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How Public Relations Contributes To ROI

People invest in companies with the ultimate goal of making a return on investment (ROI). Traditionally, responsibility for the company’s ROI was the expressed mandate of sales and
marketing. Today however, all the company’s business units are being called to account for
the company’s profitability, whether in the form of budgetary control, research and
development, public relations or some other strategy.

Since the marketers and the salesforce focus on product development and sales, measuring
their contribution to the company’s success is a no brainer. We public relations practitioners
might however argue that our contribution to the company’s success is as much as that
generated by sales, even if not as easily measurable. Nevertheless, there are at least four ways
how Public Relations contributes to ROI.

1. Lower Employee Turn Over
We take for granted the cost of a new hire. A number of thought leaders on this however
suggests that the cost associated with recruitment should inspire companies to pay better and
improve employee satisfaction. A good internal communications strategy points to staff issues
not made obvious by any other function. These are issues which if left unnoticed could easily
lead to employee dissatisfaction and departure.

Consider something as simple as special parking for pregnant employees, for example. Ok it was Facebook’s Sheryl Sandberg who gave me that idea but my communications teams within different organizations have been responsible for a radio being placed in nurse’s quarters, coffee machines for visitors and staff, the introduction of gyms for staff and family and a host of other tactics that have contributed to staff satisfaction. These tactics are not linked directly to sales and maybe seen as added expenses to most, but staff retention saves companies millions of dollars each year and hence helps to maintain a healthy bottom line.

2. Create a Favorable Environment To Do Business through CSR

One of public relation’s most important functions is building relationships with stakeholders to facilitate smooth business transactions. Contrary to what we promote, companies engage in corporate social responsibility (CSR) initiatives not just because they are good corporate citizens but because these strategies create a favorable climate within which they can operate. Take Starbucks and their multi million dollar ethical sourcing initiative. They promote that they can “have a positive impact on the communities they serve.” Scotia Bank declares that their “CSR strategy includes five priority areas: Corporate Governance, Customers, Employees, Environment and Community Investment.” Johnson and Johnson says that their ongoing goal is for “increased transparency in communicating our sustainability efforts in areas such as climate change, human rights and our Healthy Future 2015 goals.”

All these initiatives pave the way for companies to ply their trade in remote countries or in communities. These initiatives help them to make a favourable market entry and win hearts and therein overcome those obstacles that would likely make doing business difficult or impossible. The public relations function, a critical component of CSR, therefore shapes the operating environment for the company and easily can measure up with the sales strategy in credit for bringing in the money. 

3. Advertise Products Directly
But public relations is also easily aligned with the advertising function. Public relations
practitioners are the story tellers so marketers usually leave it up to them to tell the story of the
products. Often during trade shows and speaker engagement on products, this type of content
heavy advertising is most times delegated to public relations. Public relations therefore is also a
major driver of sales.

4. Managing Reputation and Averting Crises
Then there is the reputation management function. Public relations practitioners do much to
avert the cost of legal fees. An effective crisis communications strategy can smother a crisis
before it happens and in the event that it does happen, the public relations team can do much
to mitigate the cost of the damages. Most important is the cost of the company’s good name.
What is the cost of repairing a reputation? How can you win back customers after they have
lost confidence in your brand?

I submit then that a robust public relations strategy is the best insurance for your investment.
It not only gives you a return, but offers invaluable protection.

Originally published in May 30, 2016 edition of the Barbados Business Authority

For more on how Public Relations can help drive business success click the link below to download our eBook.

Public Relations: A Driver of business success by PRMR Inc. Barbados

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