“Part 1 of 3: Is Communications ROI Part of Marketing ROI?” by Jeff Posey

Greg Banks is a Director for Deloitte Consulting LLP. One of Greg’s career specialties is Marketing Return on Investment (MROI). I spoke with him about how we can apply MROI principles and leading practices to corporate communications.

Greg’s MROI practice philosophy is well-summarized in an article he wrote for Deloitte titled “The MROI Mandate.” In short, he advocates five recurring steps:

1. Architecture
2. Standardization
3. Analysis
4. Dashboarding
5. Change

This conversation took in December 2011.

Jeff Posey: Do you believe communications can be a marketing function?

Greg Banks: Sure. Communication is a big part of a marketer’s toolkit. When you call it corporate communications, I believe many experts would place that under the umbrella of marketing.

JP: How could communicating with employees affect marketing?

GB: Let’s paraphrase Philip Kotler’s definition of marketing: “answering customer needs profitably.” It’s often been the case that virtually all employees affect marketing. In recent years, employees’ impact on customers has become even more pronounced because of first the Internet and now social networking. Employees and customers and all other sorts of stakeholders have conversations in virtually every direction at various times.

I’m not saying that all employee communications is marketing, or even that all communications is marketing, but under the broad definition of marketing, employee communications can easily be included.

JP: What portion of corporate communications might not be considered marketing related?

GB: It gets a little philosophical. As an example, some would say that Human Resources communications on 401-K benefits is outside of marketing. But I could make a case that this is marketing – to employees.

JP: Does that get into your position of “Open-Loop” vs. “Closed-Loop” marketing?

GB: That’s a bit of a tangent, but it’s one that I like.

JP: I have the luxury of knowing your material.

GB: Yes, you do. You helped me write a lot of it!

You remember well then that one of the biggest changes in our professional lifetimes has been going from Open Loop to Closed Loop. It used to be that we controlled most of the information customers knew about products and services [a Closed Loop], and today that’s no longer the case [it’s become an Open Loop].

Think about all the many steps that happen before your information actually affects the buyer. Customers get influenced by your employees, their peer groups, media, blogs, texts, and countless others. Mix and match all these together, and it can take a long time for any particular piece of information to pop up later and influence the buyer to buy or not to buy

The term Open Loop hasn’t caught on since we wrote that article, Jeff. It has been usurped by concepts like social networks. Nevertheless, the points are still valid. Companies don’t control anymore, at best we influence. Even though a communication may pinball around for several weeks, you’ve still got to figure out if it’s helping you or hurting you. And how much effort you put into trying to control it.

JP: Are these social networks more than we can get our arms around?

GB: No. We humans keep figuring it out, at a slightly slower rate than we invent it. The new communications paradigms – where individuals drive their own networks – complicate matters a lot. But we’re getting our arms around it.

At Deloitte, as an example, we have a whole practice devoted to what we’re now calling “unstructured data,” where we organize pictures and text in daily volumes that improve upon decades of the past – and we can analyze it the same way we have been analyzing structured data. It’s new and exciting, and yes a little overwhelming at times, but we’re getting our arms around it.

JP: That would be a complicated thing to visualize, I would guess.

GB: Yes. There’s a whole other practice forming called data visualization, just to draw these kinds of maps. The ones I like best look like a stellar system. There’s a big star in the middle, then hundreds of planets and moons. The star is an influential person or media outlet or company, the central point of influence, and then it goes all over. A recent issue of the Harvard Business Review has an article with a great graphic [see “Forget Viral Marketing — Make the Product Itself Viral,” with this graphic]. It’s evidence of how many people are working hard to catch up with it from a business perspective.

The first thing that has to be done is an acceptance that, even when it looks as complicated as this, it is still something that needs to be measured and managed. To butcher a quote from the third Godfather movie, “if history has taught us anything, it’s that anything can be managed and measured and treated like an investment.”

JP: So even communications people have to think like investors?

GB: Yes, absolutely. Everybody has to think like business owners who manage for profit and not get thrown off by details of the changes going on all around them. Everyone should drive growth and profit to remain viable. It might be hard to measure, but that doesn’t mean that it’s a freebie.

Next Monday, see Part 2 of 3: How to Measure Investments in Communications

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.