Measuring Intangibles – Making Impact the Bottom Line

While checking in at Facebook the other day, I got into an interesting dialog with Social Media Consultant Beth Kanter. Beth is also a professional blogger and writes about the use of social media tools in the nonprofit sector for social change. I saw a status update that said “Beth Looking for resources and info about ROI and Tech.” Earlier, I had read her blog post about measuring return on investment (ROI) for intangibles where “love” was used as a tongue in cheek example. So I zipped off a link to a white paper recommended by Chris Brogan called Distributed Influence: Quantifying the Impact of Social Media from the PR firm Edelman.

After getting the link, Beth asked, “What piece of information or insight in this report struck you most? What was the most important learning?” This was my reply:

“I think what struck me most was just the whole idea conceptually of quantifying and measuring an intangible like influence. While I recognize the importance of measurable objectives, I have always had a problem forcing something that is organic by nature into a mechanical straightjacket. I mean, they’re not called “intangibles” for nuthin’!

That said, I realize the importance of discussing ways to measure intangibles. I appreciated this insight from Peter Kim that influence and attention are different. He said that influence is fiscal and long term whereas attention is monetary and short term, and I agree with that. Clicks and page views don’t tell the whole story. Influence is about IMPACT.”

As far as the most important learning, I think Jeff Jarvis and Keith O’Brien made similar statements that it matters WHO we are talking to not how many. Not just who is influential, but who is carrying the conversation, those who are more easily influenced. This includes understanding and possibly even tailoring the message to the influencers, the spreaders, adapters, commentators and readers.”

After Beth posted some of my comments on her blog, I got to thinking a little more about my reply and why I said what I did. Back when I was a community outreach point person at REI, one of the things that I discovered was that the connection between the outreach activity and the bottom line was not that clear, but that the impact was obvious.

We had an educational program that taught basic outdoor skills to customers to introduce them to activities like rock climbing, backpacking, canoeing, cross-country skiing and bicycle maintenance. The idea is, you inexpensively educate your customers on the use of the products you sell and they will want to buy from you, right? One of the classes that always did very well was a course on avalanche awareness. This is an essential skill for people wanting to cross-country and telemark ski in the backcounty, and we often found many beginners taking this course. For a nominal fee, they got a book, an in-store session, and a field session in the mountains with avalanche beacon rental. Now the cost to get outfitted to backcountry ski ($300 -$400 for skis, boots & poles, $200 for beacon, maybe another $100 to $200 in clothing) starts to add up. To measure the effectiveness of our programs, we would track the purchases of each participant in the class for one week before the class and four weeks after the class to determine the associated sales. Though we could not make a direct connection between their involvement in the class and their purchases, it was obvious that the class was having impact because we could see the spike in their buying history.

However, many questions arise when you cannot make a direct metrical correlation between a marketing activity and a purchase. Did they, in fact, buy those skis, or that beacon because they took the class? Would they have bought them anyway? How can we prove definitively, with precise data that the class influenced their decision to buy? The answer, of course is that you can’t. It is only by inference that the class impacted their purchase. And was always clear that it did.

So what does all this mean for marketers, advertisers, and in particular, mission driven organizations? Has the issue of measuring intangibles changed for them with the advent of the internet with it’s clicks and page views? Should they avoid engaging in certain activities, such as social media, because they are not easily quantifiable? Should they only embrace initiatives that can be measured out of fear of not being able to prove their value? That would not only be ridiculous, but it would be bad business. REI’s educational outreach program is the right thing to do. They are educating their members and customers in the safe and environmentally responsible use of the gear that they sell. And they sell a LOT of gear. You gotta make money, but doing the right thing cannot always be measured in dollars and cents. Focus on the mission, measure what you can, and the money will follow. Impact is the bottom line.