1) The document discusses measuring the return on investment (ROI) of relationships, using examples like marrying for money, owning a dog, the value of Facebook fans, and lifetime customer value. 2) It argues that while ROI can be measured through financial transactions, the most valuable relationships are not fully captured that way since human connections are about more than transactions. 3) To better measure relationship health, the document suggests focusing on non-financial metrics like acts of reciprocity, advocacy, and shared experiences between people.

1. Marrying for the Money
The ROI of Relationships
SXSWi March, 2011
Jen van der Meer
Dachis Group
@jenvandermeer
#MROI

2. What youʼll need to get
ROI from our time together today:
1-2 Napkins
Felt tip pen
Basic math skills
At least one
relationship to
measure:
_Dog
_Friend
_Mom
_Customer
_Potential fiancée

3. I calculate ROI in my sleep
Wall St. @jenvandermeer

4. ROI is under attack!
@mghoza @ehuddleston
#e20 RT @andyjankowski: "What’s missing in love it. Measure success through operational
most #social business attempts is a systematic metrics that are meaningful to biz and focus
link to metrics that matter." @jbernoff #sbs2011 social ROI on exception mgmt @jhagel
#SBS2011
@tmuellernyc
@tstaley
We are at an inflection point, a social generation
ROI analysis for social software is a "fool's
replaces spreadsheet generation. @jobsworth,
errand" John Hagel #SBS2011
#SBS2011

5. Good news: you can measure the
ROI of ANY relationship
= - 567%

6. 4 Cases

7. Case study 1:
The rich husband

8. The stats upfront
Time frame: 2006
Job: Real estate lawyer
Education: Ivy undergrad, top law school
Prospects: Real estate developer
Current salary: $80,000 + 20k in bonus
Salary of fellow alumni:
$1 MM in combination of cash + bonus
Increasing 100% each year
Investment: fabulous wardrobe $100,000

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

13. Length of relationship?
5 years

14. Revenue per year:
$1MM $1 MM
1000
750
500
$100k
$100k 250
2006
2007 $10K
2008 0
2009
2010
Salary Cash Bonus

15. Profit per yearly transactions
$900k $900k
900
675
450
225
$-90k 0
2006
2007 -225
2008
2009
Profit 2010

16. Marriage lifetime value
Year 0 2006 2007 2008 2009 2010
Revenue $100k $1 MM $1 MM $100k $10k
1 time acquisition cost -$100k
Costs x year -$100k -$100k -$100k -$100k -$100k
Profit x year $0 + $900k + $900k + $0 + $-90k
$1.71 MM - $100k = $1.61 MM
= 11.1x
$100k

17. Successful relationship?
11.1 x
return

18. Case study 2:
Skippy

19. Skippy lives for 14 years
$50 x 12 months x 14 years - $8,400
$300 x 14 years - $4,200
$20 x 12 months x 14 years - $3,360
= - $15,960

20. Skippy ROI: the value of a dog
Initial cost: $2,000
Revenue: $0
Lifetime cost: $-15,960
ROI = $15,960 - $2,000 = $-17,960
= -898%
$2,000

21. ROI Conclusion:
<

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.

23. Case study 3:
Value of a
Facebook fan

24. Value of a fan:
Vitrue: $3.60 (earned media)
Syncapse: $136.38 (layer cake of value)
Cost of a fan:
Webtrends: $1.07

25. The value of a fan:

26. Problem with value of a fan view
“Fans” who
Customers
donʼt buy
Fans and who are not
(haters,
customers on FB
totally
unqualified)
#ROIFAIL

27. Case Study 4:
Holistic customer
Life time value

28. Gas profits

29. Marketing Decision:

30. Gas customer lifetime value
Year 0 2006 2007 2008 2009 2010
Revenue $1500 $1800 $2100 $2500 $3000
1 time acquisition cost -$100
Costs x year -$1410 -$1692 -$1974 -$2350 -$2820
Profit x year $90 + $108 + $126 + $150 + $180
$654 - $100k = $554
= 5.5x
$100

31. ROI Conclusion:
< <

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.

33. “Your grandparents are far more
prepared for whatʼs 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." - @garyvee

34. SO WHAT.
(do we measure).

35. Healthy relationship?
# and quality of:
hugs. kisses. pleasant surprises.
help around the house. positive
reinforcement. listening. mutual
support.
shared experiences?

36. Customer referral value
LOYAL CUSTOMER SOCIAL CUSTOMER
receipt
$100
receipt receipt
$200 $50
receipt
$50
Higher Lifetime Value
Higher 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.

37. 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.”

38. if you dream it...
what are the levers and behaviors tha
drive human connections between
people and organizations?

39. Dashboard: Social Program Health!
presence! conversion! advocacy!
size of tribe social contribution to media mix, revenue brand community
% % weekly
#followers score YTD Impressions YTD CPO YTD Revenue YTD Impressions YTD CPO YTD Revenue
engaged growth
3,544,215 2.3% +4.2% 49.5 55,542,222 $0.34 $42554,254 55,542,222 $0.34 $42554,254
campaigns: social channels
Facebook Campaign XYZ
impressions eng. CTR CPO
competitive tribes 5,544,555 2.3% .15% .15
total followers
competitor 1
client
content performance
competitor 2
Video ABC
engagement rate
WOM
impressions sharing. CTR
CTR 1/5/02 1/6/02 1/7/02 1/8/02 1/9/02
sentiment analysis 3 months avg.
217,225 42.6% .5% .10%
comments and sentiment about brand
ambassador team
Interactions Sampling Reach Trial Conversion
based on 3.5 MM
10,998,877 2,444,546 43%
sentiments
Top ambassador events
brand tracking 3 months avg. social contribution to site referrals (SEO?)
Twitter
20
Innovative 15
10 Youtube
Edgy
5 Lansing, MI Oradell, NJ SF, CA
Pragmatic 0 Facebook
U Mich Ambassador Outside
Out of touch May June July Aug Sept Oct Nov Dec
Sampling Thank You Lands
party event Sponsorship

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.

41. fitbit

42. Energy Hub

43. James Burke:
Applying Analytics to Relationships

44. Analog analytics

45. 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.

46. thank you!
@jenvandermeer