Social Media ROI for Dummies

Posted by Harish Kotadia, Ph.D. on December 16, 2009

2 comments | 4273 reads

Great Slideshare presentation by Olivier Blanchard on the Basics Of Social Media ROI. I like slide nos. 32-34 on Investment Return Relationship and emphasis on Non-financial Impact of Social Media. Also, slide nos. 39-55 on how to measure Social Media Impact.

Olivier Blanchard Basics Of Social Media Roi

View more presentations from Olivier Blanchard.

Republished with author's permission from original post by Harish Kotadia, Ph.D..

Harish Kotadia, Ph.D.

Dr. Harish Kotadia has more than twelve years’ work experience as a hands-on CRM Program/Project Manager implementing CRM and Analytics solutions for Fortune 500 clients in the US. He also has about five years’ work experience as a Research Executive in Marketing Research and Consulting industry working for leading MR organizations. Dr. Harish currently lives in Dallas, Texas, USA and works as Social CRM/CRM and Analytics Consulting Lead for Infosys Technologies.

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Andrew Rudin

December 17, 2009

Does ROI Really Tell the Story?

Harish: thanks for sharing this. Oliver Blanchard provides a great explanation of the financial definition of ROI, and the slideshow was entertaining, but I struggle with term [i]ROI[/i] in the sales world and wonder if the term hasn't become overused, obscuring the clarity of the accounting meaning in the process.

[i]ROI[/i] warps decisions because it doesn't consider the two major variables of time and risk. (The ROI equation in the presentation doesn't include them). But are C-Suite executives making capital investment decisions on ROI alone? What about non-capital investment decisions? Could they? [i]Should[/i] they? These aren't simply hypothetical questions. Salespeople need to know because an ROI-based business case could--and does--provide an incomplete picture for decision makers.

Because of the often-long time to benefit for many IT, operations, marketing, CRM and social media initiatives, time and risk must be brought into the calculus. Even "return" and "investment" have widely varying interpretations among CFO's.

For social media, the overarching question on any CFO's mind is (or should be) "how will this initiative impact future value?" To our collective frustration, many fall into the trap of considering projects strictly on the merits of the current period impact. I will write more about this in a blog I'll post next week.

Harish Kotadia, Ph.D.

December 17, 2009

Does ROI Really Tell the Story?

Andrew_Rudin:

Thanks for your excellent comment on this post. I agree with you that the term is being overused, especially in the context of Social Media.

To some extent we can understand the business reasons for "ROI", especially as we are coming out of a major economic crisis and every investment has to be properly justified. But I agree that focus should be on other factors as well. I find it hard to understand that something as "transformational" as Social Media is not being properly understood by senior execs in organizations. See my earlier posts:

Dear CMOs, Wake up to Social Media challenge (http://hkotadia.com/archives/434)

When it comes to Social Media, CEOs and CMOs should lead from the front (http://hkotadia.com/archives/329)

What is Social CRM and why it is important (http://hkotadia.com/archives/347)

In the process of justifying investment in SM initiatives on the basis of ROI, organizations have lost valuable time. Now, they will be "forced" to launch major SM initiatives in a hurry because of competitive or customer pressure or just to engage customers who are discussing about their brands in Social Media. I expect major uptick in business for Social Media Marketing, CRM software & services starting Q2, 2010 and expect this "turbo" growth phase to last till 2013 at least!

Thanks again for your comments and input.

Harish Kotadia
http://hkotadia.com/

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