As stated in my previous post, measuring soft ROI is a challenge because it is highly qualitative.  In fact, many of the activities of creating soft ROI are often stepping stones in achieving hard ROI.  To differentiate soft ROI from hard ROI, hard ROI refers to savings related to time, head count, improved quality and subsequently increased dollars. Hard ROI is also tracking how many clients and new assets are brought in based on nurturing and converting prospects into new clients. While hard ROI may be the goal, adding soft ROI benefits to a business case is key in proving true profitability of an strategic business investment.

In The Business Case: The Hard Realities of Soft Benefits, it states, “Labeling a benefit as soft doesn’t necessarily mean that hard ROI payoffs don’t exist. It only means that its tangibility is not apparent and/or acceptable to the decision maker.”  Furthermore, it states, “A successful technique [in business case building] is bundling groups of quantified soft ROI benefits together into categories called ‘high impact benefits,’ ‘medium impact benefits,’ and ‘low impact benefits.’ Strive to make the total calculated value of each group at least equal to the tangible savings that have already been identified.”

To do this, you have to be able to identify those additional benefits that don’t necessarily factor into the “hard ROI” equation but nevertheless achieve desired results, and then sort them into high, medium, and low impact buckets.  Does the option being considered…

• Improve customer service?
• Reduce implementation pain (vs. other options)?
• Reduce training pain (vs. other options)?
• Provide more functionality?
• Improve employee morale?
• Increase employee commitment to a process?
• Optimize use of resources (labor, space, etc.)?
• Lead to improved billing?
• Reduce carbon footprint?
• Increase employee collaboration/customer engagement?
• Improve competitive position?
• Reduce confusion against competitive products/services?
• Increase customer satisfaction/loyalty?
• Expose your company to new, potential clients?

As mentioned in my previous post, many of the activities that go into creating soft ROI are, in fact, branding exercises.  Increasing brand value/equity creates on-the-books value for a company and is measured as an intangible.

There has been a lot of discussion lately about whether Facebook and Twitter are being valued too high.  Naysayers believe that since both are not making the hard ROI revenue that they should be, they are being overvalued (see Facebook’s valuation: The cheat sheet and Is Twitter’s Valuation too High?).  What some people don’t get is the soft ROI benefits that are being added to their brand value/equity.  A brand with high soft ROI (brand awareness, usage, differentiating strengths and brand loyalty, to name a few), which has potential high-growth hard ROI, may be a better investment, in the right leadership hands, than a company that has higher hard ROI results but fewer growth opportunities, for whatever reasons.

Getting back to the point of this posting, there are ways to measure soft ROI results.  The company I work with, C.A. Walker, does B2B and B2C survey research that can be used in the process of calculating soft ROI benefits,  therefore, I feel qualified in pointing out some of the ways this can be done.

• To measure improved customer service, a survey can be emailed out following an exchange with the customer service team.  For example, a company may be interested in evaluating the soft ROI benefits of new call center software.  It would be wise for them to query customers prior to and after the upgrade to determine if there is an improvement in customer service satisfaction ratings, current brand perceptions, and willingness to recommend the product/service to others.  It can also be determined if resolution times are shortened (hard), if there are increased up-selling opportunities (soft/hard), and whether fewer customer service employees are needed due to improvements (hard).
• To measure implementation pain, a company could evaluate expected pain across departments – those performing the implementation and those expected to utilize the new program – vs. other options.   In The ROI on IT investments, it is stated, “For many IT projects, the resulting value does not occur immediately but rather over a period of time.  Some of the other factors include how many people will be affected (either positively or negatively) by the investment, and how often the new application/system will be used.”
• To measure training pain, a company could evaluate employees’ training experiences currently vs. that in a new program.  They can be interviewed post-training for feedback on how they feel about the new program, effectiveness of the trainer, persisting product/service confusion, difficulty using the program after training, and other qualitative measures.
• To measure improved functionality, a company could evaluate, in advance, those functions that will be made available in the new product/service, however, those benefits won’t be fully realized until it is in the hands of its users.  They could survey (heavy/medium/light) users of the product/service to provide feedback on how the new functions have affected them (positive/negative) and suggestions for further improvements.
• To measure improved employee morale, companies can conduct regular employee satisfaction surveys, which has the added benefit of sending a message to employees that they are open to receiving input and their opinions about likes/dislikes/challenges are valued.  Every employee should be included, or else a self-selected group of disgruntled employees may have the loudest voices and skew results.
• To measure increased employee commitment to a process, employees can be interviewed to uncover reasons why a desired process is not being followed.  It can then be determined whether implementing a new program is likely to increase adherence.  Policy-breakers can be engaged in evaluating the new program, sending the message that this issue is important to management and hopefully increasing adherence once the new program is in place.  Post-measurements of adherence can determine success.
• To measure optimization of resources (labor, space, etc.),  measurements should be gathered before and after changes are made.  Taking labor as example, certain departments may be over-worked and putting in long hours,  resulting in hard ROI losses if on an hourly wage, and certainly in soft ROI losses with decreased employee satisfaction.  Reconfiguring department and/or job assignments could improve this, thus potentially improving both employee and customer satisfaction.  Taking space as example, in There’s more to ROI than meets the “I” it states, “Installation of a new transportation management system might lead to improved freight billing, better route management and denser loads – all very real improvements, albeit tough to quantify.”  In this example, if shipping containers were packed differently to improve efficiencies, it could lower shipping costs (hard), and customer satisfaction improvements could be made due to receiving shipments faster or at a reduced rate (soft).
• To measure improved billing, employees and customers could be interviewed to determine billing problem areas.  A new billing system could improve accuracy resulting in faster payment, and reduce stress (soft) and man-hours spent (hard) by sales teams who have to correct statements with the billing department.
• To measure effects of decreased carbon footprint, it can be determined, for example, that a grocery store that replaces its lighting equipment with a less carbon-emitting option can result not only in cost savings (hard), but also in happier customers who prefer less harsh lighting and patronizing eco-friendly retailers (soft).
• To measure increased collaboration, a company has to know what type of collaboration they are looking to improve.  It can be increasing customer engagement via their own online community, or employee collaboration using a CRM (Customer Relationship Management) solution or even a Wiki.  As example, in Quantifying Your CRM Investment, it states, “Measuring a CRM solution’s ROI can be a daunting process…a piecemeal approach involving smaller projects, however, can allow companies to easily measure factors such as increased call-center efficiencies and improved sales response times.”
• To measure improved competitive position, it has to be evaluated whether a new program can create efficiencies that allow a company to better compete. In The Business Case: The Hard Realities of Soft Benefits, it states, “Wal-Mart’s decision to employ [a cleverly automated logistics system] was not justified with hard benefits…[but] led to an eventual takeover of retail leadership from K-Mart, [which] is a prime example of a ‘competitive-edge-based’ soft benefits business case reaping hard benefit rewards.”
• To evaluate improvements in confusion against competitive products/services, a research survey may be conducted before an ad campaign to determine the competitive landscape, the brands in that category that stand out and why, competitive brand perceptions (strengths/weaknesses), and differentiating strengths of the company’s brand.  Post-campaign, a survey can again be conducted within the same target market(s) to see if these measurements have improved.
• To evaluate increased customer satisfaction/loyalty, a research survey may be conducted to determine customer satisfaction measures, how well the brand’s products and competitive products fit into their lives, whether they would recommend the brand/product to others, and likelihood to switch to a competitor’s brand/product.  These  measures can then be monitored over time, in conjunction with the measures in the above bullet, as part of a brand tracking study to determine key drivers of loyalty, likelihood to use/purchase/recommend, monitor awareness/image/value-add trends over time, and provide a perceptual map of the company’s brand vs. competitors.
• To measure exposure of your company to new, potential clients, it really depends on the marketing activity, but some soft ROI measures are:  number of business cards obtained, number of calls/meeting made (tied to a particular activity), number of people who view a presentation, source given for a sale, number of people who register for an e-newsletter, unique visitors to a website, number of responses to a blog posting, number of pingbacks (links) to your blog posting and the traffic they create, number of requests for more information and proposals, amount of daily traffic past a billboard where your ad is located, number of listeners to a radio program where your ad is run, number of incoming calls to a unique phone number, number of people who submit a promotional tracking code with their order, number of people who download a whitepaper, and so on.

In summary, I quote again from The Business Case: The Hard Realities of Soft Benefits, which says, “You need to believe in the power and relevance of soft ROI benefits. Many of the world’s greatest business success stories are built on the back of courageous business-case creators who convinced…executives that ‘hard to measure’…investments don’t automatically mean ‘bad’ investments.”

Happy ROI hunting!

Related posts:

1. The Softer Side of Marketing ROI

One good way of arriving at social media metrics is postulated by Heidi Sullivan of Cision Blog: “There are two basic types of ways to measure your impact on the Web: passive and active.” Furthermore, she attempts to break it down into the five senses: sight (where are you seen), sound (who’s talking about you), scent (do they stick around to “smell what you’re cooking”), taste (can they taste what you’re offering through search engines) and touch (are they taking the next step to touch others with your information).

Going back to the passive vs. active concept, here are metrics she suggests as well as from other sources (numbers refer to sources at bottom):

Passive

• Number of unique visitors to your blog.1
• Monthly site views aka page views.1 – Definition: Request to load a single HTML page.  Page views are only important to the degree they play a part in a site’s revenue model. If a site earns much of its revenue from advertising, then page views are important because of their contribution to ad inventory. If a site only earns revenue on sales, then page views are not a key statistic.
• Number of page views per visit.6 – Try landing people on an engaging page that funnels them through a messaging sequence that builds your brand and escalates sales. Measure the results and optimize the path that gets people to the end of the sequence. Also, measure the lift in total page views of your site’s high-value product pages.
• Monthly unique sessions.1 – Definition: In tabulating statistics for Web site usage, a user session (sometime referred to as a visit) is the presence of a user with a specific IP  address who has not visited the site recently (typically, anytime within the past 30 minutes). The number of user sessions per day is one measure of how much traffic a Web site has. A user who visits a site at noon and then again at 3:30 pm would count as two user visits.
• Number of return visits.6
• Search trends.7

Active

• Number of influencers (track who they are for targeting) that share your content through inbound links, citations, tweets, viral videos or other forwarding of information that result in transactions.1,4,6 – put a call to action in your campaign that will lift this metric.
• Number of company/brand mentions in blogs, on Facebook, MySpace or Twitter, as gauged by a social media monitoring solution, especially when supplemented with sophisticated sentiment analysis that discerns positive brand mentions from the negative. 1,7
• Number of people clicking on your images, watching your videos, using your widgets, and spending significant amounts of time on your site.1 – by tagging videos and applications, companies can track each occurrence of sharing and estimates frequency of exposure to particular media.6
• Number of and which keywords/other sites referring visitors to your content.1
• How much money social media has saved or created for your brand: How many issues that you solved, questions that you answered, leads that you created, products that you sold, call volume that you decreased, etc., through social media engagement versus traditional resources.2
• Time spent across an entire campaign.3
• Click rate [on an ad].3 – not the best metric to use.  People can accidentally click and then drop off, or they can click and see it’s not for them and drop off.
• Interaction rates [with an ad].3 – may be influenced by the creative and not a true representation of their interest.
• Conversion rates – doesn’t take into account return conversions or other offline results, e.g. visit to a store for further research.
• Time spent throughout cross channel engagement with the brand – forecast the number of touches a customer can have with a brand and the resultant amount of time spent with the brand, e.g. total number of exposures, visits you’ll drive to the site, increase in total mentions that can be measured with social media monitoring tools.3
  • Once you understand the total touches, you can either measure directly or assume through general patterns what the time spent is across each of these vehicles, and then create a cumulative time spent for the campaign. When you break down the individual media vehicles, time spent is actually quite easy to report on.3
• Lifetime value of customers based on their purchasing activity, which could be higher depending on their level of social media influence, e.g. if a customer is worth $9 dollars alone, but that person has 500 Facebook friends, and is able to drive even 1% of them (5) to make a purchase, that individual’s value could be as high as $54 dollars.4
• Number of people who you capture data from – Eyeblaster has found that the ability to capture data within a banner is nearly eight times more effective at addressing conversions than click-through rates (CTR), revealing that consumers are more likely to fill in a banner than click on it.5
• Number of people who opt into your e-newsletter/email updates (e-newsletter metrics to be discussed under separate, future posting).6
  
• Number of people who download materials from your site.6
• Number of phone calls you receive and source.6
• Number of people that share comments and opinions.6
• The impact individuals exert on wider audiences – a combination of data obtained from buzz-tracking with data from surveying (see below), to determine the probability of viewing buzz by taking into account the volume of relevant posts and amount of time spent by panelists on a website.7

And there are also metrics that can only be obtained via surveying, which is what the company work with, C.A. Walker, does:

• Awareness.
  
• Interest.
• Desire.
• Lifts in brand awareness and attitudes attributable to a social media campaign.
• Various actions taken throughout engagement with the brand.
• Usage – may be of a particular website or of a product.
  
• Consideration – may also be inferred from measuring the things that drive people into your (or your client’s) stores.  Actions like store locator queries and rep searches should always be measured and are clear indicators that a future purchase may be imminent.6
• Intent to purchase – may also be inferred from Time spent throughout engagement with the brand. If consumers spend more time than the average, they must be interested in your product or service — and if they are interested, that is a measure of intent.3

If I’ve missed any applicable metrics, please let me know so I can grow this list.

Sources:

1Cision Blog: Five Senses of Online Measurement

2Mashable: Twitter Brand Best Practices

3MediaPost: Time Spent Is The Right Metric To Measure Engagement

4MediaPost: Marketers Search For Social Media Metric

5Eyeblaster: Conversions Remain Important Metric

6ClickZ: 11 Things to Measure Besides Clicks and Conversions

7MediaPost: Media Metrics: Let’s Get This Party Started

Related posts:

1. Tracking Return Conversions
2. Email Marketing Provides BEST Marketing ROI?
3. How To Do Sponsorship Marketing

I came across a company today, Techrigy, with a product called TechrigySM2 that offers this service.  They offer free to monitor five search terms and up to 1,000 results…not per term.  If you want more than that, you’ll pay $600+/month.  I’m assuming they use a sliding scale depending on the size of the company that wants it.

They monitor the following:

• Blogs
• Wikis (Such as Wikipedia)
• Message boards/Forums
• Video/photo sharing website (such as Flickr and YouTube)
• Mainstream media blogs (such as the New York Times blogs)
• Microblogs (such as Twitter, Pownce, Friendfeed, and Plurk)
• Social networks (such as Facebook and MySpace)

And, of course, they offer a whole bunch of additional options such as “Sentiment Analysis,” “Discussion Clustering,” and it all ties into their new parent company’s platform that includes Campaign Management, Web Content Management, Email Marketing and Marketing Analytics tools.

I’m checking it out myself to see what I can get out of it…you should too. One thing that I’ve found it’s great for is to find other bloggers and Twitters who are discussing marketing ROI, so I can follow them.  It’s just too bad they don’t offer a more limited package for small businesses at around $50/month.

No related posts.

“53% of marketing budgets for US companies have increased in the past year, in the face of slow economic conditions. This extra budget is being used to fund high-return Online Lead Generation campaigns, with Email Marketing the top area of spend, with 75% of organizations using it.”

Furthermore, they share a few open-ended responses, one of which is:

“Better comparability between online and offline Cost per Lead has enabled us to shift budgets from off- to online.”

In Email – the most accountable marketing going? the author claims that out of all the marketing channels available, PPC and email are the best to evaluate ROI.  Their reasoning is that other channels only show you the good – when someone takes an action to buy – but with PPC and email you can see who clicked but did or did not buy.  Furthermore, they say with email you can re-target those who did not open, who opened but did not buy, etc., which the author claims gives it an edge over PPC.

Here is the problem I have with these articles’ claims – both were authored by companies who stand to profit from their statements.   This is an important point.

The first article, a press release, includes research from two companies who specialize in and profit from eMarketing.  What is their relationship?  A search reveals that Econsultancy pays Clash-Media nearly $2,500 a year for a Platinum Level listing in their online vendor directory.  Furthermore, they are the ONLY marketing consultant/supplier with expertise in email marketing who is at that paid level.  Does this mean that Econsultancy might be able to be strong-armed by Clash-Media into publishing the parts of the study that best supports their position?  It’s not unheard of for a client to try that sort of tactic, but it’s not something that the company I work with, C.A. Walker, would ever allow.  We certainly welcome companies to commission studies that could be used for press, but facts are facts.  If study results do not support the client’s desired outcome, they know going into the study that this could happen and we will not change or tweak results to suit their intended purpose.

I’m not saying that the research in the first article isn’t accurate, however, the relationship of the two companies raises a red flag.  The other issue I have with this particular study is their statement that “Email Marketing the top area of spend, with 75% of organizations using it.”  The implication is that the most amount of money is being spent on email marketing, which is not what 75% using it means.  75% of the people in my office may be wearing sneakers right now with shoelaces in them, but that doesn’t mean that shoelaces are a top area of spend for any of us.

Lastly, regarding this study, I found online the results from their same study from last year, 2008, which states that “over 50% of marketers’ budgets now spent online.”  That would mean that online marketing is now equal to the size of ALL the money spent combined for broadcast and cable TV, outdoor advertising, direct marketing, magazines and newspaper, specialty advertising, events, and sports sponsorships.  Logically, it doesn’t make sense.  Once again, it seems they used a figure where 50% of the companies checked off that they are participating in online marketing, and they extrapolated that to mean that 50% of their budget is spend online.  Unless the survey asked respondents to share their BUDGET SIZE with them and how that was broken out, which is highly unlikely that marketers would share, this claim does not hold up.

The second article was written by Pure360 who sells email and mobile marketing solutions.  I thought it in poor taste for the author to say that TV advertising is his “pet peeve” because of its lack of accountability.  Television advertising is still one of the most successful marketing channels that there is.  More people *still* watch TV than are online.  The fact that it is difficult to evaluate ROI in no way diminishes the power of television advertising.  Granted, with the increase in use of DVRs the effectiveness of TV ads drops, but advertisers simply have to get more creative to overcome the desire to flip past a commercial.  The problem is not DVRs – the problem has been, still is, and probably will continue to be – bad and overly repetitious TV advertising.

The author really needs to have a larger view of engagement metrics across all channels before he could possibly ever argue that email is the best.  That’s actually why I put this blog together, because it takes a serious study of these matters,  over a great deal of time, to be able to draw any conclusions about which is best and what metrics to use for what channel.  What I plan to focus on next is exactly this – how do we best measure engagement across different channels?  What is the latest thinking from the top thinkers (including the researchers who I work with) in these areas?

Related posts:

1. Evaluating the ROI of Your Online Friends
2. New Marketing Program May Increase ROI for Retailers