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What Counts That We’re Not Counting

Tuesday, February 6, 2018

One of my favorite quotes comes from Chip Conley, founder of Joie de Vivre Hotels: “What Counts that We’re Not Counting?”
In his sensational TED Talk, Chip talks of the fourth Dragon King of Bhutan, who ascended to the throne at the age of 18. As the story goes, he was asked, early in his reign, about his country’s GDP (Gross Domestic Product). He responded by asking why GDP was so important, suggesting that tracking “Gross National Happiness” should be a much more important measure of success.
These two quotes came to mind recently as I read an unflinching critique of how DMOs count what’s important by a former hotel executive in Travel Weekly. While clearly supporting the critical need for Destination Marketing Organizations, Leland Pillsbury comments on the recent flurry of political attacks on DMO funding thus:
“(It) is not a disconnect by policymakers who fail to understand the importance of tourism. It is a failure by DMOs to prove a return on investment (ROI), which enables policymakers to challenge expenditure levels and, frequently, to cut the level of expenditures when budgets are tight and leaders are under pressure to save money wherever possible.”
As we said in last month’s Z-News commentary, virtually every political meltdown or budget exorcism we see has a lack of effective communication at its root. And, while this is sometimes manifested by infrequent and insufficient communication, it is just as often a bi-product of not speaking in a language that is meaningful to politicians or voters.
Leland is not unsympathetic to the challenge of counting marketing ROI when utilizing tax revenue. And, he talks of some of the new products and services that can help quantify that which was once unquantifiable, such as Destination International’s Event Impact Calculator.
But, as the Dragon King suggested decades ago…isn’t there something more important than just numbers? What counts that we’re not counting? And, that will be as unique as your destination…as what is important for Ames IA (lowest unemployment in the nation) will be different from El Centro CA (the highest). It will be different for communities that struggle with chronic crime and image problems from those whose image problems have nothing to do with crime and everything to do with a perceived lack of cool that inhibits attracting the best and brightest workforce.
I do not disagree with Leland’s exhortation to DMOs to do a better job at counting. I’m just saying there are often more inspiring measurements than the numbers DMOs usually post. Find yours…and lead with that story, letting your Room Nights, Non-resident taxes generated and jobs created serve as back-up, not the lead.
And, speaking of counting…
Late last year, during City budget time, we watched as a Destination Marketing Organization came under Council fire for spending too much on salaries. Not that the DMO was paying its professional staff too much; but, rather, that too much of the budget was going to salaries. One Council member clucked that the DMO spent too much on salaries and should spend a lot more on marketing.
As if she knows how today's successful DMOs operate. But, when some are elected to public office, some magically become expert on virtually everything. And, the media, by reporting these comments masquerading as fact, reinforce their newfound sense of invincibility of thought.
Because here's the thing...those salaries are doing the marketing this Councilperson ostensibly desires. Gone are the days when a DMO could hire two people and have them place the rest of the budget into pretty ads. It is the salaried staff that develops content, engages with consumers, works with media and digital influencers, shoots and posts the video, etc.
So why do DMOs so often get painted as top-heavy? It’s because so many run their accounting like non-profits (which, of course, most are). But, if DMOs want to be judged on a business model, they must start running their accounting like a business.
And that, my friends, is as simple as ABC (Activity Based Costing).
Non-profit accounting (wrongly, I believe) often lumps salaries and benefits, office expense, rent and other overhead items such as copiers, IT and janitorial into the catch-all basket called “Administration.” No wonder the organization looks top heavy.
With Activity Based Costing, however, the costs associated with each functional area of the enterprise are assigned to that “activity.” Let’s take Marketing (something that every DMO does). One would certainly expect that advertising, publications, collateral, PR, web development and content development and distribution would be loaded into this line. In Activity Based Costing, the salaries, taxes and benefits of the Marketing Director and their staff would also be included in that line.
This isn’t a fancy way to hide salaries. It makes perfect sense. For, if you weren’t engaged in Marketing, you wouldn’t have hired a Marketing Director and staff. They should not be included in Administration because they don’t run the operation…they run the Marketing. And, the same goes for Sales…and any other Department the Organization supports. The only costs that should go into Administration are those costs related to Administration. And, that’s usually 10-15%, tops. A far cry from the 50% outrage with which you’re being painted.
The importance of Destination Marketing to a community is already hard enough for some to understand. Given the unsophisticated (or agenda-driven) among us, it’s on us if we hand them the smoking-gun of unprofessional accounting with which to point in our direction.
What counts that we aren’t counting? And, how can we better count so those around us can understand?

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