Social Media ROI - Social Media Academy - Online Management Briefing

Social Media ROI Axel Schultze President Social Media Academy#SMACAD © Copyright Xeequa Corp. 2008

#SMACAD Agenda Enterprise level social media engagement models Methods, models and frameworks to create high impact strategies Social Media in the support department with ROI of 142% Social Media in the product management group creating an ROI of 167% Social Media in the sales organization creating an ROI of 337% Social Media in the marketing department creating an ROI of 525% Organization models that allow high impact ROI in enterprises Where to start – who to hire.© Copyright Social Media Academy 2009-2011 2 Copying or distribution is prohibited

#SMACAD Three Years Ago Calculating an ROI on social media doesn’t make sense. Trying to calculate a financial ROI on social media is equally impossible than calculating an ROI on advertising. Social Media is a “Cost of doing business” very much like bookkeeping, facilities management, public relations and advertising. We simply didn’t know better© Copyright Social Media Academy 2009-2011 3 Copying or distribution is prohibited

#SMACAD A major project requested the change in thinking Take a $1B company Typical production cost 40% ($400MM) Save 1% (logistics & procurement) $4MM Cost of sales 30% ($300MM) Save 5% / increase effectiveness (advocacy) $15MM Marketing expenditure 3% ($30MM) Save 10% (Social Media) $3MM Support cost 10% ($100MM) Save 10% (joint support) $10MM R&D cost 5% ($50MM) Save 5% (co-creation) $2.5MM Overhead 5% ($50MM) Let it be ;-) Profitability 5% ($50MM) Increase 69% (Social Media) $34,500,000 To $84,500,000© Copyright Social Media Academy 2009-2011 4 Copying or distribution is prohibited

Creating a High Impact Strategy#SMACAD © Copyright Xeequa Corp. 2008

#SMACAD Strategic Social Media Engagement Developing a social media strategy for a team of 800 or 8,000 and 25,000+ customers isn’t an easy task! A Social Media Strategist need to be able to think cross functional and with an ROI in mind. Creating a an environment highly engaged and motivated customers doesn’t come for free.© Copyright Social Media Academy 2009-2011 6 Copying or distribution is prohibited

#SMACAD Creating a high impact strategy You can’t make a difference with 5 people on social media and the rest of the company is doing business as usual. Conduct a thorough assessment Develop a strategy (use Strategy Framework) Understand social media monitoring Create an organization plan Support the various departments Develop a presence plan Develop engagement programs Develop team guidance and structures Integrate business partners into the strategy Build the entire plan together with customers© Copyright Social Media Academy 2009-2011 7 Copying or distribution is prohibited

Measuring ROI on Social Media Initiatives#SMACAD © Copyright Xeequa Corp. 2008

#SMACAD Our social ecosystem The NCP Model and the four quadrant assessment Model helps to know the ecosystem in great detail We know our networks We know everybody in our ecosystem We know who the influencer are We can track all our activities If we know who is in our ecosystem – we can match it with our customer list New prospects generated New customer generated Repeat customers Now we can close the loop and calculate a ROI© Copyright Social Media Academy 2009-2011 9 Copying or distribution is prohibited

#SMACAD Social Media ROI Calculation CM (Contribution Margin) IC (Interaction Cost) Is getting us to our financial Social Media ROI:© Copyright Social Media Academy 2009-2011 10 Copying or distribution is prohibited

#SMACAD ROI Example We generate $ 4 Million contribution margin from revenue of $12 Million through business from people we know are in our respective groups and communities. The cost of managing and servicing the communities with teams, technology and other resources is $3 Million ROI = (($4M - $3M)/$3M)*100) = 33%© Copyright Social Media Academy 2009-2011 11 Copying or distribution is prohibited

#SMACAD Social Technology for ROI and other KPIs© Copyright Social Media Academy 2009-2011 12 Copying or distribution is prohibited

Examples#SMACAD © Copyright Xeequa Corp. 2008

#SMACAD 142% ROI - In the support department Reducing the support team from 600 to 400 Augmenting the support team with 5,000 active customers Investing $220,000 in motivation and customer engagement programs Support Model Team 600 $30 $5,280 $ 3,168,000.00 $ 2,112,000.00 $ 1,056,000.00 Strategy $ 220,000.00 Systems and tools $ 45,000.00 Education $ 80,000.00 $ 345,000.00 Programs $ 220,000.00 $ 836,000.00 ROI 142%© Copyright Social Media Academy 2009-2011 14 Copying or distribution is prohibited

#SMACAD 167% ROI In the product management group Preventing product design mistakes by 10% Co-Creation through product design community Reducing product launch cost by $350,000 Joint product launch with advocates, engaged customers and friends of the company Product Management R&D $ 5,000,000.00 10% Failure rate $ 500,000.00 $ 250,000.00 Launch cost $ 500,000.00 $ 350,000.00 $ 600,000.00 Strategy $ 180,000.00 Systems and tools $ 25,000.00 Education $ 20,000.00 $ 225,000.00 ROI 167%© Copyright Social Media Academy 2009-2011 15 Copying or distribution is prohibited

#SMACAD 337% ROI In the sales organization Reducing the outbound sales team from 220 to 170 and growing the reach from 22,000 per month to 25,000 per month Moving from 100 cold calls with an average 5% contact rate per day To 250 social touches with an average 10% contact rate per day Sales Organization Outbound sales team 220 $ 13,200,000.00 Reaching 22,000 contacts per month 170 $ 10,200,000.00 Reaching 25,000 contacts per month $ 3,000,000.00 Strategy $ 350,000.00 Systems and tools $ 156,000.00 Programs $ 100,000.00 Education $ 80,000.00 $ 686,000.00 ROI 337%© Copyright Social Media Academy 2009-2011 16 Copying or distribution is prohibited

#SMACAD 525% ROI In the marketing department Moving from less attractive corporate generated content (advertisial mail shots) to user generated content, providing social media based experience Cut the content creation and distribution cost in half i.e. from $2 million to $1 Million Increase the reach three fold from 200,000 to 600,000 Marketing Organization PR, Advertising & Event budget $20,000,000 (2% of $1B) Corporate generated content $2,000,000 Actual reach 200,000 (1%) User generated content $1,000,000 Actual reach 600,000 Delta in reach $2,000,000 Strategy $250,000 Systems and tools $50,000 Education $20,000 $ 320,000.00 ROI 525%© Copyright Social Media Academy 2009-2011 17 Copying or distribution is prohibited

#SMACAD Where to start – Who to hire Start Train a group of people who understand your company and your business Make a thorough assessment, not trial and error Develop a purpose driven, cross functional social media strategy. Use a proven strategy framework Develop execution plans Hire a Director Social Media (14,000 open) Take people from your existing team They know the culture, the customers, the processes… Hire people once you are up and running – not to get up and running© Copyright Social Media Academy 2009-2011 18 Copying or distribution is prohibited

#SMACAD Social Business Strategists Class Starting May 18 (registration deadline May 6 / Int’l April 30) All lessons are on demand at your own leisure All workshops are instructor lead Every Wednesday (90 – 120 min.) US / EU Workshops starting 08:00 am (PST) / 11:00 am EST 17:00 (CET) AU Workshops 11:00 am Sydney time Perform your free online entrance exam Tuition: $3,250 Have a 1:1 conversation with us (skype or phone)© Copyright Social Media Academy 2009-2011 20 Copying or distribution is prohibited

#SMACAD Thank You +1 (650) 384-0057 xeesm.com/AxelS http://SocialMedia-Academy.com Social Media Academy Page and Group Social Media Academy Group @smacad All social presences: http://xeesm.com/smacad © 2011 Social Media Academy. All rights reserved. This content is protected under the copyright law of the United States. It is prohibited to make full or partial copies or extractions of this documentation without the explicit written approval from the Social Media Academy. All materials contained herein are the property of the Social Media Academy and its faculty and may only be used, by an enrolled student for his or her own educational benefit. Social Media Academy | 228 Hamilton Ave. | Palo Alto, CA 94301 | (650) 384-0057© Copyright Social Media Academy 2009-2011 21 Copying or distribution is prohibited

#SMACAD About The Social Media Academy is considered the leading education and research institute for applied social media in business. Education programs are specifically designed for business professionals from all industries. The main emphasis is to help business managers and consultant to get a comprehensive education and hands on experience through collaborative workshops in all aspects of social business engagement including strategy development, planning, tools selection, resources allocation, organizational development as well as reporting and analytics. Attendees learn to use leading methodologies, models and frameworks such as the social media strategy framework, the four quadrant assessment methodology or the NCP model and other strategic tools to create successful social media engagements. The Social Media Academy is based in Palo Alto, California with representation in Europe and Australia. For more information visit http://smacad.com© Copyright Social Media Academy 2009-2011 22 Copying or distribution is prohibited

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