It is all about creating incremental business value.
Almost every CIO that I speak with asks the same question: "How can I measure the return on investment (ROI) of social software and social media solutions?" For me, measuring the ROI of social software is not about monetization, but actually measuring the incremental value it brings to your business. It is about measuring how well an employee, a team or even the entire company is doing in meeting the business challenges they are trying to address.
Here are some typical areas which social software can be measured:
- Do you get new products or services to market faster because of improved team collaboration and sharing?
- Are there resulting cost reductions in existing business units, departments or teams because of improved processes and communications?
- Has knowledge sharing improved, resulting in a reduction in duplicate work or elimination of inefficient processes? (i.e. best practices and tools that improve the quality of processes, products or services)
- Has your company become better connected with your customers resulting in increased satisfaction? Higher customer retention rates? Minimized support costs?
- Has knowledge sharing increased the rate of innovation, new product improvements, changes to methodologies and/or the number of ideas?
- Is employee satisfaction and motivation improved? Have your employee retention rates gone up? Have the number of sick days gone down?
These are just a few ways to measure incremental business value. But, before you begin any business social initiative, you must know what you are measuring, how you are going to measure it and where you are starting from.
Lets use a new product release as an example. The product manager has decided to set up an online community to try and improve cross team collaboration, knowledge sharing and overall communications, during the release process. The product manager knows that on average it takes 6 months to launch a new release. He or she also knows that it costs "X" dollars and uses "Y" resources - start to finish. By benchmarking this data right from the start, he/she can use these data points to measure the incremental value (if there is any) during or after the project has been completed.
Case Study - Green Grass One
To provide a more concrete example, I would like use one of our customers, a small Canadian company called Green Grass One. This company focuses on helping Golf Course Professionals acquire equipment and clothing apparel at heavily discounted prices. Currently they support over 320 pro shops throughout Canada, and their business model is simple…the more you buy… the more you save.
But as their customer base grew, trying to effectively and efficiently communicate with all of their pro shops became almost impossible. Telephone calls and email blasts were just too time consuming and inefficient. Just imagine the amount duplication.
The company needed an alternative. Working with IGLOO Software, Green Grass One created an online community to more effectively communicate and collaborate with their key customers and suppliers including Callaway Golf and Nike. Using their new online community, they now send out product news bulletins using blogs; wiki pages to outline purchasing terms and conditions; photo galleries to build their online product catalogs and discussion forums for gathering feedback and answers questions from their customers.
In less than one year, Green Grass One has seen a steady rise in customer satisfaction and has already saved of over $60,000 in external staffing and consulting fees.
Resource Links
- Click here to read the Green Grass One case study by IDC
- Click here to listen to the Green Grass One webinar
- Click here to download the MS PowerPoint deck
1 Comment
Nice blog post. Reinforces the point that you can’t build a generic universal business case for social software, but you can certainly build a business case for a specific well defined business purpose that is enabled via social software.
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