Tuesday, March 24, 2009

Expanding the definition of Return in your ROI

I was chatting with a local coffee shop manager about the latest social responsibility initiatives he was organizing out of his store.  He expressed the benefits in terms of customer relations, where it clearly strengthened the bonds of loyal customers, but also provided a great venue to attract new customers into the fold.  So I asked him what kind of return on investment he was getting from his corporate philanthropy.  With the expense of monetary donations, volunteer hours, and gifts in kind, he clearly stated he was still getting a positive return.  But this is where the conversation had its key point.
Return is about more than the money coming into the cash register and to limit our value of cause marketing to this one quantity is highly inaccurate and sells these initiatives short.  As his team built a Habitat for Humanity home, it was not with the intent of marketing to the new homeowners in order to persuade them to patronize the shop.  Honestly, he acknowledged he wasn't likely to see anything more in the cash register as a direct result of customer growth in that neighborhood.  So where was the positive return?
As companies take on cause marketing initiatives the benefits are greater then the external result that rewards an organization, community, or individuals.  There is also a very real internal benefit.  Experience shows that the staff increases their own job satisfaction and loyalty, which decreases employee turnover and the resulting HR training and administrative costs.  Furthermore, the bonds between fellow employees strengthens and leaves the workforce working more efficiently and effectively, reducing lost productivity due to personality conflicts, absenteeism, and low morale.
This in no way discounts any return that does come in a cash form from increased customer traffic, but we must have the awareness to account for all the benefits incorporated in order to accurately determine the value of each cause marketing initiative.