What's the ROI of social?
For almost 20 years, organizations and executives have asked that question, demanding a hard financial payback when considering an investment in social and community platforms. At a macro level, they want to know, how does a concept like “social collaboration” directly impact the status quo and improve:
- Sales, product innovation and speed-to-market of new products?
- Customer satisfaction and employee engagement?
- Cost savings and operating efficiency?
These are all logical questions as every organization has these same objectives. Yet, a magic formula for quantifying the business value of “social” has proved elusive. What’s the value of connecting people; engaging groups of individuals in collaboration within the context of a community; sharing ideas or knowledge; or learning from social interactions and the transfer of expertise, experience, interests, feedback and insights?
Benefits of Social Technology Can Be Significant Relative to the Investment
In simple terms, ROI = Results / Your Investment. While an investment in social technology involves money, time and resources, the monetary component is relatively low compared to, say, an ERP system. Yet social delivers significant, quantifiable results such as increased revenue, cost reduction and people development. Just one idea or one conversation or one social interaction all have the potential to spark the next product innovation or reduction in operating costs.
Post-it Notes is a classic example of a billion dollar product invented by an individual chemist at 3M who tried for years without success to promote his invention internally. It’s also well documented how Toyota listened to and incorporated the ideas and feedback of line workers to improve the assembly line, reduce costs and improve quality.
While these two companies showed the success of harnessing the collective intelligence of individuals, there are hundreds of examples of missed opportunities where organizations failed to capitalize on the ideas, knowledge and expertise of individuals throughout their value chain. What's needed is an effective and efficient way to more easily enable the flow of information, ideas and knowledge from those who have knowledge to those who seek it.
Investing in the right technological capabilities is critical for connecting people and self-forming communities to thrive. Social technology provides the underlying capabilities that help transform how organizations socially interact, communicate, innovate and collaborate with one another. Often, simply investing in social technology and engaging in it is how some organizations get started. Technology can become viral and take on a life of its own. In other cases, technology by itself is not the answer. Either way, a top-down collaboration strategy can help set the right organizational focus.
Embed Collaboration as Part of Your Business Strategy
At the strategic level, creating a vision and identifying objectives are critical in driving the right focus around what you hope to achieve. This includes connecting people more efficiently and harnessing the collective knowledge of individuals across your value chain. You need to understand the opportunities and baseline metrics where possible, develop a plan and determine a timeframe over which the investment will be measured.
Gartner and McKinsey both have performed studies on the benefits of social collaboration, and they are definitely worth reviewing to gain some strategic insights. These studies include measured results where organizations have reduced costs, increased revenue, shortened time to market or improved productivity, employee engagement and customer satisfaction by investing in social technology.
Quantifiable Business Value is Use-Case Driven
Tactically, identifying specific use cases where community building and social networking will positively impact culture and change is also part of the ROI equation. Identifying specific contextual use cases in which social technology will be applied is critical in justifying its business value. And there are hundreds of examples across any organization including:
In each use case, measurement and metrics may have different meanings depending on the approach. Use-case-driven tactical execution will allow your company to aggregate measurable ROI at an organizational level and also understand the impact at:
- A community level: how can social technology create greater trust, expertise sharing and problem solving, and improve the flow of information and knowledge throughout projects and process.
- An individual level: how can it increase engagement and enhance skills, job satisfaction, professional reputation and personal productivity.
Social Technology Provides Capabilities to Measure What You Couldn’t Measure Before
By incorporating collaboration as part of your organizational strategy from the top-down, investing in the right social technology, and focusing on specific use cases, you will begin to impact cultural change from the bottom-up and realize business value. In the absence of a top-down strategy, focusing on specific use cases with small investments in social technology will help determine the value that social collaboration through communities can have on the organization and culture from the bottom-up.
Regardless, it’s likely your organization has few, if any, benchmarks to compare measurable results against. Until social technology, there really has been no systemic way to measure concepts like “community.” Most decision makers and executives fail to recognize that investing in social technology provides new capabilities to measure what they couldn’t measure before.
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