In my opinion, one of the things that separate a good supplier from a great supplier is the proactive contribution of knowledge to an industry. This passion for helping the profession learn and belief that a rising tide raises all boats is laudable. Every year I attend the annual IEDC Conference with the hope that there will be e new study available that can gain insight from. I was not disappointed this year at the Houston meeting. My friend Ben Wright, CEO Atlas Advertising, shared the results of a new study entitled “High Performance Economic Development: How Technology and Outcome-based Metrics Will Save Economic Development Investment and Promotion as We Know It.”
Making marketing tactic investment choices based on knowing and measuring how the tactic impacts the deal funnel is something I have been writing about recently.
While I recognize many EDOs cannot afford to measure the cause and effect relationship of every marketing tactic. But, I do believe they should at least be able to logically describe how the tactic impacts the deal funnel. In my experience this isn’t always the case. That is why you so often see the “ask” in a marketing tactic is often weak or non-existent. Every tactic needs to somehow move the potential capital investor along the continuum from awareness to RFP request. If this test is applied to every marketing investment, then some will be eliminated from the mix and others will have the call to action strengthened dramatically.
At the IEDC Conference, I picked up a copy of the study from the team at the Atlas exhibit. The study is survey based, and on-going. Hundreds of EDOs from 30-states have responded to the survey all ready. The goal is minimally 350 respondents representing all 50-states. If your EDO as not responded to the survey, I believe you can still participate.
Here are my take-aways from reading the study results.
Not all EDOs are created equal, so a customized dashboard makes sense. The Report describes a spectrum of work done by EDOs ranging from a deal focus to an infrastructure focus. Most EDOs have a combination of expected outcomes they are held responsible for by their Board of Directors and investors. Looking back at my experience leading the Ohio Business Development Coalition, the OBDC would most closely meet the description of a “promotion focused” organization based on the criteria described in the report. Based on the report recommendation, awareness improvement and inquiries per month would be measures on the dashboard.
Atlas defines high performance development as the “dedicated pursuit of any objective, no matter what the current objective might be, coupled with measured progress along the way.” Just to be provocative, eHow.com defines a high performance organization as “a company considered to be more successful than its competitors in the areas such as profitability, customer service, and strategy.” This brings in the element of competitive superiority. The Center for Creative Leadership describes it as “An organizational system that continually aligns its strategy, goals, objectives, and internal operations with the demands of its external environment to maximize organizational performance.” This definition brings in the concept of adaptability and responsiveness to changing customer needs.
I think the Atlas definition is a reasonable start. But, the concept of high performing organizations has been studied in-depth in the private sector. The more complex private sector understanding/definitions can and should be reapplied in economic development. In my mind, the ideas of competitive performance superiority and adaptability are equally relevant in our industry. I’d like to see Atlas take their definition of a high performance economic development organization a bit further in the final report.
Conversation is key to success. The report discussion on the importance of engagement and conversation really resonated with me. If you are unable to get a potential capital investor interested enough to have a meaningful conversation, then you are going to lose the deal. You need to get potential investors emotionally engaged with your community. They have to want to bring or expand their business to (in) your community. They have to see a bright and profitable future if they locate in your community. Of course, the NPV of the deal must be right to address their fiduciary responsibility. But, if they can’t visualize their operation in your community you are doomed to lose the deal. As the report appropriately calls out, conversation is key to conversion. If you are not talking, then the investor is likely walking.
Cost per conversion should be evaluated. I like the idea of evaluating the impact of your tactical investment on driving conversion. But, unfortunately cause and effect is challenging to establish since different tactics may play a unique role depending on when they are leveraged in the site selection process. In the private sector, marketing mix modeling is used to try and statistically evaluate the unique contribution a tactic may make in the final purchase decision. In my experience though, the analysis is helpful but not conclusive in establishing a cause and effect relationship between the tactic and result. The biggest challenge is the interdependent and synergistic effect of a well-designed marketing mix. In economic development, EDOs rarely have sufficient data to conduct a marketing mix analysis. Instead we need to rely on informed judgment. Given that conversion is a cumulative result of a well-executed effort, I would recommend each tactic have a specific threshold measure for successful engagement (e.g. response rate, click-through rate, call rate, etc.) set apriori. If the selected tactic fails to meet the threshold, evaluate why and then decide to either fix it or lose it.
There is a lot of great information in the Atlas report. I encourage you to get a copy and benefit from the learning.
From a performance measure perspective though, I believe the best way to evaluate an EDO’s success is improvement in the American Dream Composite Index (ADCI). This Index indicates the degree to which the American Dream is being realized in a location. The ADCI is comprised of 35 different components, and as important as jobs are, they are not even close to being the sole measure of success.
Right now, the Index is only available on a multi-state regional level. But, the Xavier University Team that created the ADCI is working on trying to make it available both on a state and major MSA basis. Being able to compare how well your state (or MSA) is enabling its citizens to achieve the American Dream versus competing states (or MSAs) will provide valuable insight to use in the strategic planning process. If the people living in your location are not realizing the American Dream to the same or greater degree than competing areas, your EDO has serious work to do. I think enabling Americans to achieve the American Dream is what economic development is all about, and that high performing EDOs will likely outperform others on this measure.
Read my presentation entitled – Time To Change The Dialogue
I’d love to hear your perspective on the Atlas research findings.
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