What Social Business ROI really means

Who is using social media to gen revenues and cost savings ?

And the reason is because…

Don’t be “ myth”taken … Avoid social media myths that will torpedo your initiative.

Social media is free . That would be never …Even a small program has personnel costs. Larger programs? Add in higher people costs plus technology.

Social media is exempt from Business 101 fundamentals. Hmmm….that would be no…
Social initiatives are among a field of other corporate initiatives. Make the business case like you would for any other.

Metrics = R eturn O n I nvestment Big honking no. Web visitations Page views Registrations Customer Satisfaction Etc. Metrics are important…But as leading indicators of revenues (or cost savings).

What executives really want to know about a corporate initiative.

The purpose of business is to generate revenues or increase profitability . Get executive attention by showing them the money associated with your social initiative.

Convert social benefits (like influence, loyalty, engagement, etc.) into monetary terms…. …yes, really.

Social media can and should be valued .
The secret is to couple defendable assumptions with appropriate risk .

Perform valuation hand-in-hand with the strategic vision and definition, as well as tactics.

Strategic definition = verbal or written expression of what you plan to accomplish. = Valuation = numerical view of the strategy.

1. Start with cash flow … … of Gains and Costs.

NPV = Time-value of cash flows. Incorporates risk via discount rate (also known as cost of capital). 2. Determine Net Present Value

3. Determine ROI Determined from the NPV of Gains and Costs. ROI = Gains - Costs Costs

What cash flows where?

Money out = Social Media Costs

People costs…
Social team staff:
Strategists - Execs & managers.
Tacticals - Community participants.
IT.
Third-party consultants.

Tech costs for social business platform…
CRM, traditional (E.g., Salesforce, SAP, Sugar, RightNow).
SCRM (same – via add-ons).
Community solution (E.g., Jive, Lithium, SF Chatter, INgage).
Premium web analytics solution (E.g., Radian6, Attensity 360, ScoutLabs, Clarabridge).
Misc.

Money In = Social Media Gains

Revenues due to social initiatives = x x Reach How many are you connecting with Impact Who’s paying attention Yield How much is their spend

And then there’s Cost Savings from social…
Call center savings:
Fewer incidents.
Fewer contacts per incident.
Shorter time needed to close incident.
Cost of Sales savings:
Lower cost for lead acquisition.
Shorter sales cycle.

Now you’re ready to be an executive champion helping them make an informed decision about investing in social business.

Go forth and make social!

Leading expert on social business and change management.
Practice centers on business process design and definition, valuation, and the user experience.
Valuation expert and designer of the ValueRight methodology and tool for social business valuation (and ROI) determination.
Active participate in the SCRM Accidental Community on Twitter, a premier group of social business thought leaders.
www.kathyherrmann.com

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What Social Business ROI really means

by Kathy Herrmann on May 06, 2010

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What Social Business ROI really means — Presentation Transcript