Marrying for the Money The ROI of Relationships  SXSWi March, 2011 Jen van der Meer Dachis Group @jenvandermeer #MROI
What you’ll need to get  ROI from our time together today:  <ul><li>1-2 Napkins </li></ul><ul><li>Felt tip pen </li></ul><...
Wall St. @jenvandermeer I calculate ROI in my sleep
ROI is under attack! @ehuddleston   love it. Measure success through operational  metrics  that are meaningful to biz and ...
Good news: you can measure the ROI of ANY relationship <ul><li>=  - 567% </li></ul>
4 Cases
Case study 1:  The rich husband
The stats upfront <ul><li>Time frame: 2006 </li></ul><ul><li>Job: Real estate lawyer </li></ul><ul><li>Education: Ivy unde...
 
 
 
Problem: ROI framework Data that was needed at the start: Length of relationship Cash transaction amount per year Profit p...
Length of relationship?  5 years
Revenue per year:  $100k $1MM $1 MM $10K $100k
Profit per yearly transactions $900k $900k $-90k
Marriage lifetime value 2006 2007 2008 2009 2010 Revenue  Costs x year Profit x year 1 time acquisition cost Year 0 -$100k...
Successful relationship? 11.1 x return
Case study 2:  Skippy
Skippy lives for 14 years $50 x 12 months x 14 years $300 x 14 years $20 x 12 months x 14 years - $8,400 - $4,200 - $3,360...
Initial cost: $2,000 Revenue: $0 Lifetime cost: $-15,960 ROI = $15,960 - $2,000 = $-17,960 $2,000 = -898% Skippy ROI: the ...
< ROI Conclusion:
What is the problem with measuring the transactional cost of a relationship? What we value most are the transactions  that...
Case study 3:  Value of a Facebook fan
Value of a fan: Vitrue: $3.60 (earned media) Syncapse: $136.38 (layer cake of value) Cost of a fan: Webtrends: $1.07
The value of a fan:
Problem with value of a fan view Fans and customers Customers  who are not on FB “ Fans” who  don’t buy  (haters, totally ...
Case Study 4:  Holistic customer Life time value
Gas profits
Marketing Decision:
Gas customer lifetime value 2006 2007 2008 2009 2010 Revenue  Costs x year Profit x year 1 time acquisition cost Year 0 -$...
< ROI Conclusion:  <
So we CAN measure the ROI of a relationship.    But transactional value distorts the purpose of why people are in business...
“ Your grandparents are far more prepared for what’s coming than you are. They understood the human connection, small-town...
SO WHAT. (do we measure).
Healthy relationship? # and quality of: hugs. kisses. pleasant surprises. help around the house. positive reinforcement. l...
  Customer referral value According to Kumar, Petersen, and Leone, your most valuable customers are those whose word of mo...
Wall Street Secret Revealed: Customer Lifetime Value is not something that “the street” cares about. When CMOs and CTOs sa...
How far can we take this?  As the social graph reveals a huge volume of data about our actual relational behavior, we have...
  fitbit
  Energy Hub
  James Burke:  Applying Analytics to Relationships
  Analog analytics
In conclusion:  ROI can be measured. But human connections are fluid, dynamic, and worth more than financial transactions ...
  thank you!  @jenvandermeer
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Marrying for the money

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  • Very clever and well thought out concepts and preso on ROI in social media + relationships. Should be a must-read for all the self-proclaimed SM 'gurus' and 'scientists.
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  • Very clever and well thought out concepts and preso on ROI in social media + relationships. Should be a must-read for all the self-proclaimed SM 'gurus' and 'scientists.'
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Marrying for the money

  1. 1. Marrying for the Money The ROI of Relationships SXSWi March, 2011 Jen van der Meer Dachis Group @jenvandermeer #MROI
  2. 2. What you’ll need to get ROI from our time together today: <ul><li>1-2 Napkins </li></ul><ul><li>Felt tip pen </li></ul><ul><li>Basic math skills </li></ul><ul><li>At least one relationship to measure: </li></ul><ul><li>_Dog </li></ul><ul><li>_Friend </li></ul><ul><li>_Mom </li></ul><ul><li>_Customer </li></ul><ul><li>_Potential fiancée </li></ul>
  3. 3. Wall St. @jenvandermeer I calculate ROI in my sleep
  4. 4. ROI is under attack! @ehuddleston love it. Measure success through operational metrics that are meaningful to biz and focus social ROI on exception mgmt @ jhagel # SBS2 011 @mghoza #e20 RT @ an dyjankows ki : &quot;What’s m issing in most #social business attempt s is a systematic link to metrics that matter.&quot; @ jbernoff # sbs2011 @tstaley ROI analysis for social software is a &quot;fool's errand&quot; John Hagel # SBS2011 @tmuellernyc We are at an inflection point, a social generation replaces spreadsheet generation. @ jobsworth , # SBS2011
  5. 5. Good news: you can measure the ROI of ANY relationship <ul><li>= - 567% </li></ul>
  6. 6. 4 Cases
  7. 7. Case study 1: The rich husband
  8. 8. The stats upfront <ul><li>Time frame: 2006 </li></ul><ul><li>Job: Real estate lawyer </li></ul><ul><li>Education: Ivy undergrad, top law school </li></ul><ul><li>Prospects: Real estate developer </li></ul><ul><li>Current salary: $80,000 + 20k in bonus </li></ul><ul><li>Salary of fellow alumni: </li></ul><ul><li>$1 MM in combination of cash + bonus </li></ul><ul><li>Increasing 100% each year </li></ul><ul><li>Investment: fabulous wardrobe $100,000 </li></ul>
  9. 12. Problem: ROI framework Data that was needed at the start: Length of relationship Cash transaction amount per year Profit per transaction Understanding of stocks vs. flows Cost of investment to initiate relationship
  10. 13. Length of relationship? 5 years
  11. 14. Revenue per year: $100k $1MM $1 MM $10K $100k
  12. 15. Profit per yearly transactions $900k $900k $-90k
  13. 16. Marriage lifetime value 2006 2007 2008 2009 2010 Revenue Costs x year Profit x year 1 time acquisition cost Year 0 -$100k $100k $1 MM $1 MM $100k $10k -$100k -$100k -$100k -$100k -$100k $0 $900k $900k $0 $-90k + + + + $100k - = $1.61 MM $1.71 MM $100k = 11.1x
  14. 17. Successful relationship? 11.1 x return
  15. 18. Case study 2: Skippy
  16. 19. Skippy lives for 14 years $50 x 12 months x 14 years $300 x 14 years $20 x 12 months x 14 years - $8,400 - $4,200 - $3,360 = - $15,960
  17. 20. Initial cost: $2,000 Revenue: $0 Lifetime cost: $-15,960 ROI = $15,960 - $2,000 = $-17,960 $2,000 = -898% Skippy ROI: the value of a dog
  18. 21. < ROI Conclusion:
  19. 22. What is the problem with measuring the transactional cost of a relationship? What we value most are the transactions that cannot be measured . Immeasurable. Beyond measure. Priceless.
  20. 23. Case study 3: Value of a Facebook fan
  21. 24. Value of a fan: Vitrue: $3.60 (earned media) Syncapse: $136.38 (layer cake of value) Cost of a fan: Webtrends: $1.07
  22. 25. The value of a fan:
  23. 26. Problem with value of a fan view Fans and customers Customers who are not on FB “ Fans” who don’t buy (haters, totally unqualified) #ROIFAIL
  24. 27. Case Study 4: Holistic customer Life time value
  25. 28. Gas profits
  26. 29. Marketing Decision:
  27. 30. Gas customer lifetime value 2006 2007 2008 2009 2010 Revenue Costs x year Profit x year 1 time acquisition cost Year 0 -$100 $1500 $1800 $2100 $2500 $3000 -$1410 -$1692 -$1974 -$2350 -$2820 $90 $108 $126 $150 $180 + + + + $100k - = $554 $654 $100 = 5.5x
  28. 31. < ROI Conclusion: <
  29. 32. So we CAN measure the ROI of a relationship. But transactional value distorts the purpose of why people are in business. Why they become customers.
  30. 33. “ Your grandparents are far more prepared for what’s coming than you are. They understood the human connection, small-town rules. All of you who just worry about metrics , numbers, roi, you're going to die.&quot; - @garyvee
  31. 34.
  32. 35. SO WHAT. (do we measure).
  33. 36. Healthy relationship? # and quality of: hugs. kisses. pleasant surprises. help around the house. positive reinforcement. listening. mutual support. shared experiences?
  34. 37. Customer referral value According to Kumar, Petersen, and Leone, your most valuable customers are those whose word of mouth brings in the most profitable new customers, regardless of how much they themselves buy.
  35. 38.
  36. 39. Wall Street Secret Revealed: Customer Lifetime Value is not something that “the street” cares about. When CMOs and CTOs say ROI, they really mean, “show me a pretty dashboard.”
  37. 40. How far can we take this? As the social graph reveals a huge volume of data about our actual relational behavior, we have an opportunity to pause for a moment: to consider the value system reflected in how we measure each other, ourselves, our relationships in the world.
  38. 41. fitbit
  39. 42.
  40. 43. Energy Hub
  41. 44.
  42. 45. James Burke: Applying Analytics to Relationships
  43. 46. Analog analytics
  44. 47. In conclusion: ROI can be measured. But human connections are fluid, dynamic, and worth more than financial transactions alone. To measure the health of a relationship, define those actions of reciprocity and advocacy.
  45. 48. thank you! @jenvandermeer

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