New revenue is the value that computes with business heads

In the drive to survive, new revenue is oxygen. If you can't predictably help your organization convert financial C02 (expenses) to O2 (revenue), you and your programs are vulnerable to reallocation or elimination by those who need a sure bet.

In the drive to survive, new revenue is oxygen. If you can't predictably help your organization convert financial C02 (expenses) to O2 (revenue), you and your programs are vulnerable to reallocation or elimination by those who need a sure bet.

Recently, many PR and marketing budgets have been slashed as executives weigh what they need to survive. But it's often not a pure cost-cutting move. In fact, most of the time, the reductions imposed on PR and marketing don't drop to the bottom line. They are reallocated to areas the business believes will drive revenue.

Let's take a large b-to-b company that uses a direct sales force and each salesperson costs $100,000 in salary. The company knows that most of these salespeople will produce about $1 million each in new, annual revenue after the first six months. In the CEO's mind, the ROI equation is simple and predictable - invest X, get 10X.

Establishing the revenue contribution of PR - or even marketing - historically has been more challenging. And we've taken some wrong turns in search of credibility. In the minds of many business leaders, when we tout PR's value solely in terms of "brand value" and "reputation," it only moves us further from the most valuable business metric of all: new revenue generation. So, how does more measurement get PR higher up on Maslow's hierarchy of needs?

  • Measurement is about context. Publishing coverage data - however detailed - means nothing to the business because it isn't tied to anything that the business cares about. You must correlate to other data that resides outside PR and marketing.
  • Understand how your business makes its money. If you don't "get" the pain points in your company's sales cycle, you'll miss important correlation points that will help prove your value. Cut back your time with the people who spend money and get to know those who make or count it.
  • See the tradeoffs how your CEO does. PR and marketing compete with every other department for investment, especially when money is tight. Proposals that promise the best revenue ROI win.

Our programs must be so tied to revenue creation that a proposal to cut PR and marketing budgets is synonymous with revenue deceleration. In the end, the most vital metric is neither number of articles placed nor people reached - it's about the money.

Mark Stouse is global communications leader for BMC Software.

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