Social Media ROI - Social Media Academy - Online Management Briefing

Social Media ROI

Axel Schultze
President Social Media Academy

#SMACAD
© Copyright Xeequa Corp. 2008

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Agenda

Enterprise level social media engagement
models
Methods, models and frameworks to create
high impact strategies
Social Media in the support department with
ROI of 142%
Social Media in the product management group
creating an ROI of 167%
Social Media in the sales organization creating
an ROI of 337%
Social Media in the marketing department
creating an ROI of 525%
Organization models that allow high impact
ROI in enterprises
Where to start – who to hire.

© Copyright Social Media Academy 2009-2011 2 Copying or distribution is prohibited

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Three Years Ago

Calculating an ROI on social media doesn’t make
sense.

Trying to calculate a financial ROI on social media is
equally impossible than calculating an ROI on
advertising.

Social Media is a “Cost of doing business” very
much like bookkeeping, facilities management,
public relations and advertising.

We simply didn’t know better


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A major project requested the change in thinking

Take a $1B company
Typical production cost 40% ($400MM)
Save 1% (logistics & procurement) $4MM
Cost of sales 30% ($300MM)
Save 5% / increase effectiveness (advocacy) $15MM
Marketing expenditure 3% ($30MM)
Save 10% (Social Media) $3MM
Support cost 10% ($100MM)
Save 10% (joint support) $10MM
R&D cost 5% ($50MM)
Save 5% (co-creation) $2.5MM
Overhead 5% ($50MM)
Let it be ;-)
Profitability 5% ($50MM)
Increase 69% (Social Media) $34,500,000
To $84,500,000


Creating a High Impact Strategy

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Strategic Social Media Engagement

Developing a social media strategy for a team
of 800 or 8,000 and 25,000+ customers
isn’t an easy task!

A Social Media Strategist need to be
able to think cross functional and
with an ROI in mind. Creating a
an environment highly engaged
and motivated customers doesn’t
come for free.


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Creating a high impact strategy

You can’t make a difference with 5 people on social media
and the rest of the company is doing business as usual.

Conduct a thorough assessment
Develop a strategy (use Strategy Framework)
Understand social media monitoring
Create an organization plan
Support the various departments
Develop a presence plan
Develop engagement programs
Develop team guidance and structures
Integrate business partners into the strategy
Build the entire plan together with customers


Measuring ROI
on Social Media Initiatives

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Our social ecosystem

The NCP Model and the four quadrant assessment
Model helps to know the ecosystem in great detail
We know our networks
We know everybody in our ecosystem
We know who the influencer are
We can track all our activities

If we know who is in our ecosystem – we can match
it with our customer list
New prospects generated
New customer generated
Repeat customers

Now we can close the loop and calculate a ROI


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Social Media ROI Calculation

CM (Contribution Margin)
IC (Interaction Cost)
Is getting us to our financial Social Media ROI:


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ROI Example

We generate $ 4 Million contribution margin
from revenue of $12 Million through business
from people we know are in our respective
groups and communities.

The cost of managing and servicing the
communities with teams, technology and other
resources is $3 Million

ROI = (($4M - $3M)/$3M)*100) = 33%


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Social Technology for ROI and other KPIs


Examples

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142% ROI - In the support department

Reducing the support team from 600 to 400
Augmenting the support team with 5,000
active customers
Investing $220,000 in motivation and
customer engagement programs

Support Model
Team 600 $30 $5,280 $ 3,168,000.00 $ 2,112,000.00 $ 1,056,000.00
Strategy $ 220,000.00
Systems and tools $ 45,000.00
Education $ 80,000.00 $ 345,000.00
Programs $ 220,000.00 $ 836,000.00
ROI 142%


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167% ROI In the product management group

Preventing product design mistakes by 10%
Co-Creation through product design community
Reducing product launch cost by $350,000
Joint product launch with advocates, engaged
customers and friends of the company

Product Management
R&D $ 5,000,000.00
10% Failure rate $ 500,000.00 $ 250,000.00
Launch cost $ 500,000.00 $ 350,000.00 $ 600,000.00
Strategy $ 180,000.00
Education $ 20,000.00 $ 225,000.00
ROI 167%


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337% ROI In the sales organization

Reducing the outbound sales team from 220 to
170 and growing the reach from 22,000 per
month to 25,000 per month
Moving from 100 cold calls with an average 5%
contact rate per day
To 250 social touches with an average 10%
contact rate per day

Sales Organization
Outbound sales team 220 $ 13,200,000.00 Reaching 22,000 contacts per month
170 $ 10,200,000.00 Reaching 25,000 contacts per month
$ 3,000,000.00
Strategy $ 350,000.00
Programs $ 100,000.00
Education $ 80,000.00 $ 686,000.00
ROI 337%


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525% ROI In the marketing department

Moving from less attractive corporate
generated content (advertisial mail shots) to
user generated content, providing social media
based experience
Cut the content creation and distribution cost in
half i.e. from $2 million to $1 Million
Increase the reach three fold from 200,000 to
600,000

Marketing Organization
PR, Advertising & Event budget $20,000,000 (2% of $1B)
Corporate generated content $2,000,000 Actual reach 200,000 (1%)
User generated content $1,000,000 Actual reach 600,000
Delta in reach $2,000,000
Strategy $250,000
Systems and tools $50,000
Education $20,000 $ 320,000.00
ROI 525%


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Where to start – Who to hire

Start
Train a group of people who understand your
company and your business
Make a thorough assessment, not trial and error
Develop a purpose driven, cross functional social
media strategy.
Use a proven strategy framework
Develop execution plans

Hire a Director Social Media (14,000 open)
Take people from your existing team
They know the culture, the customers, the
processes…
Hire people once you are up and running – not
to get up and running


Social media strategists around the world

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Social Business Strategists Class

Starting May 18 (registration deadline May 6 / Int’l April 30)
All lessons are on demand at your own leisure
All workshops are instructor lead
Every Wednesday (90 – 120 min.)
US / EU Workshops starting
08:00 am (PST) / 11:00 am EST
17:00 (CET)
AU Workshops
11:00 am Sydney time
Perform your free online entrance exam
Tuition: $3,250

Have a 1:1 conversation with us (skype or phone)


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Thank You +1 (650) 384-0057
xeesm.com/AxelS

http://SocialMedia-Academy.com

Social Media Academy Page and Group

Social Media Academy Group

@smacad

All social presences: http://xeesm.com/smacad

© 2011 Social Media Academy. All rights reserved. This content is protected under the copyright law of the United States. It is prohibited to
make full or partial copies or extractions of this documentation without the explicit written approval from the Social Media Academy.

All materials contained herein are the property of the Social Media Academy and its faculty and may only be used, by an enrolled student for his
or her own educational benefit.
Social Media Academy | 228 Hamilton Ave. | Palo Alto, CA 94301 | (650) 384-0057


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About

The Social Media Academy is considered the leading education and
research institute for applied social media in business. Education
programs are specifically designed for business professionals from
all industries. The main emphasis is to help business managers and
consultant to get a comprehensive education and hands on
experience through collaborative workshops in all aspects of social
business engagement including strategy development, planning,
tools selection, resources allocation, organizational development as
well as reporting and analytics. Attendees learn to use leading
methodologies, models and frameworks such as the social media
strategy framework, the four quadrant assessment methodology or
the NCP model and other strategic tools to create successful social
media engagements.

The Social Media Academy is based in Palo Alto, California with
representation in Europe and Australia. For more information visit
http://smacad.com


Social Media ROI - Social Media Academy - Online Management Briefing

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