Trying to Determine the ROI of Social Media
Actually, it is possible to measure the Return On Investment (ROI) of a Social Media program, just like it is possible to measure the ROI on a phone line.
The problem is not the true ROI, but the fact that people can seldom measure their own ROI at present.
Or, the ROI is something too vague - I have a 5 person office, we make $10,000 per month, per employee.
Salaries are...
This is fine for a McDonalds (NYSE:MCD) but if you start taking sales people off of sales calls, the revenue lost in the time away from the phone or client has to be determined.
A Call Center Example I run a call center.
I have 100 agents and 100 phone lines.
Each agent makes 5 calls an hour.
The client pays $100 per call.
My client want to increase my calls from 500 calls an hour to 1000 calls an hour, so I have to increase my call center infrastructure.
To add 500 lines costs me $5000.
To add PBX hardware costs $6000.
These are both CAPEX and you have to be able to determine the ROI on your CAPEX spend at present.
I have to hire 100 new agents at $2000 a month.
I have to buy 100 new phones.
I have to buy 100 new desks chairs, more garbage cans and so on.
Do I need to expand my office space? Do I need to increase data center space? Heating and air conditioning, computers and all the costs associated with a new call center agent.
Calculate until you know the cost of hiring a new call center agent and determine the cost per call.
That is exactly how we do it in call centers and an easier example than an office phone.
A call center is a profit center (normally) and to make a profit we have to know what resources cost and what those resources, human and other, will bring in as revenue.
If you want to see the RIO on Social Media, hire someone to do that and nothing else.
That employee cost is your investment.
Determine what the result is from hiring that person in terms of revenue.
That is your revenue.
Do the division.
Again, that example is easier than determining the cost of one person doing Social Media from a home office.
With a small business, adding extra work takes time away from something else, so the calculation is more difficult to determine, but it is possible.
The 5 person office making $10,000 per month, per employee is unwilling to hire a social media person.
They have to decide who is going to do what, how much time will be taken away from existing clients, if this lost time will generate a loss in revenue and how much the social media program will generate in revenue.
Once you know all the numbers, do the division.
Are you afraid of wasting time on social media? Have a look at: Overcome Social-Media Time Sink
The problem is not the true ROI, but the fact that people can seldom measure their own ROI at present.
Or, the ROI is something too vague - I have a 5 person office, we make $10,000 per month, per employee.
Salaries are...
This is fine for a McDonalds (NYSE:MCD) but if you start taking sales people off of sales calls, the revenue lost in the time away from the phone or client has to be determined.
A Call Center Example I run a call center.
I have 100 agents and 100 phone lines.
Each agent makes 5 calls an hour.
The client pays $100 per call.
My client want to increase my calls from 500 calls an hour to 1000 calls an hour, so I have to increase my call center infrastructure.
To add 500 lines costs me $5000.
To add PBX hardware costs $6000.
These are both CAPEX and you have to be able to determine the ROI on your CAPEX spend at present.
I have to hire 100 new agents at $2000 a month.
I have to buy 100 new phones.
I have to buy 100 new desks chairs, more garbage cans and so on.
Do I need to expand my office space? Do I need to increase data center space? Heating and air conditioning, computers and all the costs associated with a new call center agent.
Calculate until you know the cost of hiring a new call center agent and determine the cost per call.
That is exactly how we do it in call centers and an easier example than an office phone.
A call center is a profit center (normally) and to make a profit we have to know what resources cost and what those resources, human and other, will bring in as revenue.
If you want to see the RIO on Social Media, hire someone to do that and nothing else.
That employee cost is your investment.
Determine what the result is from hiring that person in terms of revenue.
That is your revenue.
Do the division.
Again, that example is easier than determining the cost of one person doing Social Media from a home office.
With a small business, adding extra work takes time away from something else, so the calculation is more difficult to determine, but it is possible.
The 5 person office making $10,000 per month, per employee is unwilling to hire a social media person.
They have to decide who is going to do what, how much time will be taken away from existing clients, if this lost time will generate a loss in revenue and how much the social media program will generate in revenue.
Once you know all the numbers, do the division.
Are you afraid of wasting time on social media? Have a look at: Overcome Social-Media Time Sink
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