How to measure the ROI of an Enterprise Social Network

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Despite all the well know positives of having an Enterprise Social Network, sometimes the financial heads of our company need to see concrete numbers. Fortunately, measuring the ROI (Return on Investment) of an Enterprise Social Network is not as difficult a task as you might think.

What variables to take into account?

Some costs that can disappear with an Enterprise Social Network are phone calls, time lost duplicating work and looking for information, time spent managing tasks, printing, and even time spent traveling between branches thanks to the internal chat. There are also many intangible benefits to consider such as an improvement in work culture.

How to know if an Enterprise Social Network makes employees more productive?

We can always be more efficient with our time. If we ask our employees how much time they spend looking for files and information, replying to unnecessary emails, finding the right person for the job and managing tasks most will reply that these activities occupy over 50% of their time. Clearly this is a huge opportunity to save time and resources. Joincube’s client Atento Perú found that after 6 months of active use they were able to reduce unnecessary internal emails by 90% and reduce time spent coordinating tasks between work teams by 80%.

What kind of an impact would similar results have on your organization?

There’s even more…

There are several intangible variables that have a big impact on ROI as well, such as improvement in internal work culture and reduction of employee turnover. With tools that facilitate a positive work climate with more horizontal and open communication our employees will be happier and as a result our turnover will go down. This directly lowers the cost of recruiting and training new employees. How many resources does your company currently have tied up in recruiting and training new employees? How important is it for your organization to reduce employee turnover?

Enterprise Social Networks also help identify internal leaders or “champions” in teams or areas. Identifying these leaders can help us make sure we are compensating and promoting the right people. How valuable is it to your organization to identify and promote the people who are adding the most value to your organization?

ROI Calculation

So what do we need to calculate the ROI:

Savings from improvements in productivity

To perform a simple exercise we can start by dividing the average salary of our workforce by hours worked per month. For example, if each worker earns $1000 dollars a month and works 140 hours, this means that the average salary is $7.14 per hour. If we can save people on average 15 minutes a day using our Enterprise Social Network the company can recover the value of those 15 minutes, or $1.8 dollars per day per employee.

If for each employee we save $1.8 dollars per day and we have 200 employees, the total daily savings would be $357 dollars. This represents monthly savings of $7,142 and an annual savings of $85,714 dollars.

As a reference point, Joincube’s Pro Plan for 200 employees would represent an investment of less than $10,000 dollars per year. This ROI is extremely high, especially considering that the savings calculated above only represent gains from increases in productivity.

This does not consider other benefits both tangible and intangible such as:

• Improvement in the work culture and reducing employee turnover
• Savings in phone costs and travel for meetings
• Savings in communication and training tools replaced by Joincube
• Better identifying and incentivizing key employees in my organization

To calculate the ROI we need to divide the total savings by the annual cost of Joincube and if applicable the costs of communication campaigns and community managers in the company.

Here’s the final calculation:

ROI= Savings x100
Investment

ROI= $85.714 x100 = 857%
$10.000

If the number is greater than 100% you have a positive return on investment. The majority of business owners and managers that did the calculation for themselves were surprised by the results. What are you waiting for?

Contact one of our experts today to review in more detail some of our other success cases and to calculate your own savings potential.

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