Where’s the ROI?

At what point is it worth it to invest in a new user interface? For Facebook, the answer is “right now.” In the last week, the social network giant rolled out a new design for its homepage, to mixed reviews. The design isn’t bad per se – but the fact that the design was last changed in October (again, with feedback on both ends of the spectrum) makes a lot of people wonder, is it time to optimize again, or is it too much?

Facebook’s new design seems to indicate a stronger desire to push chat and keep users on the site for longer sessions. Unfortunately, the friend requests, messages, and notifications icons get a little lost in this new design—wose considering these are some of the main attractions to repeat visitors. Oddly, updates from the Facebook pages you’re a fan of her even more lost than before — which is a bit strange considering Facebook’s push to businesses.

The news isn’t all bad: the search box now has the spotlight, though the placement might take some a while to get used to. Swapping out the confusing “News Feed” and “Live Feed” options with “Top News” and “Most Recent” is another step in the right direction as well.

Should your business “pull a Facebook” and redesign? There’s a good chance your budget for redesign and optimization isn’t as big as Facebook’s; therefore, you really need to consider how broken the current user interface is before calculating whether or not to redesign. Optimizing navigation and other UI elements is generally a good use of your budget, but there’s definitely a law of diminishing returns that comes into play in this area.

Rob Pegoraro of the Washington Post asked his readers how long this new design will last. Building on that point: do you think this design was worth it? Where does the tradeoff between optimization and consistency of experience reside?

Related articles:

• Facebook’s redesign shows how important search is for social networks (freshnetworks.com)
• Facebook Begins Rolling Out New Home Page Design (Eric Eldon/Inside Facebook) (techmeme.com)
• Facebook Gets Another Facelift (blogs.wsj.com)

Social Media

Without clear objectives, you are never going to have clear path towards high ROI. This is especially the case for new technologies such as mobile websites and mobile Web applications: when your VP walks into your office and tells you “we need to do something with mobile”, get them to take a step back and define some objectives first.

If you are thinking of exploring mobile marketing in 2010, you are not alone: a recent survey by R2integrated had 22% of respondents indicate that mobile marketing is “very important” to their 2010 strategy, with 26% ranking it as “important” and 28% ranking as “somewhat important”. Company awareness and lead generation were the top two reasons given for executing a mobile marketing campaign.

All of this is great data but it’s clear that the ROI measurement for a successful local marketing campaign is still not so clear. 43% of respondents in the very same survey indicated that the “most critical area of improvement” for mobile marketing campaign would be how to fully determine the ROI.

What are most mobile marketers doing to establish a positive ROI? Says R2integrated CEO Matt Goddard: “I think because the technology is still working to fully prove itself, most marketers are playing it safe by focusing on the mobile browsing experience, where they can leverage existing Web assets, rather than on mobile marketing, where the ROI proposition is still being evaluated.” Goddard’s views are well-founded: more than half (52%) of respondents said that their mobile marketing campaign would focus on mobile Web site development rather than web applications.

Says Goddard: “The iPhone still reflects the largest base for marketers to sell into, even though the Android may be the platform du jour in terms of hype.” When asked to rate the importance of mobile platforms, 59% of respondents said the iPhone and 40% said the BlackBerry were “very important,” while only 7% thought that Android was a “very important” platform. Indeed, while the user experience is somewhat limited on the Blackberry compared to an iPhone, the huge install base for Blackberry cannot be ignored.

If you are going to jump into the mobile marketing waters for the first time this year, strongly consider launching a mobile presence that can be used across all major mobile devices and operating systems. However you calculate the return on your investment, it definitely helps if you are marketing to all of your customers — and not, say, to only those with an iPhone.

Related articles by Zemanta

• Dropbox Android and Blackberry app coming (slyvisions.com)
• Foursquare’s Facebook Integration Now Live for iPhone Users (mashable.com)
• Seesmic adds multi-account support for Android (digital.venturebeat.com)

mobile Add new tag, Android, Blackberry, Handhelds, iPhone, mobile, Mobile Web, Smartphone

TrendsSpotting just-released a report predicting changes to the social media landscape in 2010. One of the key takeaways is that 2010 is the year that social media ROI starts to get measured and monitored on a consistent basis.

While the definition of ROI is evolving to better fit the world of relationships and networks, the ability to demonstrate ROI in hard numbers — not in followers or fans — will become a baseline business requirement in 2010.

-Ustrategy co-founder Ravit Lichtenberg

If Lichtenberg is correct, that can only bode well for future investment in this emerging area. There is too much pressure from senior management in many cases to post a brands sentence or followers totals at the risk of sacrificing actual business value. The principles of the long tell demand that brands approach social media marketingin a very targeted manner so as to attract the right people rather than just any people.

Tracking the return on investment on a social media campaign will require, to many organizations’ dismay, making an actual investment. When it comes to human resources, social media campaigns tend to be woefully understaffed. Connie Bensen has a good point in her article where she predicts that 2010 is the year the Community Manager becomes mainstream. if social media is all about conversation marketing, it’s imperative that organizations have a dedicated resource on their payroll for keeping the conversation going. indeed, once the proper investment has been made, it will be easier for businesses to see what the true return for their efforts is.

Check out Trendspotting’s 2010 Social Media Influencers Trend Predictions below:

Social Media Community Manager, Investment, Marketing, Rate of return

Image via CrunchBase

This from Internet Retailer:  “Zappos.com [now part of Amazon] posted the best rating in the Gomez Inc. high broadband availability tests for October. Web shoppers could access the shoe and apparel retailer’s site 98.55% of the time last month.” To put this number in perspective, the average high broadband availability for the top 50 e-tailers in October was 92.33%.

While the average e-commerce channel marketer thinks long and hard about website availability, senior management might not always agree. After all, investing to make sure your website is always available isn’t as sexy as, say, a new Flash app, or a Facebook page.  If you’re in marketing, it’s sometimes easier to secure an investment for an externally-facing marketing component rather than a mission-critical piece of the backend like website availability. If you’re in IT, of course, you’re likely to have better luck.

E-commerce is incredibly mature compared to where it was 10 years ago. In fact, there is so much distance between us and the initial wonderment of having an online store that sometimes people lose sight of the fact that one of the benefits of selling online is 24-7 availability. if you have a brick-and-mortar location closing at 8 PM, your conversion rate drops to 0% at 8:01. If you open up an online store, while you may not see that much traffic during off-hours, you have a pretty good shot at converting that traffic that you wouldn’t have otherwise. On some of the sites I’ve managed, I’ve seen some crazy impulse purchases at 3:45 a.m that are 5, 6 times the average cart – all sales that wouldn’t have been captured otherwise.

If being able to capture all transactions in off-hours is important, the same goes even more so for during peak times. And yet, plenty of e-commerce sites face sporadic availability issues during peak hours. Despite the fact that keeping your online store up and running 100% of the time should be the goal, it’s pretty shocking how many big businesses are lacking in this area. That same phenomenon is true any times over for smaller businesses. Most of the small business owners I know have little to no idea what website availability even means, or why it’s so important. you don’t even need to start with a major investment: checking out a tool like HostTracker will pay huge dividends to start.

Speaking of website availability paying dividends, take a look at Zappos’ stellar ranking in this category. Pretty compelling case for availability being a high-ROI initiative, wouldn’t you say?

Uncategorized Amazon, Business, Conversion rate, Electronic commerce, Online shopping, Zappos

I found this good quote today regarding tracking the ROI from your social media efforts:

My response to the [social media] ROI roadblock is this – How does your boss measure the ROI of attending Chamber mixers, participating in Associations, and dropping in on networking luncheons? Done correctly, social networking on sites like Facebook is really no different – you don’t measure participation based on direct sales, you measure success based on identifying one potential strategic partner, acquiring one actionable bit of advice, or striking up a conversation or two that may eventually lead to developing a new customer. That kind of sounds like a set of solid networking objectives doesn’t it?ducttapemarketing.com, Small Business Marketing Blog from Duct Tape Marketing, Jul 2009

Read the whole article and tell me what you think. My two cents? This is spot on; it’s important to find something trackable before engaging in an social media activity, and then report on your success on an ongoing basis. Simply put, without trying, you won’t get to where you need to go.

Twitter

Why does email marketing often get overlooked when it comes to ROI? As most online marketers know, one of the highest ROI tools in their toolkit is email marketing. as a matter of fact, according to the Direct Marketing Association, in 2009 email marketing projected to generate an ROI of over $43 per one dollar spent. As a means of comparison the DMA puts the ROI of search marketing has less than half of that — not to mention the low ROI of direct mail and other traditional marketing efforts.

Today’s MediaPost article addresses a major shortcoming of email marketing: while it is good at observing certain behaviors, such as opening an email and clicking through to a website, it does a poor job of clearly displaying its long-term value.

Case in point: what’s the value of an offline sale of a product learned about from an email marketing message? An Epsilon study found that 67% of email subscribers have purchased products off-line as a result of an email marketing communication.

While it is harder to quantify the total ROI on email marketing, there are some easy ways to get closer to the true number:

1. Track offline redemptions. Give your customers a promo code (why not the phrase?) that they have to relay in-store.
2. Incentive your offline team. Let’s face it: if you can’t get your team to help you track the ROI, you’re not going to be successful. Tried to explain the value of email marketing, and how helping you track off-line redemptions properly will allow you to build better campaigns for them the future.
3. Marry your data. You don’t need a fancy CRM system to start — but you do need to leverage those in-store redemption’s towards improving your email marketing campaigns in the future. For example, if Joe Customer is on your email list and only responding to in-store offers, you need to get that data into your email marketing program so you can use it to segment your marketing list.

Email Marketing has an astoundingly high ROI on paper, and its harder to quantify properties make it even more attractive; as long as you put the proper tracking mechanisms in place,  you should be able to show a strong return on your investment.

Email Marketing

There are a lot of free tools online to market your business, and especially in these dire economic times, many marketers are turning to such tools. Why not, right? After all, with little to no cost, you’re bound to have an astronomically high ROI.

Of course, that’s not always the case; there is such a thing as a negative ROI. Take this past week’s example, furnished by Habitat, a trendy UK-based furniture store establishes in the 1970s. Perhaps sensing that being on Twitter made sense for its business, the company started tweeting as @HabitatUK a few days back. In order to garner followers quickly, the company had the bright idea to “hijack” irrelevant hashtags such as #iphone and #IranElection so that most people would see its tweets.

The outpouring from the Twittersphere was tremendous, with many users calling the company out for its behavior. A number of these preserved tweets can be found at Social Media Today.

Is there a lesson to be had here? Absolutely. Everything your business invests in will have a return – but not necessarily a positive one. Habitat jumped into Twitter thinking it would either be a smashing success or a mediocre initiative, in which case they could kill the endeavor – no big deal, if there wasn’t a true investment made in the first place. Many people seem to forget that a negative return is indeed possible – even on free or nearly free initiatives. In the case of Habitat, plenty of consumers that fall within their demographics now have a less favorable view of the company than previously.

Sidebar: Incidentally, when the company finally actually apologized, they blamed it all on a presumably unsupervised intern – and implied they had let the intern go as a result. Definitely not the way to win an uphill PR battle.

Twitter negative ROI, PR, ROI, Twitter

There are so many clinical definitions of ROI out there, it’s easy to get the impression that there’s some biblical law that tells us that the Investment in Return on Investment is only allowed to refer to direct expenditures of money.  While this narrow view might be useful for some, chances are you can get a lot closer to the truth than this.

One of the best examples I can give has to do with a startup (let’s call this fictional company DunceCo) putting together a limited-edition gift set. Margins were slightly lower than anticipated, so the project manager was told that rather than having all the pieces of this promotional set be put together in the company’s warehouse, she was to assemble a team within the company’s headquarters who would assemble all of the components into one finished promotional set. This would save about $.20 per set, or $100 (500 units were being assembled).

The only problem is, this took about 20 people away from their usual revenue generating jobs for about 30 minutes apiece! On top of that, these employees were not particularly skilled at putting together components to make sets — leaving a not insignificant portion of the sets to become unusable.

As far as I can tell, the project was marked something of a success in that a creative way was found for costs to stay down. But did costs really stay down?

• Since we don’t know enough about DunceCo, let’s just assume that these 20 workers are making, on average, $55,000 a year.
• Factoring in benefits, each of these people likely cost $73,000 a year.
• This would mean each one of these people is costing the organization $35 an hour.
• If a total of 10 manpower hours were used to get all of these sets complete that would be $350 that is not factored into the ROI calculation!
• Remember, in this example, assembling at the warehouse would have just cost the company $100.

This is a perfect example of what should NOT happen when determining ROI on a project. Know your costs! It’s so simple that it’s embarrassing to say, but as we speak, there is an organization out there just like DunceCo, spending $350 to save $100. I am not up for that kind of investment; are you?

General DunceCo, employee cost, project management, ROI

In case you haven’t heard, there’s this site called Twitter that has been a pretty dominant part of the online marketing conversation over the last year-plus, becoming a sensation over the last few months. But what exactly is the ROI for getting your company involved and active on Twitter? It’s certainly an interesting question, with a pretty complex answer: as of this writing, if you Google “ROI” and “Twitter”, you will receive about 4.29 million results, many of those pages dwelling on this very question.

At the same time, as with any new emerging technology, it seems like many people and organizations jump in headfirst without having a clearly-defined goal in place. Without this, it’s impossible to tell if you are achieving a Return on Twitter Investment (ROTI) that is acceptable. Perhaps that’s why Mashable is reporting that over 60% of Twitters users quit within the first month; not only are companies and entrepreneurs not sure what they want to get out of the service, but everyday people who sign up aren’t sure what type of return they should expect, either!

While there are many different ways to calculate your ROTI, if we wanted to start with the most salient example, we could look at how much incremental revenue our business is generating that we can directly attribute to our Twitter page. Last week, Dell shared that it had made $3 million in revenue directly from Twitter since 2007, posting exclusive coupons and promotions as @delloutlet for their Dell Outlet site. It took 18 months for Dell outlet to make $1 million off of Twitter; they have doubled that with another $1 million in the last six months alone. Still another $1 million has come from people going from Twitter to Dell outlet to the regular Dell.com site.

Is this the most genius usage of Twitter (or any referral site) possible? Absolutely not. Is it easily quantifiable? Certainly — though one should be careful about declaring Twitter a free business tool, and thus a zero-dollar investment. Dell likely calculates how much time it takes for its employees to manage and develop its Twitter presence, as should anyone getting involved with any “free” online marketing tool. On the return side of the coin, the actual Return on Twitter Investment is more substantial than the incremental revenue alone. There are a number of “intangibles” (which is in quotes as nothing is truly intangible) that are harder to capture, that we should be capturing nonetheless (and which we will definitely be going into in the future!).

And on that note, I’m done with ROTI for tonight. Because of that acronym, though, I do have a late-night hankering for Indian food.

General, Twitter dell, mashable, ROI, ROTI, Twitter

ROI. It is one of my favorite acronyms. A lot of people don’t seem to to realize how important ROI is, not just in business, but in everyday life. Simply put, return on investment or is about measuring what you are putting in to any specific endeavor, and measuring that against what you are getting out of it.

Case in point: I am looking at moving to a larger apartment right now, so that my wife can have a study, where she can work on her Ph.D. (she’s studying Art History with a focus on Tiepolo’s Punchinello works). The new apartment costs approximately 25% more than the old. It has about 17% more space. Obviously, that doesn’t quite get to the utility of having that extra room for her — square footage is not what she’s looking for; she’s just trying to get a door she can close to get away from our younger dog — but it’s a decent start.

When it comes to marketing efforts, often no one seems to want to even get to that “decent start” point. There are many “fluffier” aspects of where ROI calculations are quite tricky, and because of that, some seem to not even try in the first place. This is simply unacceptable. You wouldn’t even think about upgrading apartments and spending more money without trying to see if it was worthwhile, would you? Yet, at the same time, many marketing executives will do far less due diligence when it comes to spending other people’s money — often, hundreds or thousands times more capital.

It’s true: there are many different marketing initiatives and organization can undertake where the ROI is very difficult to ascertain. That’s not an excuse for not trying to calculate ROI. This is a blog about not making excuses. This is a blog that will (hopefully) make you think about ROI a bit differently. This is a blog that asks “where’s the ROI?” – knowing full well that the answer won’t always be an easy one.

General