In yesterday’s post, I defined social media ROI as the measure of what matters (profit…revenue…mission…) versus the resources required to achieve it.
Starting with the resources required, we can identify the specific costs associated with a social media strategy. Costs derive from two major sources: technology and people.
Technology
The greatest difficulty generally lies in disentangling those technology costs that result directly from social activities from those that would – or should – occur “anyhow.” I have found that the ROI for many organizations just venturing into social media can be so high that the distinction seems irrelevant to the decision to proceed. But it is important for accurate tracking and decision-making down the road.
One large non-profit, for instance, realized that technical upgrading was necessary in order to reap the benefits of the new social strategy. The failure to upgrade previously, however, was impeding their ability to operate efficiently and to grow even in the existing environment. Regardless of the social media strategy, we agreed that the organization needed to add:
· a public front-end website redesign, including development of a common portal that would unite the siloed units and help users to understand and navigate all of the benefits and offers of the organization
· an e-commerce and customer feedback platform
· a CRM system
While those costs were not a direct result of the social strategy, other costs were, including:
· a social networking platform, which could be a simple add-on and link to the CRM or a dynamic user experience with community segmentation
· digital marketing costs, covering content creation and digital marketing tools as well as an analytics platform
· digital content delivery, which encompassed both a storage and delivery platform and external resources to help digitize current content
People
Personnel costs exceeded the technology costs, even though we found a number of social media savvy staff. The use of existing resources helped to control the incremental costs ~and drove new excitement throughout the organization ~ but people costs were still the dominant factor in the investment.
Because we wanted to change the culture and embed a social strategy within all decision-making and activities, we did not set up a separate social media team. Three categories of personnel expenditures, however, were still needed.
· Digital strategy implementation assistance – governance, program management, ongoing education and training, and execution – imbuing social thinking into all activities – was the major cost for the first year. Some of the cost was for external assistance, which ramped down as the internal skills improved and the culture began slowly to shift.
· Digital Project Champion – a senior person to facilitate and pro-actively drive the social strategy going forward. The Digital Project Champion is an internal subject matter expert, a facilitator to bridge across the distinct organizational units, a corporate strategist, and a clear-eyed “energizer” and non-conformist. As the driver of a virtual center of excellence, the Digital Champion has a lot of dotted line relationships, but no direct reports.
· One new staff resource, who brought expertise in a new revenue opportunity that the social strategy had created.
Detailed cost estimates and expenditure timing were required before forecasting the impact on revenues and mission. For this organization, a conservative ROI was calculated at 200%. WOW! An easy decision to move forward, and to do so in the “right way.”
Tomorrow I will look at the other piece of ROI – revenue and other measures of what matters.
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