Four ways to measure the ROI of sustainability
- 09 December 2016
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Marketing strategies for sustainability inevitably involve long-term investments. Justifying them can be tricky, especially when traditional return-on-investment (ROI) measurements are not easy to apply.
“A company can measure anything but it cannot measure everything,” says marketing consultant Mark Stapylton, president of Brand Panorama. “Some items, such as efficiency improvements, can provide fast evidence. But that’s not the case when the kind of long-term investments that sustainability requires are being made.”
Broadly, there are four areas of effective ROI measurement:
- Brand ROI: Assessing the return on brand in terms of Customer Lifetime Value. Brands that successfully adopt sustainable values gain more customers and those gains can be measured according to loyalty. If consumers believe the brand’s values, then measurements of their behaviour and attitude will be more positive.
- Talent ROI: This is an ROI measurement inextricably linked to the concept of “doing well by doing good”. Being a good company to work for means being able to employ the highest calibre of staff, who will typically stay for longer. Companies can measure this by, for example, including questions about sustainable business practices in employee appraisals and satisfaction surveys.
- Reputational ROI: According to the Reputation Institute, sustainability now epitomises a company’s reputation. This is one reason why BMW has come top in the Institute’s Global Rep Trak study for two of the last three years. “Sustainability is part of our identity,” says BMW chairman Harald Krueger. Measuring the financial ROI on reputation can be two-fold. First, through a survey-based measurement that can inspire shared-value initiatives. Second, by a real-time analysis of earned media – the value of content generated by editorial, digital or word of mouth. The most powerful measurements probably emanate from social media monitoring tools.
- Initiative ROI: Marketing teams need to analyse specific sustainability programmes or initiatives for their efficacy with more custom-designed metrics. Rather than focus on subjective measurements, such as brand behaviour and customer attitude data, ROI needs to be seen with greater results-based specificity. How have healthier ingredients lowered rates of obesity? How are measurements of air quality directly related to the use of greener engines? The end result is what holds real ROI meaning.
If you'd like to learn more about the concept of ‘ROI’ , and the key metrics to use when measuring the effectiveness of your marketing sustainability efforts, check out our Introduction to Marketing Metrics and ROI course.Back to all