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Online Reputation Management Return on Investment (ROI)
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Online Reputation Management Return on Investment (ROI)

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There are three ways to calculate the return on investment to see if online reputation management is worth the cost: ...

There are three ways to calculate the return on investment to see if online reputation management is worth the cost:

1. ORM Building
2. One Negative Review Equals 30 Lost Customers
3. Lifetime Customer Loss Calculation

If the average customer transaction is about $1,000, then:

The benefit to building a positive reputation can generate $32,000 or more in sales.
The loss can be thirty customers or $30,000 for each negative review.

The loss over the lifetime to the business can be $60,000 or more.
Obviously, the costs could be much higher.

I knew of one lawyer who, because of one negative review on RipoffReport.com, saw the loss of at least $150,000 in one year.

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Online Reputation Management Return on Investment (ROI) Presentation Transcript

  • 1. Calculating the Value of Online Reputation Management ROI Recover Reputation Steven W. Giovinco
  • 2. Calculating the Value of Online Reputation Management
  • 3. How Much?
  • 4. • Most small businesses or professionals understand that online reputation management is important, but: One Negative Review Costs 30 Customers
  • 5. Two Sides to ROI Equation • Building a positive online presence equals sales.
  • 6. Two Sides to ROI Equation • Calculation of lost revenue due to negative content.
  • 7. What is Online Reputation Management?
  • 8. What is Online Reputation Management? • Online reputation management (ORM) is anything online about a business or business owner.
  • 9. What is Online Reputation Management? • Blog posts. • Comments on blog posts. • Web sites. • Tweets. • Facebook likes. • Instagram. • Pinterest.
  • 10. “Reputation management is the understanding or influencing of an individual's or business's reputation.” -Wikipedia OnlineOnline ReputationsReputations ReflectReflect TrustTrust
  • 11. Goals of ORM: Build and Repair
  • 12. Goals of ORM: Build and Repair 1. Build or boost a positive presence.
  • 13. Goals of ORM: Build and Repair 2. Remove or suppress negative reviews.
  • 14. For professionals such as lawyers, accountants, financial advisors or others: If a negative link shows up on the first page of a Google search page, a client stops calling.
  • 15. Bottom Line • What is the bottom line for lawyers, financial advisors, executives, those in the art world?
  • 16. Value of Positive ORM
  • 17. Value of Positive ORM • Generates more site traffic. • More phone calls, visits, and inquires. • More repeat transactions over the lifetime of the business.
  • 18. Negative Reputation Leads to Lost Sales
  • 19. Negative Reputation Leads to Lost Sales • A negative reputation leads to lost sales. • Prospect will move on to a competitor. • They probably will never return as a customer—ever.
  • 20. Value of ORM Repair Process •
  • 21. Value of ORM Repair Process • Determine how much revenue decreases due to negative links.
  • 22. Value of ORM Repair Process • Calculating how much money is lost will determine the value of online reputation management.
  • 23. 3 ROI Formulas
  • 24. 3 ROI Formulas 1. ORM Building. 2. One Negative Review Equals 30 Lost Customers. 3. Lifetime Customer Loss Calculation.
  • 25. 1. ORM Building
  • 26. 1. ORM Building • Calculate how much each client spends per transaction. • Estimate the average number of transactions. • How long a client stays with the business. • Find the number of site visitors per month. • Evaluate how many visitors actually become a customer: this is the conversion rate.
  • 27. 1. ORM Building • Reviewing these five factors: – It’s possible to calculate the overall value a customer represents for a business.
  • 28. 1. ORM Building Example: • New client spend=$1,000. • Number of yearly transactions=2. • Client stays with the business=4 years. • New visitors per month=100. • Conversion rate= 2%.
  • 29. •Results in: •$32,000 in new sales 1. ORM Building
  • 30. 2. One Negative Review Equals 30 Lost Customers
  • 31. 2. One Negative Review Equals 30 Lost Customers • One single negative online review can cost the business an average loss of 30 customers.
  • 32. 2. One Negative Review Equals 30 Lost Customers • Results in a sizable decrease of income. • Is usually devastating.
  • 33. 2. One Negative Review Equals 30 Lost Customers
  • 34. 2. One Negative Review Equals 30 Lost Customers • Determine how much the customer spends for the service. • Multiply by 30. • Equals total revenue lost.
  • 35. 2. One Negative Review Equals 30 Lost Customers For example: • Customer spends=$1,000. • Multiply by 30. • Total revenue lost=$30,000.
  • 36. 2. One Negative Review Equals 30 Lost Customers In this scenario: • If one customer is worth $1,000 to the business. • One negative post equals a loss of $30,000.
  • 37. 2. One Negative Review Equals 30 Lost Customers • If the repair process costs less than $30,000: • The business should clearly go forward with the repair project.
  • 38. 3. Lifetime Customer Loss Calculation
  • 39. 3. Lifetime Customer Loss Calculation • Alternative way to calculate the ROI for the repair process. • This determines the lifetime impact.
  • 40. 3. Lifetime Customer Loss Calculation • Take average sale amount. • Determine the number of lost customers per review. • Identify the number of negative reviews. • Calculate number of years a client. • This equals the lifetime lost revenue.
  • 41. 3. Lifetime Customer Loss Calculation For example: • Average sale amount=$1,000 • Number of lost customers=10 • Number of negative reviews=2. • Number of years a client=3 • Lifetime lost revenue=$60,000.
  • 42. 3. Lifetime Customer Loss Calculation This seems like a lot…but:
  • 43. 3. Lifetime Customer Loss Calculation • If the repair process costs less than $60,000, • The business should clearly move forward with the repair process.
  • 44. The Bottom Line
  • 45. The Bottom Line • There are ways to calculate rates of return (ROI). • They provide a fairly accurate monetary value.
  • 46. The Bottom Line • Use for revenue gained due to building a positive online reputation • Or money lost due to negative reviews.
  • 47. About Recover Reputation • Boutique online reputation firm, focused on professionals • 20+ years IT, writing experience • Personal, hands-on approach Steven W. Giovinco Owner, Recover Reputation
  • 48. Recover Reputation • Questions for Steven W. Giovinco? • Connect! • Call 347-421-7598 • Email steve@recoverreputation.com