Transcript CIPR ROI - CIPR Inside

Calculating the ROI on Your
Communications
CIPR Measurement Summit
13 June 2012
Angela Sinickas, ABC
[email protected]
22365 El Toro Road, Ste. 139, Lake Forest, CA 92630
TEL: 714/277-4130
FAX: 714/242-7049
Talking with communicators about ROI
is like talking about religion…
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There’s no good or bad…
no “should I?” or “shouldn’t I?”
• It’s one of many
tools at our
disposal
• Based on a
standard formula
for all business
functions
Gain – Cost
÷
Cost
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• To calculate a
financial value, not
an intangible value
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ROI Ex. 1: Communication impact on longdistance dialing costs
• Situation: Employees were dialing
long-distance calls directly instead of
using a string of pre-dialing
numbers that reduced the cost
• Solution: Humorous internal
communications campaign over
three-month period using e-mails
and the intranet; repeated every
few months to alert new hires and
remind back-sliders
• Outcome: Long-distance costs reduced over $20,000 per
month with the same call volume
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ROI Ex. 1: Calculating communication ROI on
long-distance cost savings
• Annual long-distance savings
(12 x $20,000)
• Annual salary and benefits for
one communicator
• Net annual cost saving
• Cost of comm. salary/benefits
• Annual ROI
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$240,000
- $ 86,000
$154,000
÷ $ 86,000
= 179%
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Taking appropriate credit for change: Isolate the
role communication played in improved results
• Pilot the change in only some units; track the change
in outcomes at your pilot units against closely
matched pairs at control group units
– Ask other managers involved in the issue to not do anything
differently at only some locations
OR
• Measure levels or outcomes before and after your
communication intervention
– Try to correct for any other major changes at the same time
– Ask the people making the change to what extent the
communication affected their behaviors
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Example 2: Reducing insurance
costs at Westec Security
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• Situation: Most employees
drove vehicles; insurance
costs due to accidents
were skyrocketing
• Solution: Communicator
piloted a new safety
communications in
3 of their 7 branches
• Outcome: Company
insurance premium
reduced by $1 million per
year at the three pilot
branches; no change at
7
other 4 branches
Example 2: Calculating communication’s
ROI at Westec
•
•
•
•
•
Annual insurance cost savings $1.00 million
Annual salary of communicator -$ .06 million
Annual cost saving
$ .94 million
Annual salary of communicator ÷ $ .06 million
Annual ROI
= 1566%
2 Rules: Be aggressive in including costs,
be conservative in taking credit
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Ex. 3: How much time using the new portal saves
over the old intranet
• Survey question answered
by 1,376 people who said
the portal helps save time,
out of sample size of
14,082 (or about 10%),
which means these
numbers can be projected
to 10% of the entire
100,000-person
workforce, or about 10,000
employees
Minutes the
portal saves in
my work each
week
9%
4%
29%
58%
1-15
16-30
31-60
Over 1 hour
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Ex. 3: Productivity savings due to updated
portal for about 10,000 employees (10%)
58% (5,800) x average of 7.5 minutes
29% (2,900) x average of 22.5 minutes
9% (900) x average of 45 minutes
4% (400) x average of 60 minutes
725 hrs/wk
1,088 hrs/wk
675 hrs/wk
+ 400 hrs/wk
Total hours saved per week
2,888 hrs/wk
X 49 wks worked
Hours of productivity saved each year
Convert hours to weeks
Average salary per week
141,512 hrs/yr
3,538 weeks/yr
X $1,500 pay/wk
Total productivity savings from portal
$5,306,700
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Ex. 3: Calculating ROI if the total cost of
replacing the intranet was $500,000
Benefit/cost ratio
Return on investment (ROI)
$5.3 million ÷ $.5 million
($5.3 million – $.5 million)
÷
=
$.5 million
10.6
= 9.6 X 100%
= 960% ROI
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Ex. 4: Sales reps’ assessment
of communication’s ROI
• Methodology: 234 of about 500 invited XYZ sales reps
and managers participated in an online survey to evaluate
the effectiveness of sales communication support tools.
This 47% response rate means that the following results
are accurate at the 95% confidence level within a margin
of ±5%.
• Respondents attributed
37% of the total revenue
they generated to the
sales communication
support they receive,
which results in an ROI
of __%.
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Impact of
everything else
63%
Impact of
sales
communication
support
37%
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Ex. 4: Calculating sales communication
support’s ROI on generating sales
• Total extra revenue generated
• % credit sales reps attribute
to sales comm. tools
• Comm.’s “credit” for sales
• Cost of comm. + research
• Net return after costs
• Cost of comm. + research
• ROI
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$
x 32% to 42%
=$
- $
X
=$
÷$
X
= ____%
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Have audiences connect your communication
with their actions that have financial value
• Member magazine survey asks which services readers purchased
after first learning about the service’s availability in the magazine
• Bank of America media relations team used to calculate drops in
new account deposits per day of negative news coverage to
encourage senior management to actively address bad news
• Social media impact. SeaWorld in San Antonio surveys entering
guests on reason for visit. They identified how many came to ride a
new roller coaster that had no advertising or PR
yet, just social media coverage.
• Readers Digest PR tracks immediate jumps
in book sales through amazon.com after each
author’s appearance on local TV talk shows
or local book reviews
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Free monthly
newsletter with
practical
measurement
tips available
by emailing
angela@
sinicom.com
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