How to Put a Value on Your CSR Program, in 6 Simple Steps

 Interested in how to measure CSR? See this page for a guide to our coverage.

People always want to know how to measure “the ROI of CSR.” The answer is pretty simple. You can’t.

To understand why, take a look at the classic ROI equation:

Start with the easy stuff, the Cost. Let’s assume your CSR department has an annual budget of $1 million. You could just use the entire budget, but that assumes that all employees in the department do nothing but CSR full-time all year. If that’s the case in your organization, you’re all set. But if you’re like most departments you probably help out on a variety of projects, not all directly CSR-related. In which case you need to know how to allocate what percentage of staff salary goes to CSR vs. anything else. You would also need to account for the volunteer efforts of any other staff that might get involved. Another tricky part to calculating the full “cost” of a CSR program is how much of your efforts, if any, is tax deductible. Any tax savings are entered on the Gain side.

Now let’s talk about the Gain, which is whatever return your CSR function is intended to provide. It’s complicated because there are several potential gains to consider:

• If the purpose is to make your company more attractive to consumers than the competition, then you will need to calculate incremental sales after you’ve made consumers aware of your efforts. (See the Cone Study for why CSR is a key driver of purchasing decisions.)
• If the goal is to make it easier to recruit talent, then you need to consider any cost savings on recruitment.
• If the purpose is to avoid future crises by beefing up your trust rank or reputation, then you need to put a dollar figure on any reduction in legal fees, assuming you have access to that data.

By now you get the point: it’s so complicated to determine CSR’s costs and gains that it is probably not worth the effort to try to calculate real ROI. Which is why we’re going to talk about how to measure CSR’s value to your particular goals, rather than make a precise financial calculation.

As with any measurement program, it all starts with agreement on the objectives of the program…

Step 1. Agree upon objectives

Regardless of what form of communications you are measuring, the goals and metrics will be unique to your organization. That reality is even more evident in CSR programs, since they are frequently shaped by the priorities of your CEO and your internal culture. For example:

• Southwest’s mission is to give people the freedom to fly, so its CSR efforts revolve around providing tickets and volunteers in the communities it serves.
• Exeter Hospital in Exeter, New Hampshire, set a goal of reducing youth suicide, because that is a major issue in its local community.
• If you’re a consumer company, then your goal may be to generate preference over the competition.

There are lots of good reasons for CSR programs. The challenge is to agree on goals for your particular program(s) that are SMART: Specific, Measurable, Attainable, Relevant, and Timely.

So set up a meeting with senior leadership. Don’t let anyone leave until you have consensus on what the goals for CSR are and what everyone expects for measurable outcomes.

Here are some suggestions for goals, outcomes, and appropriate metrics:

Step 2. Understand your audience

According to the latest Cone CSR Study, what has changed the most in CSR’s impact on consumer behavior and perceptions is how people define “responsibility.” According to the report, “Today’s consumers don’t just want environmental good deeds, they expect companies to take actions that ensure the welfare of employees, other consumers and the global community as a whole.”

If done correctly, CSR can be a powerful motivator of audience behavior and opinion. Done incorrectly, it is likely to be called out as greenwashing and could backfire by tarnishing your reputation. So it’s important to understand your audience, what will influence them, and how they perceive your efforts at social responsibility. Whether you like it or not, your customers expect to hear details on how you have impacted their communities.

So the next step is to a get a better understanding of the people you are trying to reach. Ideally, you’ll have data on hand from a brand survey, an employee attitude survey, or some other prior research. If not, it doesn’t take a massive research project to get these answers. A simple online survey will do. Ideally, someone in sales or marketing would have a list of customers and prospects.

These are the questions you will need to know the answers to:

1. From a social responsibly perspective, what do they expect of companies in your industry?
2. What perceptions do they have of you now?
3. How do they perceive you vs. your competition?
4. What keeps them up at night?
5. What are their most trusted sources of information?
6. What would make them act or buy?

Step 3. Decide on a benchmark

The key question in this phase of measurement is: What are you comparing your CSR program to? In some cases, CSR is an alternative form of marketing or PR, in which case you’d want to do an A/B test to compare your results with CSR to prior non-CSR efforts.

If you’re trying to establish preference in your marketplace, you’ll want to compare your efforts to the CSR efforts of your competitors or a peer organization. If you’re measuring a new CSR campaign or approach, you’ll probably want to compare the results of your most recent efforts to earlier efforts.

Step 4. Select your metrics

Your metrics will be based on your particular SMART objectives and what you’re using as a benchmark. For example:

• One of our clients wanted to know if its CSR was having any positive impact on its distributors. We were able to show that the publicity for its CSR efforts was very cost effective, reaching parts of the country that their normal advertising did not. The metric we used was a simple CPM (cost per thousand reached) calculation.
• Another client was involved in a variety of CSR campaigns, all of which had the same goal: increasing trust in the brand. We used a detailed social media content analysis to show that the client’s efforts aimed at improving services for veterans had the highest impact on the client’s trust score. The metric used was a Media Quality Index score based on Grunig’s trust instrument.
• Yet another had launched an awards program to promote STEM education. It received terrific attention in the media, but when we surveyed the target audience only 10% had ever heard of the program. That survey data explained why their program had no impact on customer preference scores.

For more metrics suggestions, see the handy chart in this article, “Evaluating Your CSR? Here Are Activity Measures and Outcome Metrics You Need to Use.”

Step 5. Decide on a measurement methodology

Once you’ve gotten to this step, the selection of a measurement method is pretty straight forward.

• If your objective is to increase awareness, consideration, or preference for your brand, you’ll need to do pre/post surveys of your audience to determine their attitudes.
• If you’re aiming to increase employee retention, you’ll need to survey your employees to see how aware they are of the program. Then compare awareness data with data from your employee engagement survey.
• If you want to generate beneficial publicity or engagement, you will need to first agree on a definition of “beneficial” and “engagement.” We recommend designing your own customer index(es) to reflect your particular needs. Here are instructions for creating an engagement index, and here for a media quality index.

Step 6. Analyze, report, find insights, and repeat

The reason you’ve just put all that time and energy into measuring your CSR efforts is to help you make better decisions on how to manage it going forward. It’s in the analysis that you’ll find that help. Here are some tips:

• If you’ve done a survey of your audience, look for the lowest performing elements. In other words, which group of customers, or specific tactics didn’t work. What can you learn from that?
• Segment your data by age, gender, demographics, psychographics, or any other variable you have and see what you can learn.
• If you’re analyzing media coverage, look for the best and worst quality stories. Where did they appear? Who wrote them? What can you learn from them?
• Look at data ranges. Is there any seasonal variation in the data? If so, is it something you can use for your next project?

Your final step is to make the improvements that the data indicates. Now use what you’ve learned to prepare for the next round of measurement. ∞

(Thanks to David Marcu at Unsplash for the image.)