calculating the roi on your communications

Calculating the ROI on Your Communications

Angela Sinickas, [email protected]

CIPR Measurement Summit

13 June 2012

22365 El Toro Road, Ste. 139, Lake Forest, CA 92630TEL: 714/277-4130 FAX: 714/242-7049

2© 2012, all rights reserved. Sinickas Communications, Inc.

Talking with communicators about ROI is like talking about religion…


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

• To calculate a financial value, not an intangible value

Gain – Cost÷

Cost


ROI Ex. 1: Communication impact on long-distance 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


ROI Ex. 1: Calculating communication ROI on long-distance cost savings

• Annual long-distance savings(12 x $20,000) $240,000

• Annual salary and benefits for one communicator - $ 86,000

• Net annual cost saving $154,000 • Cost of comm. salary/benefits ÷ $ 86,000 • Annual ROI = 179%


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


Example 2: Reducing insurance costs at Westec Security

• 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 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


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

58%29%

9%4%

1-15

16-30

31-60

Over 1 hour

Minutes the portal saves in my work each

week


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


Ex. 3: Calculating ROI if the total cost of replacing the intranet was $500,000

Benefit/cost ratio

$5.3 million ÷ $.5 million

=

10.6

Return on investment (ROI)

($5.3 million – $.5 million)

÷$.5 million

= 9.6 X 100%

= 960% ROI


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 __%.

Impact of sales

commu-nication support

37%Impact of every-

thing else63%


Ex. 4: Calculating sales communication support’s ROI on generating sales

• Total extra revenue generated $• % credit sales reps attribute

to sales comm. tools x 32% to 42%

• Comm.’s “credit” for sales = $• Cost of comm. + research - $ X• Net return after costs = $• Cost of comm. + research ÷ $ X• ROI = ____%


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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calculating the roi on your communications

Documents

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communications angela

new safety communications

cost of

communication roi

longdistance costs

net annual cost