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ROI

What is ROI? It basically means  return on investment. Return on Investment means different things to different people. To some, ROI must achieved to warrant investment. For others, ROI is used as a  way to coax people to make the business case for a proposal. Some treat ROI as a formula, others as a philosophy. This post will discuss some examples of how ROI can be calculated for Enterprise 2.0 projects through employee engagement, turnover and sales.

Measurements are going to be required to help bring about a more successful transition and wider adoption of Enterprise 2.0 into an organization. Here are some ways of how organizations success can be measured.

1) Employee engagement

Employees using enterprise social media tools  in the workplace are more engaged than those employees who do not use these tools. Why? Employees are more engaged because they become part of something larger than themselves and their immediate departments.   Something large being the social media network.

How to Measure employee engagement? There are companies who generally conduct annual/monthly surveys to gauge the levels of enterprise work force engagement. Another way is to measure by viewing an employee’s usage of the enterprise social software.  By doing this you can have a better view of their engagement with social media.


 

 

 

 

 

 

 

 

 

 

 

 

 

2) Turnover

Employee turnover is another way of measuring ROI. Employees that utilise activity streams in the workplace are less likely to turn over than those that do not use activity streams.  In addition to increasing employee engagement, enterprise social media tools help employees onboard more quickly, it helps them find the information they need to be successful, and help them receive real time feedback from fellow coworkers – all of which lead to better employee retention.

So how can turnover be measure? Just Like employee engagement, turnover can be measured by viewing an employee’s usage enterprise social media tools. Another alternative could be,  obtaining data concerning the employee usage of the community as well as data that could have an impact on turnover rates such as tenure, salary, and market conditions.

 

 

 

 

 

 

 

 

 

 

 

 

 

3)  Sales

How can sales aid  ROI?  Monitoring the level of sales within an organisation is another way of measuring how ROI can be calculated through the use of social media platforms. Actually you could say social media platforms provide employees with real-time information, providing them with key business insights thus enabling them to react faster to product availabilty, customer issues, current news on competitors, and other data that will help employees to be successful. So how do you measure sales? Lets look at 4 ways of measuring sales:

How to measure sales:

1. Obtain the sales results for each of your sales team members.

2. Gather data to reflect each person’s usage of the enterprise social network.

3. Account for other factors that could have impacted sales results.

4. Analyze the relationship between the use of enterprise social tools and sales results.

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Some interesting links:

http://www.pamorama.net/2010/12/07/how-to-calculate-the-roi-of-enterprise-social-media/#.UEmo2LJlSSo

http://www.cmswire.com/cms/social-business/social-enterprise-roi-measuring-the-immeasurable-015149.php

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11 thoughts on “ROI

  1. Hey, Andy.
    I think return on investment is significant in corporation. In employee engagement, turnover and sales influence, companies need to consider expenditure cost can bring more benefits. Hence, expenditure and income must stay in an absolute balance.

    • Hey Rick, thanks for the comment, ROI is actually really important because it allows to see where and if the organization has made any profit, particularly with the use on of social media.

  2. Hi Andy.
    I like the points you described.
    Measuring ROI for E2.0 is not a easy task for sure. Specially dealing with abstract concepts such as collaboration and knowledge sharing. Companies like IBM, Microsoft, and Yahoo!, are hiring economists, anthropologists, and other social scientists to map and classify new types of friendships—and put a value on them (http://www.businessweek.com/stories/2009-04-08/putting-a-price-on-social-connectionsbusinessweek-business-news-stock-market-and-financial-advice).
    In the other hand, when you talked about sales for example, in my view, that’s not too hard to calculate the increase in sales after a marketing campaign using social medial as channel for example.
    Cheers,
    Charles (http://charlestontelles.wordpress.com/)

    • Hey Charles,

      thanks for reading, yes i agree that the topic wasn’t easy to discuss, but the 3 points i mentioned does give a better idea of how organizations can use ROI to calculate enterprise 2.0.

  3. Great post Andy. I like how you include the ways to measure each success. We know that Enterprise 2.0 presents great benefits. However, justify that, we need a set of metrics and measures. Customer engagement might be another point that is worth considering. I have covered examples on using Facebook Insights and Google Analytics to measure users’ interaction and site visits. Do check it out. 

  4. Nice post Andy.
    You have pointed out what is the ROI, Employee engagement、Turnover、Sale. Those three point can indeed make a good enterprises development. In my blog i also write some point for improve ROI.
    (There is the link: http://dennipan.wordpress.com/2012/09/09/roi-return-on-investment-of-social-media-web/)
    As for my opinion of the return on in investment, will involve the “Investment rate” and “Proportional hazards”, because people knows the higher the investment risk, the higher the required rate of return.

    • Thanks Denni, i totally agree that using these 3 measures we haves stated not only allows us to calculate ROI in enterprise 2.0 but allows an organizations to run efficiently as well!

  5. Hi,
    Great infographics. It really helped me understand the points that you make. In my opinion, analyzing sales is a huge factor that helps contribute to the calculation of ROI. It could help explain a lot on how to product is doing and how to improve it. It could also help the internally team get more info on the amount of time and money they have to invest in.

  6. I think blogging is the cornerstone of your social media strategy
    If you want to see more Return on Investment (ROI), focus on creating great content on a blog associated with your ecommerce website.

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