Where’s the ROI?

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

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