The Bottom Line

An enterprise or business looking to implement any sort of change to their company is undoubtedly concerned with the bottom line; i.e. the expected return on investment (ROI). Measuring an ROI is an important step to building any sort of persuasive business case to management. So, the question is how do you measure the ROI for a business looking to implement some Enterprise 2.0 functionality into their daily operation? The answer is unfortunately quite difficult. This is because many of the benefits to be seen from employing such a business improvement are that the biggest enhancements are not tangible. Martin Koser gives the best explanation:

“Buying and deploying IT systems is the easy part, and the bigger part is the soft stuff, like e.g. enabling and supporting collaboration. So we may start to add the hours of the people involved in our projects, and continue to count in all the costs that we’re guessing – it’s almost as hard to measure the “investment” as measuring the “returns” of social software in the Enterprise.”

Newman and Thomas give some examples of both hard and soft benefits. Hard benefits include additional sales from increased customer interaction, decreased technology costs, greater marketing efficiency and savings in customer support costs. The more important soft benefits include employee satisfaction, attracting better employees, and improved communication between personnel.

Let’s look at an example of a company you used a social media campaign to help them through some marketing issues. ShipServ is a leading e-marketplace in the maritime industry providing a portfolio of software, services and hosted applications designed to enable efficient global shipping. In 2008 they faced a few issues, including an image of being impersonal, limited marketing budget and a customer base that aren’t early tech adopters. They set out several objectives they wanted to achieve; 50% more website traffic in three months, raised brand awareness, new sales and a change of approach to customers. Shipserv realised that there were very few online communities in their business area and approached an outside marketing firm to create an integrated social media plan.

They took the following actions:

  • Research into customer information needs
  • Created a blog
  • Created a scorecard through their CRM system to examine visitor behaviour
  • Developed a quarterly content plan
  • Promoted original content
  • Crafted a series of papers for visitors to download
  • Joined LinkedIn
  • Search engine optimisation

Many of the benefits from these actions would be considered intangible, however some are not.  Website visitors, page views and average time spent on the website jumped up 59%, 70% and 25% respectively. They also received 300 visitors to their blog and 378 members in their network on LinkedIn. However the most telling figures for management must be those related to the bottom line. These include a 150% increase in initial contact to sales lead conversions, a 50% increase in sales lead to opportunity conversion, an 80% decrease in management costs and an increase to sales-ready leads by a massive 400%. The initial investment on the social media campaign was $30,000, which they made back in three months. An exact ROI from this sort of initiative is impossible to calculate, but given the fact that ShipServ’s blog and community is still very much active, I’d say they are still feeling the benefits of their $30,000 investment even today.

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