Skip to content

Calculating ROI for Enterprise 2.0 projects

September 18, 2011
  • What is ROI?

Return on investment, can be used to measure the value of an entire company or of a specific investment that a company might make. To define ROI, it is “The ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction”.

  • How to measure ROI?

Thus, the simplest term to calculate ROI that is companies must have more money coming in than money being spent on something.

Simple ROI = (Gains – Investment Cost) / Investment Cost * 100

The following picture illustrates ROI in a good way:

 

Lenovo was able to achieve cost savings by a 20% reduction in call center activity as customers go to community website for answers

Dell sold $3,000,000 worth of computers on Twitter. Dell also tweets about existing promotions and answers customers’ queries.

BlendTec use low-cost online video with the theme ‘will it blend’ on YouTube. As a result, their videos have received over 50  million views  and over 200,000 followers as well as  700% increase of their sales.

Gary Vaynerchuk – Family Wine Business uses social media to run his business. $15,000 in Direct Mail = 200 new customers, $7,500 Billboard = 300 new customers and $0 Twitter = 1,800 new customers. As a result, the family business exploded from $4 million to $50 million which is a remarkable achievement.

Advertisements

From → Enterprise 2.0

One Comment
  1. Great post Muath!!! You have provided good examples of how the ROI has been used in a real organizations and most of them are about cost saving. I just would like to add that the ROI can also improve both customer and employee Satisfaction.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: