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.
Before you read Part 3, see Part 1: Is Communications ROI Part of Marketing ROI? and Part 2: How to Measure Investments in Communications.
Jeff Posey: I remember you saying that the principles of MROI are anticipated to create a free market for funding dollars.
Greg Banks: It gets a little philosophical, but any money that is spent without having accountability to generate a financial return is suspect in a free market for funding. It’s not just marketing and communications. It’s everything.
JP: If you’re the director or VP of corporate communications, how might your MROI philosophy change the way you manage?
GB: First, seek to convince yourself that you can and do influence financial return before you even get to all the fancy math.
If you’re talking about a corporate communications leader who has a small team, spends a very small percentage of a company’s revenue, the pressure’s not as high. But if I had that job, I would figure out how I contribute to the company’s financial return.
JP: And then after you embrace this idea, what do you do?
GB: First, define what you do. You can start as high-level as this:
Good Employee Communications = Higher Productivity = Higher Profit
Think about the steps you take and how they make the company more money, more growth, more profit. Write those steps down using SMART [Specific, Measurable, Achievable, Realistic, Time-based] objectives. Do that for your whole department, or natural subsections.
Then break it down, maybe by audience constituents. For constituent A, we want them to have a better image of our company. Constituent B needs to be willing to advocate for us in the halls of Congress. And on and on. You know your business.
And then, after all that, now I’m finally ready to measure.
JP: We’ve still not really made the tie all the way back to money.
GB: No, we haven’t. Only in concept, but not in measurement.
At this point, the juice of measurement may not be worth the effort of the squeeze. If it’s a big company, and there are three people doing messages to employees, it’s just not a big enough expenditure to bother measuring for ROI.
If, on the other hand, you’re the corporate communications leader of a big company, with a huge budget for buying naming rights, speaking tours, associations with celebrities, big events, a presence at rock concerts, something like $300 million a year, that certainly warrants the extra steps. For that big a chunk of expenditures, we would pull out the sophisticated stops and use things such as time-series regression and econometrics to see how much all that effort affects sales and the retention of customers.
Jeff Posey: If we have used SMART (Specific, Measurable, Achievable, Realistic, Time-based) objectives to measure what we’re doing, how do we start measuring and ranking?
Greg Banks: I imagine a pyramid, with a fully loaded measure at the top, a very precise assessment of money and dollars returned. As you go down the pyramid, you have less and less measurement precision, less direct relation to the return of dollars.
You don’t have to go nuts with this. You don’t want to spend more on measuring than you do on increasing the company’s gains. That’s crazy.
If you could demonstrate that what you’re doing increases employees’ understanding and compliance by even a few percentage points, that’s great. Just using cocktail-napkin math, productivity would go up a little, which would be worth $XX million to your company. That’s really attractive thinking from a senior management perspective.
I’m an MROI advocate, but I don’t seek perfection. I seek growth. I seek change and growth. If you learn how to do that, it’s better than just sitting in your cubbyhole and never asking.
JP: This is great. Thank you very much. Anything else to add?
GB: You’re welcome. It’s been fun.
I’ll finish with this. The basic philosophy of making more return than you use and proving it in a measurable way is good at each level of business. I can’t see any downside to it in the long run. It’s something anybody at any level can start thinking about, and we’ll all have to practice it sooner or later.
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