In the social business arena, many strategists and practitioners have learned to dance very well. Usually, they do their best moves when asked, “What’s the ROI of Social Business?” From industry experts to vendors, to practitioners you hear lots of soft benefits from people when asked this question. Often, you hear some broad sweeping general statement such as Find experts faster or Improve innovation. I’ve written in previous posts that these terms are mostly jargon that must be demystified to be understood.
Another approach to estimating ROI is to look at the social media tool in use and suggest the value is people are logging on and participating. Another area of confusion is the topic of “engagement“. This term has been used for years to describe workers who are “fully involved in, and enthusiastic about their work.” But somewhere along the way, it’s been repurposed to mean “contributor” by the social business crowd. These definitions are completely different and can cause great confusion inside of companies.
If you take the benefits above, you may be able to convince certain executives they should invest in social business. But, there’s one executive who will raise his/her eyebrow and ask, “What’s the measurable ROI of this?” or “How do I prioritize this over <pick your favorite ERP project> which will save the company $1m year-over-year?” These are the questions you need to be ready to answer.
What’s important to the business?
To get started, we need to understand what businesses care about. In my experience, this can be broken down into 4 areas:
- Increase Revenue – e.g. Grow sales, acquire new customers, develop new products
- Reduce Cost – e.g. Shorten project completion time, reduce inventory, improve process efficiency
- Improve satisfaction – e.g. Provide customers with better information/services/products, improve morale, reduce attrition
- Reduce Risk – e.g. Avoid fines, reduce intellectual property loss, Increase security awareness
If we further analyze these, we can see they break down into 2 general categories:
Quantitative value is a value that can be measured using quantities such as Net Sales, Qualitative value deals with items around quality that are highly subjective such as Customer Satisfaction.
There are times when the qualitative benefits have quantitative values (such as avoiding the risk of non-compliance to prevent a potential fine), I’ve found these qualitative breakdowns to be a good starting point when working with business value.
Quantitative Value
If we look at the quantitative side of the table, these values are fairly straightforward. If you’ve implemented a social business solution and it increased your sales by 15%, it’s easy to tie this to business impact. In some cases, this may be all you need, but to be credible you must be able to prove you accomplished what you promised. Now you must establish a baseline and measure the delta over a period of time:
Baseline -> Change -> Result
Sales for 2011: $1,000,000 -> Implement social business -> Sales for 2012: $1,150,000
But business is rarely this simple. More often than not there are many changes implemented simultaneously, so tying value back to a specific component is difficult. In this case, you can use a series of interviews to build qualitative data to support the quantifiable values.
“In speaking to the sales team, 35% of the sales team felt the social business tool enabled them to shorten their sales cycle by 4 days or more, while 38% felt they saved 3 days, enabling them to spend more time closing new deals“
Qualitative Value
Working with qualitative value is much harder than quantitative value for many reasons. First, you are asking for opinions and feelings. These are highly subjective and usually collected by either surveys or interviews. There is a risk of people misunderstanding the question as well as not wanting to share things that may paint them or anyone in a negative light. Another risk is not actually capturing a representative sample leading to false findings. Finally, there’s the question about whether this the problem that matters to your company. If you work for a company where employee morale is already high, improving morale may not be a priority.
One area that is especially difficult is around productivity. When saying that something improves productivity, many people will question this with statements like, “Does this mean my employees can now leave early?”. It’s best to focus on what is now possible that wasn’t before. For example:
The help desk has increased productivity as a result of their utilization of the enterprise social network, resulting in them closing 20% more tickets in a day.
Those tricky metrics
Metrics can be elusive. In almost every company I’ve worked for, the metrics are far less mature than you need. Often, even the most rudimentary metrics are missing or not captured accurately or consistently. People say they don’t have time or the metrics aren’t important or they’ll just “know” if there’s an improvement.
The last thing you want to do is be critical of the people and or groups who aren’t capturing the proper metrics. Instead, be consultative and work with teams to see what they actually have and what you can use. Identify how they judge themselves and help them work to mature metrics and see how the group can benefit from the effort. I usually deploy a “Good, better, best” roadmap when working with teams so we can show how each step in metrics maturity will deliver more concrete information (see: Case Studies for more information).
Let’s look back at the sales cycle discussed above. Perhaps the sales team doesn’t have a sales automation tool, but with the business growing, they know it’s time to start to consider one. The metrics roadmap could look something like this:
Good: VP of Sales view of the average sales cycle length <- Qualitative value that can be used as a baseline
Better: Having Sales Associates track their cycle length <- Shift from qualitative to quantitative
Best: Integrated with Sales Automation tool tracking Lead to Order days <- Automated
Being more specific about jargon
In previous posts, I’ve tried to explain what businesses and leadership want when they say things like Improving Collaboration, Break down silos, Innovate better. Usually, it’s just a matter of getting more specific. For example; “Finding experts” inside a company can be valuable, but we do ourselves a disservice by generalizing and not calling out what’s actually going on. There are many different types of expertise that is needed inside companies. It’s best to document them all so that people understand this.
By leveraging our enterprise social network, our sales teams have access to product experts and can find answers to customers’ questions faster, resulting in a shortened sales cycle and improving customer satisfaction.
In many cases, it’s not that people are looking for experts, they are looking for answers. When you focus on what having those answers enables for your business, you start to have the basis for a solid social business case, focused on answers.
By having process owners engaged on the enterprise social network, we can remove the delays which occur when something breaks an existing process. This becomes clear when you see something like:
By having the accounting department actively monitor the sales group, they were able to clear up a system error on a big customer in minutes that would have taken days in the past and potentially lost the $10m sale.
Summary
These are the basics for uncovering and proving “hard” business value within your organization. This information is based on the assumption that you are already experimenting and have implemented a social business solution. In my next post, I will share how to align your social business case to the company strategy and how to leverage “Conservative Guesstimation” to make your business solid in predicting value within your organization.
As always, I’m interested to hear your feedback. Let us know how you are building your social business cases inside of your company.