How To Use Social Return On Investment (SROI) To Measure Marketing Effectiveness

SROI

 

This article demonstrates how to use Social Return on Investment (SROI) to measure marketing effectiveness. SROI is process used to measure the impact of “social campaigns” on society as a whole. It was developed using ‘cost benefit analysis’ principles. A key feature of SROI is the provision of a monetary value on an outcome. The overall SROI impact is expressed as ratio, i.e., 5:1 which means, for every £1 invested £5 worth of social good is created.

This article investigates how the concept of SROI can be applied to marketing, more specifically how campaigns can be measured and monitored. It should help marketers justify their spend to the business and/or provide an argument for more investment.

The SROI process will allow marketers to evaluate either an actual campaign or forecast the impact of a future campaign. It is based on seven principles:

  • Involve stakeholders.
  • Understand what changes.
  • Value the things that matter.
  • Only include what is material.
  • Do not over-claim.
  • Be transparent.
  • Verify results.

Lets now look at these individually.

Involve Stakeholders.

To be successful in marketing an organisation needs to ensure that every element of the marketing mix is maximised: that’s not just the 4Ps but the whole extended marketing mix. As an example, the “people” element of the extended mix can be used by marketers to identify the key stakeholders and their impact to the process. It should include:

  • The sales team.
  • Customer services.
  • Frontline staff (people with direct contact with customers).
  • Backroom staff (people with indirect contact with customers).
  • The customer.

In most cases the marketing cost will be the associated education that is provided to the staff. This should be relatively easy to value as it would be a distinct activity within the business. The difficulty of the SROI process is its ability to gain a customers value of the process. So how do we do it? This is where we need to establish “what changes” or mapping the outcomes.

Understand What Changes.

Understand what changes or mapping the outcomes is a research process used to identify the marketing campaign’s impact. It can be qualitative or quantitative (using focus groups, interviews or surveys): the trick is to implement a practice that is not too costly, some form of online questionnaire is probably going to be the best and most efficient method. The cost of measuring the outcomes should also be proportional to the actual marketing campaign: it is pointless to put in expensive procedures that far out way the actual cost of the process you are looking to measure.

Value The Things That Matter.

Once you have established the outcome you will need to prioritise them, select those that really matter then value them. Depending on the type of outcome you will find that it will either be objective or subjective. As an example a digital marketing campaign that is linked to an e-shop can be objectively reviewed through the actual sales where as the training giving to a team of waiters and waitresses is more subjective (some may say why is training part of marketing, well it is a way of differentiating the brand from its competitors and instilling the brand ethos into staff).

In my opinion, the best way of valuing these subjective factors is to give the overhead value that was attributed to the product / service costing. That way if there are any arguments about the value you can at least say that it is how the accountants have valued the brand.

What about if it is an add in a magazine or piece of copy on TV or Radio? Static adds like posters or magazines should have a “call to action” with an associated promotional code or website landing page. These can be easily measure, even if they are just enquires: you should have from past experience an idea of what percentage of enquires turn to sales and the average sales value. TV and radio copy impact should be related to actual sales following the airing.

Only Include What Is Material.

The marketing process can be very complicated if you are looking to measure every element. Focusing on specific elements is likely to be easier, undoubtedly the promotional element is likely to be the one which is most considered. Your trick is to pick out that which is most important to the business and does not over burden you.

Do Not Over-Claim.

Any over-claiming is likely to be associated with the subjective reviews. If you take my advice and base it as a percentage of the product cost then it will be difficult for others to argue against you.

Be Transparent.

Using these steps will allow you to be transparent. You will obviously have to produce a report to go with it.

Verify Results.

Once you have completed the process you must look to verify the results. In the first instance your accountant should take a look at it. There are also a number of other factors that you will need to consider before publishing the results. We will now have a quick look at these.

Deadweight.

The term deadweight refers to the amount of outcome that would have happened if the marketing campaign did not happen. Basically what we are saying here is the outcome should be an incremental impact of the activity.

Displacement.

Another term for displacement is cannibalisation. What this does is look at the impact on your other brands. If you run a campaign that increases sales of brand X by 20% but reduces the sales of brand Y by 25% the business will need to make a strategic decision on its value.

So there you have it, a very quick review of how the concept of SROI could be used to measure the effectiveness of marketing campaigns.

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Dr Alan Shaw is a Senior Lecturer and Marketing consultant focusing on a range of sectors. His main interests are in strategy development, social marketing, digital marketing, advertising, consumer behaviour and marketing application.
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