Being a part-time MBA student, one of the things drilled into our heads is the importance of ROI and its basic use when making tough business decisions. When we start a new project or start to even consider taking on a new initiative, as business people, we often times look at the return on investment (ROI) associated with taking on the new project. The ROI gives the company and business managers an idea on what to expect as far as returns are concerned for the business. ROIs are meticulously evaluated and analyzed. The basic formula for ROI is as follows:
ROI = (Gain from Investment – Cost of Investment)/Cost of Investment.
Risk factors play an important role in determining whether or not to start a project. For example, if the risk is high if project, and ROI is relatively low, a company will most likely not take on the project due to the large possibility the project will fail.
As new web 2.0 technologies are being introduced, companies have to once again engage in trying to assign an ROI to web 2.0 technologies. I initially thought that ROI could be applied to a web 2.0 technology such as a blog, but I have learned this is far from the truth. Its hard to measure the true value a blog has on a companies marketing effort. Any VP or CEO can implement a blog and post discussions but does anyone care? On one hand you may have an engaging blog while another is barely even noticed. The one that commands a following is truly instrumental in connecting with the masses. Given that web 2.0 technologies are highly dealing with user generating content and experiences, its hard to say that a given web 2.0 technology will hold “X” amount of value. So question is, how does a company place value on a web 2.0 technology? This question is hard to answer since web 2.0 technologies affect many “soft” areas such as loyalty and customer engagement. In my opinion, here are some factors you may want to look at:
Estimating the number of customer interactions (such as blog posts, downloads, surveys, product sales coming from the web 2.0 site, etc. )
Time required to set-up the web 2.0 technology
Time to learn the technology.
Maintenance of the site
Affect on other company processes (i.e. is your blog answers certain product related questions, this may in turn reduce customer service calls.)
Customer satisfaction
Can you think of any others?
ROI = (Gain from Investment – Cost of Investment)/Cost of Investment.
Risk factors play an important role in determining whether or not to start a project. For example, if the risk is high if project, and ROI is relatively low, a company will most likely not take on the project due to the large possibility the project will fail.
As new web 2.0 technologies are being introduced, companies have to once again engage in trying to assign an ROI to web 2.0 technologies. I initially thought that ROI could be applied to a web 2.0 technology such as a blog, but I have learned this is far from the truth. Its hard to measure the true value a blog has on a companies marketing effort. Any VP or CEO can implement a blog and post discussions but does anyone care? On one hand you may have an engaging blog while another is barely even noticed. The one that commands a following is truly instrumental in connecting with the masses. Given that web 2.0 technologies are highly dealing with user generating content and experiences, its hard to say that a given web 2.0 technology will hold “X” amount of value. So question is, how does a company place value on a web 2.0 technology? This question is hard to answer since web 2.0 technologies affect many “soft” areas such as loyalty and customer engagement. In my opinion, here are some factors you may want to look at:
Estimating the number of customer interactions (such as blog posts, downloads, surveys, product sales coming from the web 2.0 site, etc. )
Time required to set-up the web 2.0 technology
Time to learn the technology.
Maintenance of the site
Affect on other company processes (i.e. is your blog answers certain product related questions, this may in turn reduce customer service calls.)
Customer satisfaction
Can you think of any others?
No comments:
Post a Comment