Week 10: ROI

Well it’s finally the last blog. Thanks for reading and commenting on post’s appropriate the community we all helped build over the semester.

Onto this weeks topic: Return on investment. What is it? Well it is calculated using the following formula:

On the surface social media seems like it would have a great ROI:

  • cheap/free to setup and use,
  • easily able to upload/use

However, understanding the formula is easy, finding actuate numbers to enter is difficult. Let’s look at the formula again. It’s obvious from the onset that the ROI needs fairly specific numbers, and yet depending on the business or Social Media endeavor not all investments are quantifiable.

One of the most common McKinsey (Global Institute Report) levers we looked at in the past has been marketing, sales and customer service related. An organisation’s marketing team might not be able to discern which marketing tools have proved most valuable unless they launched and tracked a specific Facebook/Twitter campaign. Furthermore, effective (or ineffective for that matter) customer service leads to impacts on a business reputation and brand. These individual impacts however can be hard to track and measure (for both positive or negative effects). In the past posts we have also looked at social media risks and their business impact. These risks (such as a inflammatory comment) could lead to loss of sales but that same quarter might have had other issues that caused loss of sales (historical low sales period).

So why invest in Enterprise 2.0 if a business is unable to track their effects? Well this is not entirely true. When it comes to social/front facing technologies, Martian Kosler  discusses the issues and “flawed logic” behind ROI calculations and enterprise 2.0 tools. He argues that ROC (return on change) or RONI (risk of not investing) is what organisations should focus on, however understands that positioning these concepts to a board is exceptionally difficult.

Back to our favorite mobile phone manufacturer; Apple. I have already previously discussed how the media (of all forms) keep telling us different details about Apple products especially the ever famous iPhone. Does Apple take stock of the market via the McKinsley levers? Well we have already investigated this in great detail here. The organization however can’t put a price on Social Technology. Do not mistake this with Apple not putting a price on their reputation and brand which has become the world’s top brand.

The issue is that I am unable to tell you that Apple’s Facebook and Twitter has directly helped or hindered their growth to become the number one brand and I doubt anyone with Apple can provide specific numbers either.

Well guys I hope you enjoyed the last blog, good luck with your last assignments!

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5 comments on “Week 10: ROI
  1. Mr. Terry says:

    You’ve explained ROI and RONI well, but why pick Apple? They are kind of notorious for not needing social media campaigns, since they are extremely word of mouth. Unless you consider their keynote addresses that they stream social media, which they really are not. In addition to that Apple has a habit of keeping its numbers to itself unless it suits their interest to release them.

    – James
    http://www.enterprise-activa.com

    • gally101 says:

      Hey,
      I am in agreement with James. You have done a great job explaining ROI and how to use it.
      But I don’t believe picking Apple was a good idea, as Apple are well known for keeping details to them self. For instance with the latest Iphone they let the rumors run wild until about a week before the Iphone was released to announce what the specs where.
      Otherwise a great read!

      • colhili says:

        Thanks for the comment guys. Let me explain my thought process here, what I tried to point out is that Enterprise ROI form a social media perspective is either impossible or flawed. I mean this form the point of view that negative talk about Apple never seems to affect their bottom line, yet negative comments / perceived value of say a Nokia phone is that of lesser value if blogs/Facebook and twitter are anything to go by.

        However, this analysis is based on personal experience and is hard to quantify as a regular ROI calculation. If we discussed collaborative tools then a more traditional ROI could be generated and would have value, but this doesn’t stop companies in investing in other social tools not should it.

        In short i picked Apple specifically because company information is almost nonexistent yet opinion and unofficial information is abundant.

  2. thaiithaii says:

    Oh I see, that’s a really interesting take on this final blog. I honestly think you made it unnecessarily more difficult for yourself, but I really respect that you took the challenge.

    To help the readers, perhaps you could have included a link to their Facebook/Twitter/whatever page so we could see for ourselves how many likes they have, or how often they comment. OR, for the really lazy reader like myself, you could include a screenshot and then go into further depth about your findings. IT would have also helped flesh out your post a little more.

    But otherwise, it was a really good read! Keep up the good work ^^

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