Question

Topic: Research/Metrics

Proving Roi For Social/community Programs

Posted by Anonymous on 9/9/2008 at 5:37 PM ET 1125 Points
I am writing a business case for a community/social networks program to build loyalty and support for an education product. I need to show an ROI on my program in terms of a value or percentage of total revenue. As you know, these kinds of values are often used by executives to choose between programs that are pitched by business leaders.

Does anyone have any metrics you know of that can help me prove the case?

I don't need qualitative research, I've built the case using mountains of great research about what these programs can do for a business... but I need to build the financial side with examples of what the program means for top and bottom line.

help?
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RESPONSES

  • Posted by Frank Hurtte on 9/9/2008 at 5:59 PM Member
    here are some suggestions...

    for many retailers even slight gains in sales at existing locations without changes in cost result in large increases in profit.

    Most business associations produce what they call the "PAR" profit - analysis - report. These show the typical costs associated with the industry. Plug in some marginal gains - say 1% in top line sales and see what comes out the bottom. They will respect you for researching their industry.
  • Posted by Peter (henna gaijin) on 9/9/2008 at 8:43 PM Member
    Both Frank and Gian have interesting and informative responses. As they point, ROI doesn't have to be directly financial, but can be an improvement in another indicator that is important to those who approve the project. For example, Red Cross may look at how much donations they have taken in, or how many people in need they have served.

    You can also still try (though it likely won't be easy) to quantify this with dollars, as executives often prefer. If this is a case where you lower costs of educating (while providing the same level of education), then it is easy to get the value side of the ROI equation (how much you lowered costs).

    But if it is improving education, it can have value in improved outlooks for those who are educated. You can show how this value has increased the prospects for those who partake. MBA programs do this all the time when they show average salaries for those without MBAs versus average salaries for those who graduate from their programs. Basically you are comparing how people who have gone through this program (or similar programs) have fared as compared to compared to those from similar backgrounds who haven't been through this type of program.
  • Posted by Jay Hamilton-Roth on 9/9/2008 at 8:47 PM Accepted
    Have you looked at any of these resources:

    https://www.frogloop.com/social-network-calculator
    https://mediamindshare.wordpress.com/2008/07/23/roi-calculating-social-netw... (commentary on frogloop's tool)
    https://leveragesocialmedia.com/?cat=22
    https://www.doshdosh.com/social-media-networking-and-roi/
  • Posted by SRyan ;] on 9/10/2008 at 2:51 AM Accepted
    The topic might be a little broad to address your specific concerns, but the recent MarketingProfs online seminar Tools and Techniques to Measure the Effectiveness of Social Media Campaigns has some interesting case studies cited by Kami Watson Huyse. Check it out!
  • Posted by Dawson on 9/10/2008 at 4:38 AM Accepted
    I think ROI is a fairly specific term and using a monetary based framework really helps. In my own experience, research based on "soft" metrics alone is likely to get a flat reception vs something with a more financially orientated approach.

    If you're really unsure quite what impact something like this may have on the top line performance then one simple trick is to provide a range of outcomes based on different scenarios. i.e. something like:
    1) If we achieve a 2% improvement in our sales performance on this product, the ROI would be x%
    2) If we achieve a 5% improvement in our sales performance on this product, the ROI would be y%
    etc

    Then use case studies or other research to back up the x% / y% figures.

    Use a simple P&L structure to calculate your ROI and be clear about any calculations you use to ensure that you are transparent. Poor assumptions will be picked up on early so best to be upfront about any assumptions you make and challenge them with your colleagues until you are satisfied that they are reasonable.

    All the best,
    John
  • Posted by koen.h.pauwels on 9/10/2008 at 10:24 AM Member
    Dear Polkadotcom,

    In addition to the excellent sources above, you may draw upon my research on ROI of social network markeitng:
    https://mba.tuck.dartmouth.edu/pages/faculty/koen.pauwels/working_papers.ht...
    This method is also used to decompose performance (in your case revenues) into the percentage due to various marketing actions. You may contact me for more information

    Good luck!
  • Posted by Levon on 9/12/2008 at 11:01 AM Member
    The monetary value is long-term exposure. Being exposed to social network audiences is like being exposed in other mediums like TV, Radio and Print. Sometimes the trickle is felt in the long term rather than the short.
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