself a quantifiable, actionable goal and choose the right metric for measuring it. You should be able to know whether your goal was achieved (or not achieved) using a simple "yes" or "no" question.

Good goals include lead generation targets—"generate 100 new sales leads from B2B companies"; "get 25 business cards from CMOs"—or hard sales figures. If your goal isn't measurable with a concrete "yes" or "no," it's too vague or complicated.

For your first tradeshow, set one goal for your team to accomplish. As you become more experienced at tradeshows, you can add unique goals for lead generation and branding; in the beginning, it pays to keep things nice and simple.

If you can't think of a good metric, use the same metric as you do for other forms of marketing. That will make it easier to compare the ROI of tradeshows with digital, print media, and other marketing methods to determine which channels are the most profitable.

Step 2: Track and update your leads in a CRM tool

Tradeshows are all about connections. Some connections are worth a great deal as soon as they're established, while others take months (or even years) to mature and start producing dividends. Some connections never develop at all.

Without tracking your leads after the event, it's difficult to measure which ones produce a good return on investment for your business and which don't. It's also impossible to determine what your average tradeshow lead and new customer are worth.

As you enter the leads from your latest tradeshow into your CRM software, set up a custom tag so that you can measure them in the aggregate. This is easy using "event" tags in Salesforce, which let you group leads into tradeshow-specific groups.

In Zoho, Highrise, and other CRM applications you can achieve the same tagging and grouping using the "referrer" field. Enter the event (be sure to include the date) into each lead, and you'll be able to pull aggregate statistics for the entire collection.

In addition to tracking each lead's source, make sure you update each lead over time to measure the revenue each connection produces. Doing so will help you work out how much each customer is worth as well as the total revenue from each tradeshow.

Step 3: Calculate your lifetime customer value

Lifetime customer value (LCV) is one of the most important metrics you can track as a marketer. It tells you the total amount of profit a new customer will produce over the long term, letting you quickly assess the ROI of a specific marketing campaign.

LCV differs from one lead source to another: A customer you earned from a tradeshow, for example, might have a higher LCV than a customer who responded to one of your search ads or email newsletters.

Since you've tagged all of your tradeshow leads in your CRM software, calculating your LCV for a specific tradeshow is fairly simple. Group all of the leads from one event using their tag, then divide the total profit by the amount of leads.

After one or two events, your LCV for each tradeshow will still be relatively crude and inaccurate. However, as you generate more leads and customers over time, you'll be able to accurately predict how much each new tradeshow customer is worth.

Once you understand the LCV of each tradeshow, you'll be able to quickly calculate your return on investment within weeks of a tradeshow, allowing you to make quick, actionable decisions about whether to return to a certain event next year.

Step 4: Continue measuring and optimizing

In the same way that your online advertising campaigns become more optimized and profitable as you gather more data, your tradeshow marketing campaigns will become more optimized and profitable as you attend more events and generate more leads.

Many businesses make the mistake of measuring their tradeshow ROI once, then assuming that their ROI will not change. Every tradeshow is different, making it essential that you track and monitor each event as it happens.

Pay close attention to your tradeshow metrics and return to them every month to see whether you've made progress. Some tradeshow leads may not mature for weeks or months, only to suddenly produce revenue a long time after the event is over.

The more you measure, the more you'll understand about the value of each tradeshow you take part in.

Continue measuring and optimizing after each tradeshow; in a few years, you'll be able to develop a concrete strategy for generating profitable leads.

Was your last tradeshow profitable?

If you don't track your tradeshow ROI, start now! After two to three shows, you'll have an understanding of the value of each tradeshow lead you generate, helping you get far more out of future events.