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I don't blog or tweet as much as I should. Generally I do when I am passionate about a topic. Last year when I blogged about ROI, it felt like the whole Social Media industry was saying it was too hard to put a dollar value on social media. I spoke about it at the Web 2.0 conf in NY as well. "No tangible ROI" is generally a kiss of death when trying to get a project funded at the exec level. I blogged about it then because it was a big issue with clients, and because I thought social media vendors needed to address it. I'm the CTO here at Awareness, so I got to focus our thinking about this in our next round of product features. I'll talk about the fruits of that later in this post. Of course we are always talking to clients and internally about how ROI is tied to what your "use case is for social media. If you are publishing blogs by your exec team, that has very different purpose and return-on-investment than a community that might be offering "peer support". Shortly after that we launched BPC's or "Best Practice Communities" to deploy our platform in ways to specific to each use case. Target the use case, and you can target a specific ROI benefit. You can read more on that in my Post "Stop whining about ROI and start digging for numbers "

Having BPC's in place meant we could enhance our reporting with dashboards dedicated to each use case. After all, if I want to look at a dashboard for a support community, I want to know how many questions have been asked/answered. If I am looking at a dashboard for an executive blog, I want to know how many comments have been left, how many page views that site gets, and how many leads have been generated from that activity. We added "Net Promoter Score " to all dashboards to make sure customer satisfaction and "referral" are kept as a measurement. You can read about our release of "Dashboards " here.

I'm thrilled to give you the inside scoop on our latest enhancement of our dashboards. Our dev team has been referring to this as "Dollars for Dashboards". The premise is simple and goes back to the blog post I wrote last year. Software can capture a metric, but it becomes a good ROI measurement when you add a cost/value multiplier (that you endorse and have agreement on). The platform will tell us how many questions were answered in a Support Community, you tell us what a support call is worth to you, and presto we can present a dashboard that shows ROI over a period of time. And next exec review you can make a statement like "We saved $24,514.25 in support calls with our community last quarter".





The dashboards take your input on the value of the various metrics we capture. Then we use those dollar values in the report. So now, for example, you can view our peer support community and see how many questions were answered last week, and what was the dollar value of that activity. Each dashboard allows you to edit your values by answering simple questions.

Here is a sample of some of the values we let you put in.
  • What is the value of an answered question?
  • What is the value of a new registered member?
    • As a lead
    • As better demographic info on an existing customer
  • what is the value of a comment?
  • what is the value of a shared innovation?
  • What is the value of a page view?

We aren't stopping there. Architecturally we've added the ability to put a numerical value on a post. This will allow community admin's to put arbitrary values on a piece of content. There are a lot of use cases here, but in an innovation community one idea may have a huge value. Now there is a place to track and document that. The team has a ton of ideas for next iteration of this feature, but it feels like it's a pretty big step for the industry to address ROI at the platform level.

Looking forward to the near future, I can't see slowing down in this area. I can see adding values to each profile question, and voting. If I am serious about lead generation, then certain profile responses would make them higher and lower value. The same applies if I am serious about improving customer service. The more I know about my customer the better I can serve them, and sell to them. ROI is not a tough nut to crack, but you definitely need to factor it in to the planning process of a community from the beginning.

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I think ROI is hugely important, but lately people seem to be looking to a vendor for all the answers.  The truth is you need to have your own answers to a few questions before we can get to that.

Every person I talk to struggles with the ROI (return on investment) of social media. The first step in finding ROI is establishing what is measurable. I see "ROI" and "measurement" used interchangeably when they really aren't. You can say your site got 10,000 thousand visitors, but until you attach a value to each of those visitors you can't calculate a return. And it's the second step, establishing that value, that is the most important piece.

We could be talking about social media, or people walking around wearing sandwich-boards. If you don't know the value of a few basic things in your company, stop marketing now and leave... please close the door behind you.

You didn't really leave did? Of course not you are reading this... Let's assume you have your house in order and you know the value of a few basic things. These could/should be
  • What is the cost of customer acquisition? How much are you willing to spend to get a customer? Before you have pens printed, book a trade-show booth, and of course embark on a social media campaign do you know this value?
  • What is the annual value of a customer? Is it a repeat purchase product? A one time, large purchase? High margin, low margin?
  • What are the costs associated with supporting a customer? What does a single support call cost?
  • What do you spend on product research? Focus groups, R&D, testing?
Almost everything is a derivative of the numbers above. You can talk about customer loyalty, but it's really just the delta between customer acquisition and customer retention. Many companies don't care about keeping customers... just getting new ones. It depends on your business, the quality of your product, the propensity to repurchase etc.

If you make a direct link from your site metrics to the numbers above, bingo!  E.g. X questions asked in our support area times the cost of a support call = return.  Usually its a little harder, not every web question would have resulted in a call to a support desk.  Some customers would have just not bothered (God knows I never call Bell Canada on the phone).  But... how much higher is your customer satisfaction when they can get a question answered immediately?  So really what happens on the web is there ends up being a few things that result, each having incremental value.  Lets stick with the support example.

  • number of support questions answered - Customer retention, Support costs
  • increased customer satisfaction - Customer retention
  • search engine optimization - Customer acquisition
  • sentiment data - R&D, product development
There's clearly more to write here but I'd be curious to hear what you think needs to be factored into ROI formulas.






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Stop whining about ROI and start digging for numbers

I think ROI is hugely important, but lately people seem to be looking to a vendor for all the answers. The truth is you need to have your own answers...
more »

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