Measuring Success:
Both externally and internally
March 2003
SEARS, ROEBUCK AND CO.
Agenda
Measuring external communication

Linking public relations to sales

Focusing on ROI
Measuring internal change management
communication


Scope of the Conversion
Measuring associate understanding and
attitudes

Customer and financial measures

Conclusions
Keep it simple
Revenue - Costs = Profit
Simplifying further...
Marketing Communication
Media Relations
Revenue Increases
Events, Publicity, etc.
Crisis Communication
Investor Relations
Etc.
Cost Control
Typically measurement...

Stops at awareness

Often stops short of awareness

Measures output. Not impact.

Is often compared to advertising


Ad equivalencies are the wrong measure
No measurement of impact, change in attitude
or behavior
Do they believe?



Businesses want to measure behavior change -- Are
they buying?
Are customers buying your products and
services?
Are employees buying your messages?
Clipping and Message Analysis

Can be a useful management tool

Measures activity and output of PR group

Measures whether key messages are being seen

Helpful in gauging whether coverage is negative or positive

Identifies positive and negative bias of media

Can calculate cost per impression

But, it is not a measure of ROI or behavior change
Taking clippings further...



Link to changes in awareness, preference or
behavior (purchase)
What is the impact on revenue?
What is impact on cost control, associate attitudes
or other intermediate measures?
Effort that never
gets printed, broadcast
(0 impact)
Budget funds PR
activity
($)
News Releases
Events
Media calls, etc
(Effort)
(Difficult to measure)
Percentage of effort results in publicity
Most people never
see the article or
hear the broadcast
(0 impact)
Those not in target
audience not likely to
purchase.
(minimal impact)
Publicity
(semi-controllable
and measurable)
Measure is circulation
or viewers
(MediaLink)
Target Audience
Consumers who see or hear the publicity and are
part of the intended audience for message
(difficult to measure, but assumed to be
a fraction of the circulation number)
Businesses keep score with $
What is the relationship between a $ invested in PR and
company revenue or profit?
Customers make purchase
Measure is revenue $
(SPRS report)
Subtract customers
who purchased without
benefit of the publicity
(test market vs. control
or incremental above
baseline) (AdEffect)
Consumers who take
action as a result, and
visit a store with intent
to purchase
(Traffic - no current
measurement device)
Subract cost of all investments,
leaving profit $ tied to PR program.
ROI is how much of this is generated
for every dollar invested at beginning
No impact on
consumers
“I still won’t
shop.”
Consumers who have an
attitudinal shift -“I will shop as a
result of that story”
(measurable-- Oprah and
BrandKeys)
Those who read
the article, intend to
shop, but never
follow through
Those who don’t
find what they
need or want
and make no
purchase
Measures existing
Does it work?



Can you identify changes along the path?
Is there a link between public relations events and
revenue?
Two examples of how changes have been
measured at Sears and how you can design a
model for your business.
Background

One placement on the Oprah show involved providing
Christmas gifts for foster children in a small Texas
community.

Sears provided all the gifts for 100 children

Oprah exclaimed “We love Sears!”

Can this be measured?

40
35
65% agree vs. 58%
30
25
20
15
10
5
0
Shift came from all rating
levels
Sears Pre
Sears Post
Disagree

Slight positive shift
following the broadcast
Neutral

Agree
Sears is high quality company
Sears does good things for community
40
30
20
10
0
Sears Pre
Sears Post
Disagree
Almost a five-fold increase
in number of those
agreeing completely
50
Neutral

Following broadcast saw a
huge shift to positive on
this question
Agree
Completely

60
Plan to shop Sears for Holiday
40
30
25
20
15
10
5
0
Sears Pre
Sears Post
Disagree
Increased to 70% vs. 59%
before show
35
Neutral

The show provided the
incentive to move viewers
from neutral to positive
intent
Agree
Completely

“I plan to shop at Sears for the holidays.”
Neutrals dropped from 73
respondents to 52, and
somewhat negatives dropped
from 29 to 18.


The strongest negatives
remained the same.
The positive side of the intent
to shop increased from 178 to
210 respondents.
Sears Pre
Sears Post
1
35
35.6
2
24.3
34.3
3
24.3
17.3
4
9.6
6
5
6.6
6.6
35 35.6
34.3
Percent
24.3
24.3
17.3
9.6
6
6.76.7
Sears Pre
Disagree

40
35
30
25
20
15
10
5
0
Neutral
The Oprah PR placement provided
the additional incentive needed to
move some viewers from a neutral
position to a positive intent to shop at
Sears.
Agree
Completely

Sears Post
…estimate what you’ll spend at Sears during this
holiday season.

We saw earlier there was a positive
shift in the number of people
saying they planned on shopping
at Sears.


About 10% increase in
positive intent.
If we assume the mid-point for each
range, and $600 for the over $500 data,
then these 300 respondents represent
an average of $195 per respondent after
seeing Oprah, versus $140 before.
60
50
40
48.6
Percentage of Respondents
40.3
35.6 34.3
30
17.3
20
5.6
10

An increase of +39% per
shopper in the amount they
estimate they’ll spend at Sears.
2
6
6.6
3.3
0
Less $100
than
to
$100 $250
$251
to
$350
Sears Pre
$351 Over
to
$500
$499
Sears Post
What was the impact?



Shift in attitude led to planned spending increase
of $40-million
Discounted by 2/3 to account for intentions that
never come to fruition, the actual spending
increase may be about $13-million
Subtract costs and calculate ROI
Fashion Footwear and NYT


January feature placement in New York Times -New York/New Jersey edition
What was the impact in that market vs. a control
market and vs. national?
The New York Times
National down
Week 1
Week 2
Week 3
National

Chicago
Chicago down
York

New
Week following placement
NY and NJ markets were up
vs. year ago.
New

25
20
15
10
5
0
-5
-10
-15
-20
Jersey
Fashion Footwear Results
Footwear Conclusions




A single placement in a credible publication made
a dramatic difference in sales compared to both
national and comparable market
The only variable that changed that week was the
New York Times placement
Translated into measurable dollars
Cost of placement vs. incremental revenue
increase gives ROI
Connecting the dots...


Two examples measure the impact of single
“communication events” -- not the cumulative
impact of entire program
The right events can have a significant positive
impact


Activities and events which do not have
positive impact are suspect
Impact can be either a shift in attitudes or actions
Measuring internally


Can the same principles be applied to an internal
audience?
How do you define success in a large change
management communication program?
Background

In late 2001 in Full Line Stores…

Announced 4,000 layoffs

Announced Productivity Improvements

Sears. Where Else? introduced

Morale is not at an all time high
Measures going in wrong direction...
As s o c ia te Attitu d e s
% p o s it iv e
80
75
U nder st and
S t r at egy
70
Feel good
about f ut ur e
65
60
Making
changes t o
compet e
55
50
1999
2000
2001
Conversion Objectives

Improved customer satisfaction

Easier to shop

Easier to operate and easier to support store model



Clear lines of accountability throughout the
organization
Improved execution on in-stock, in-store marketing,
customer service
Improved profitability
Communication Principles

Open and honest

Share information as soon as it’s available



Focus on key audiences, while making
information available very broadly
Credibility is key

No sugarcoating

No promises we can’t keep

Focus on the end result and how to get it
Use existing communication channels where
possible; emphasize personal communication
Communication Objectives




Gain alignment among senior management for the
changes that will be necessary
Create high awareness and understanding for:

Why change is needed

What changes will be made and why
Win support for the dramatic changes, despite
announcements of layoffs and new job
descriptions and accountabilities
Focus on new model: easier to shop, easier to
operate
Communication Tactics

Identify and leverage credible channels

Senior leadership meetings - FLST initiated

One-on-one meetings with leadership

Town Hall meetings (existing and new)

PMO Website

Regular features in S Journal, S Update

Training meetings and support materials

Detailed conversion manuals

Communication materials provided to DGMs for
cascading through stores organization
Communication Tactics (cont’d)





Issues and questions fielded in multiple ways,
with response ASAP
Video Updates to field midway through conversion
In-store meeting materials for consistent
messaging
Input into training materials to reinforce new store
model of excellent customer service
Ongoing communication through newly defined
MAP and Weekly Updates
Measurement

Baseline MOC results reviewed

Key questions pulled for ongoing pulse surveys

Surveys following major communication events


Weekly review of Q&A and Issues raised to
identify gaps in communication program
Informal discussions within stores organization

Didn’t overreact to anecdotal information

Checked feedback against data
Performance Improvement Program
Projects that have a direct impact on the store were
grouped together into a synchronized field
“Conversion” calendar
Supply
Chain
Marketing


Ad
Production
Promotional
Profitability



Flow
Optimization
Integrated
Order
Management
Liability
Inventory
Store &
Field
Strategy




Lands’ End
Initiative
Covington
Roll out


Center Core

Home
Fashions


Footwear

Appliances

Store & Field
Organization
Store
Activity
In Store
Marketing
Labor
Management
Sign
Creation
HR

e-Learning

e-Recruiting

Associate
Services
Conversion Scope
Field
Organization



Store Structure
District Structure
Region Structure
Service Levels

Merchandise and Customer Assist

Consultative Selling

Center Aisle Cashiering
Activities and
Processes
Store
Environment










Number of
Stores
Center Aisle Cashwraps ALL
Signage and Fixturing
ALL
Four Zone Merchandising ALL
Appliances
101
Center Core
543
Home Accents
557
Mattresses
32
Men’s Big and Tall
349
Open Sell Shoes
216
Tool Territory
149

POS Signing

Ad Setup/Take-down

Replenishment

POG/ZOG

Liability Merchandise

Labor Management

e-Learning

e-Recruiting
Note: initiatives will be implemented in all stores except where a
specific number is given
Communication Output





PMO website has had more than 2-million hits
during conversion; Of the 24,000 visitors 23,000
are from the field.
PMO base conversion has been successfully
implemented, and has been widely supported
Articles every month in corporate publications
Communication is becoming embedded as a core
leadership responsibility in the stores
organization
Web site is becoming an operational tool more
than information only tool
Communication Results - Associates


Associate attitudes (all store associates) are more
positive than they have been since 1998.
Understanding of strategy is higher than it has
ever been.
As s ociate Attitudes
% p o s it iv e
80
75
U nder st and
S t r at egy
70
65
Feel good
about f ut ur e
60
Wave 3
Wave 2
Wave 1
2001
2000
50
1999
55
Making
changes t o
compet e
Store management is even more positive ...

Assistant Store Managers and hourly leads feel good
about the future, believe we are making the
changes necessary to compete, and understand
our strategy.
100
90
Understand
Strategy
80
Feel good
about future
70
Making
changes to
compete
60
50
Wave 1
Wave 2
Wave 3
Customer feedback is also encouraging


Customers reacted favorably to the new store
environment
Store revenues were on target for Holiday
Financial Benefits are on track

Conversion costs stayed on budget

Field operating costs met planned savings

Capital expenditures within budget

Communication had no incremental budget increase

Full Line Store profitability is up more than 30%

Sears posted record earnings in 2002
Productivity



Objective is to create a culture of continuous
productivity improvement
Ongoing process of continuous improvement in
efficiency and effectiveness
Ultimately, time will tell

Can we continue to improve both customer
satisfaction and productivity?
Conclusions





Looking at measurement from the perspective of
the CEO will help clarify what’s important
Establishing a logic model for communications
and measurement of results is good start
Building evidence over time will help improve
ability to make fact-based decisions about public
relations and communication investments
In some areas (such as marketing public relations)
we can remove the mystery of the craft and earn
respect of management team on their terms
There is still much to do
Questions?
Tom Nicholson
Sears, Roebuck and Co.
[email protected]
SEARS, ROEBUCK AND CO.