PR NEWS is pleased to introduce an inside peek at measurement trends in some of the nation's leading Fortune 500 corporations. What follows is exclusive data and analysis relating to measurement practices in corporate communications, courtesy of Best Practices in Corporate Communications, a division of the Public Affairs Group in Washington, DC.
Overview
In the current competitive environment, we lead, measure and change - or get out of the way and watch others take "a seat at the table." Today's corporate communications department leaders view measurement as a critical component in their arsenal of management strategies. Measurement is being applied increasingly not only to the overall communications function, but also to each of the functional areas. Measurement is critical to communications effectiveness and the proving of Return on Investment (ROI).
Today's senior leaders feel that their questions about communications effectiveness deserve answers. How is the overall department impacting business and operating results? Can the communications staff show a correlation between their activities and financial performance? How do they impact profitability? What will drive each function to maximum effectiveness? Is a better allocation of resources needed? How do we measure our reputation? How do media relations, employee relations or customer service communications impact our stock price? These are the questions being asked today. They will become even louder tomorrow.
In a corporate-wide economy of scale, we witness that communications is now much more integrated with marketing, human resources, customer service, and with the CEO and CFO in critical areas such as investor relations. Communications has risen to a new level of strategic importance.
-Edie Fraser, President, Public Affairs Group, Inc., Best Practices in Corporate Communications
Measurement Trends
Commitments and Budgets Rising
- 98% of respondents said that the alignment of business and communications goals requires measurement and research.
- 88% include measurement and research in their communications budgets.
- 88% participate in benchmarking.
- 82% use focus groups
- 5% of the average communications budget (among BPCC members) is now allocated to research and measurement.
- (e.g. a $7.5 million PR operating budget devotes $375,000 to measurement).
New Terminology Introduced
- 20% of respondents said they use a coined terminology (such as Allstate's "QLMS") to describe measurement systems, or use common phrases such as "process benchmarking," "performance benchmarking" and "strategic benchmarking."
Staffing Needs Growing
- 30% of respondents reported having designated in-house staff to handle research and measurement.
- In the insurance and telecom industries, 50% reported having designated in-house staff to handle measurement. Note that both of these are service industries.
- Of those companies boasting the largest staff allocations for research, 60% were information technology services (ITS) companies, followed by telecom and utility companies. ITS companies with sales over $17 billion averaged more than four staff for research and measurement.
Walking the Talk
- 100% of respondents agreed that there is a new impetus to demonstrate how communications functions improve the business case or and drive profitability.
- 10% of respondents are using sophisticated measurement processes (e.g. patented systems?)
- 24% said they use ROI to measure communications effectiveness.
No Discipline is Exempt
- Respondents said they are using measurement to gauge all communications disciplines, including employee, investor, media, customer and community relations, as well as special events, technology and Web communications and M&A management.
- Employee Communications ranked #1 as the fastest growing discipline subject to measurement tracking.
In-house or Outsourced?
- 50% of respondents said they consider in-house communications staff responsible for managing the measurement process.
- 50% are outsourcing the leadership of research.
- 75% report an increased use of niche or specialized firms to handle specifics such as branding or employee relations.
Accountability Linked To Compensation
- "Balanced Scorecard" measures are gaining popularity (at least 20 BPCC members have shared information about their scorecard practices). Leadership and communications performance measurements are now tied to compensation. BPCC projects show that as much as 10% of the annual compensation paid to communications managers and executives may be tied to the performance of employees who report to them.
Integrated Measurement Strategies Prevail
- 90% of respondents cited using a combination of tools and techniques, including surveys, focus groups, one-on-one interviews and formal studies.
- 10% of respondents consider demographic or ethnographic studies extremely important.
- Marketing departments spearhead the demographic research in most companies, while communications departments use the data. In the best companies, communications staff are involved in the front end of demographic research.
Spotlight On Specific Disciplines
Employee Communications
- Companies cite employee research as their number one measurement commitment and increasingly use it to measure communications against the business case.
- 99% of respondents said they use employee surveys an average of 1.2 times per year.
- 75% of that number said they are actively engaged with HR in the process.
- 95% of respondents cited the Internet as the most critical new technology component in employee relations. Companies are using intranets to measure employee feedback and input.
- 20% of respondents said they are developing CEO Web sites to encourage interaction between employees and senior leaders.
Media Relations
- 100% of respondents have media relations programs and 95% track results.
- 65 % are now measuring the impact of media through more sophisticated tracking tactics.
- Reputation management is increasingly linked to media messaging management.
Branding
- Branding with technology is the hottest new area of measurement for communications
- 27% of respondents said they were utilizing brand measurement research to gauge either communications, or communications and advertising jointly.
- Brand measurement drives more attention from senior communications officers - particularly in light of recent M&A activity and new market growth. Executives in electric utilities and telecom, and those representing global conglomerates, showed the highest interest in brand measurement.
Special Events
- 22% of respondents said they measure special events and special event impact against corporate goals.
Community Relations
- 70% of respondents said they measure community relations against the goals of the corporation and, when appropriate, the goals of the corporate foundation.
Customer Relations
- 25% of respondents said the communications function now encompasses customer surveys.
- Retention is recognized as the number one goal linked to customer relations, as the average rate of customer turnover is about 20-25% (changes according to industry). Outside surveys indicate that it costs five to six times as much to attract a new customer as it does to retain an existing one. Meanwhile, recent Gallup surveys have shown that customer retention and customer service are gaining ground as CEO priority issues.
Investor Relations
- 68% of respondents said they are tying communications objectives into analyst surveys.
M&A Management
- 8 % of respondents said they are measuring M&A communication, noting that this will become an increasingly important area for measurement over the next several years. (BPCC members report having managed an average of three acquisitions between Jan. 1999-Aug 1999).
- 60% of respondents said they are allocating teams to handle M&A communications - often including representatives of HR and other functions in the process.
Who Controls Measurement?
Measurement today is being managed internally as never before in communications departments, although it is being performed both internally and externally. A look at who's holding the reins:
1. Measurement is now the imperative of strategic communications and the senior communications officer. All of the vice presidents interviewed by BPCC emphasize that they are accountable and responsible for measurement as it impacts their relationships with the CEO and senior management. VPs, in turn, are holding staff accountable in all areas of their communications departments.
2. Many companies are conducting more of their own research internally. Corporate communications executives are making strategic decisions to determine which research is conducted internally and what is outsourced.
3. Integrated teamwork is key to the measurement function. BPCC notes that the most effective measurement strategies often call for collaboration with other departments. Common partners include HR on employee relations; CFOs and I/R teams on financial relations; marketing and advertising teams on branding and customer relations.
4. Outsourcing is strategic. BPCC members indicate a tendency to use major PR agencies to handle tactical assignments. At the same time, agencies are getting a run for their money as specialized niche firms and consulting giants are winning far more measurement assignments in areas such as branding, employee relations or customer relations. Market research and PR firms no longer have the monopoly on research.
Survey Criteria
To gauge the role of measurement in today's corporate landscape, BPCC recently interviewed 100 of its members in the following 13 industry sectors:
- Chemical
- Computer
- Consumer Products
- Electric utility
- Financial
- Health Related (health care and pharmaceutical)
- Insurance
- Manufacturing (other than consumer products and chemical)
- Petroleum
- Retailing
- Technology (other than computer i.e. electronics)
- Telecom
- Transportation (airlines and automotive)
Putting Measurement In Motion
Now, more than ever, senior managers expect PR initiatives to line up in accordance with company-wide goals. The following chart is exemplifies this type of goal setting, using special events as an example:
| Special Events Measurement As One Area of Communications | |
| Objective | Measurement Tool |
| Sales Activities: | |
| On-Site Sales | Actual Sales |
| Mailing List Creation | Cards Filled out/Catalogs Requested |
| Sampling | Samples Given Out |
| Couponing | Coupons Redeemed |
| Display/Demonstration | Event Attendance Figures |
| Entertain Clients | Future Orders |
| Promotion Activities: | |
| Promotional Tie-Ins | Sales/Orders |
| Product Usage | Sales |
| Contest Tie-in | Number of Responses |
| PR Activities: | |
| Media Outreach | Quality/Quantity of Media Coverage |
| Advertising Activities: | |
| Corporate ID | Times Logo Shown on TV |
| Awareness | Pre- and Post-event Surveys |
| Image | Pre- and Post-Event Surveys |
| Target Marketing | Sales |
| Athlete/Celebrity Tie-in | Recognition/Likability Surveys |
| Source: Suzanne Lainson, SportsTrust | |
Benchmarking Basics
Success does not occur in a vacuum and neither does positive change. As such, it's a good idea to measure your own communications effectiveness against the competition. A checklist to follow:
1. Identify what you want to benchmark. Understand your current position; don't just randomly pick a topic to benchmark.
2. Identify the companies to benchmark. Choose carefully. Just because a company has an image as a "good corporate citizen," doesn't mean its programs and practices will necessarily work well for you.
3. Determine the methodology and data collection instruments. Choose relevant measures.
4. Collect the data. Be sure to get the information you want; you don't get a second chance.
5. Analyze data and develop recommendations. Make sure you take cultural issues and other mitigating factors into account.
6. Communicate the findings to management and participants. Generate buy-in from the people who will be impacted by the changes.
7. Develop action plans.
8. Implement actions.
9. Monitor progress, measure results and make adjustments as necessary.
Source: LBG Associates and the Public Affairs Group, Inc.