From Anna Kominik at the International Association of Business Communicators’ World Conference in Chicago:
One of the most exciting things about the International Association of Business Communicators’ World Conference is getting access to some of our profession’s best thinkers. And so it was on Day One today of the conference, being held in Chicago, Ill, USA, that measurement doyenne Angela Sinickas outlined a mathematical formula for proving how communication is delivering to an organisation’s bottom line. This is a pertinent issue in New Zealand at this time, where belt tightening is causing an increasing number of organisations to review their communications functions.
Angela’s worked with organisations around the world on measuring the ROI of communications, so she knows what she’s talking about and she imparted some excellent advice to communicators wanting to really prove their worth to management:
- Focus on one project and start with the total financial value of the outcome the communication is intended to achieve. Make the outcome as specific as possible. Then focus on an initiative that will contribute to a revenue or cost control goal for that outcome rather than an entire communication channel. Focusing on the entire goal is going to be too wishy washy.
- Reduce this total financial value by the percentage credit that can be attributed to communication. Communicators often get hung up with the other “inputs” and departments that contribute to a result. Working out this financial value can be done in a number of different ways depending on the situation. But even an expected contribution of 1% can show a large return because typical communication budgets are often a small part of an organisation’s total budget.
- If you can, conduct a “pilot and control group” study. The incremental increase in success for the pilot locations over the control groups represent the contribution of communication.
- Multiply the total financial value with the figure from Step 2 to calculate the proportional financial value of the outcome that could be due to communication. Be very conservative in taking credit. Take credit for less than you think you deserve, rather than more.
- Subtract the total cost of the communication from the figure produced in Step 3. Be as aggressive as possible in calculating this. Include staff costs, production costs and the money spent on any research.
- What’s left is the net financial value of communication to your organisation, after the cost of communication. Divide this net financial value by the total communication cost. The result is your estimated return on investment.
Angela talked of one communicator of a retail company that did direct mail. He saw an opportunity to refocus the communication for a better result but his manager was unconvinced. He got approval to distribute two different brochures - one with ‘old’ content and the other reflecting a different approach. He had different 0800 numbers for each brochure and measured the consumer uptake as his ROI. While these take bigger budgets than most New Zealand communicators generally have, the idea of isolating and piloting a communication initiative in a way that proves that communications seriously does have a role to play in bottom line results.
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