Tag Archives: Greg Banks

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.

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.

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 2, see Part 1: Is Communications ROI Part of Marketing ROI?

Jeff Posey: When you say MROI, what’s the I? What’s the investment? How can we identify investments in communications?

Greg Banks: It’s dollars. It’s not always obvious how to translate into dollars, but dollars are the great equalizer. Dollars are the way you put a value on effort and resources, and, handy for us, dollars are also the way to measure return to the company.

One of the important techniques is that you need a way to standardize dollars so you can compare. Some communications you may pay for in labor costs, on a bi-weekly basis; some you may pay for in material production, on an annual basis. We should standardize to get these both on, say, a weekly unit of time, so we can compare them.

JP: So you’re looking for magnitudes of difference in investment activities that affects the return in dollars?

GB: Yes. If your communication is big enough to make a change for your company, then don’t get hung up on precision. Figure out the dollars you invest in the communication and accept some tolerance in your definition.

Don’t invest inordinate time trying to capture every detail and every original thought by your communications team.

Here’s an example: For a project I was once involved in for a large company, we wanted to improve the marketing investment. We spent a lot of effort upfront to calculate the cost to generate a new sale.

Then we went back into the marketplace, and altered our plans based on our understanding of cost-per-sale. We made a lot more sales for the same investment. And we learned as an organization how to change.

Were we precise? No, not at that point. For this company, the value of a sale varied widely. Some sales generated $100 in profit, some generated $500. We knew this in concept, but we didn’t want to tackle this topic until after we got some marketplace experience. By the time we were on our third cycle, we evolved our measurement from cost-per-sale to NPV [net present value, a measure of profit]. And we kept growing, and kept learning.

If we’d tried to leap all the way to NPV in the first cycle, we might have bogged down and never gone back into the marketplace.

I’m sure there are parallels when trying to improve the return on communications efforts.

JP: Good enough is good enough.

GB: Yes, that’s right. MROI is more about the change than it is about the analysis. That’s a common misperception. It’s the same kind of thing we’ve seen with technology. It’s not about the technology, it’s what you do with it. It’s not about the analysis, it’s about making different, better decisions, or having validation of your decisions. I call it a “relentless improvement” approach – where you can get better over multiple periods of time.

The analysis itself is important, sometimes even awe-striking in what we can figure out. But if you come into it with analysis as your orientation, you can invest a lot of time and money and never earn a dollar in return.

JP: If I were trying to identify an analytical approach in a corporate communications environment, how would I start?

Before that question, ask yourself: What’s your goal? Can you link it to something that has a financial value to the company?

JP: So I started trying to analyze before I even figured out what I’m trying to change.

GB: You almost fell into that trap we were talking about. You were too focused on the details of the analysis, of how you calculate it. That’s just a means to an end.

Think about what you’re trying to accomplish as a corporate communicator. If you, for example, influence a group of employees, what actions do you expect them to take? How does that lead to more revenue or lower costs? That’s the kind of thought process I’d recommend.

You don’t have to be a purist. All things don’t have to fit into a sophisticated statistical model. Think of it this way: Most other disciplines are trying to generate some financial gain for the company. Communications should have that orientation as well.

Next week, see Part 3 of 3: Communications ROI can Compete in the Internal Free Market

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.

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.