Week 10 has arrived and my last blog post on my journey of “Discovering
Enterprise 2.0” will finally focus on the bottom line outcome of investing in
social technology – the Return on investment (ROI). The ROI can be specified as: (Net profit/invested capital) *100
and in general the examples of how ROI can be increased using social technology are
numerous. In my final blog post I have chosen to take a
look at Cisco, one of the world’s leading manufacturers of networking supplies, and how the company managed to decrease the investments of a productlaunch with more than $100.000 ultimately increasing the ROI.
Product launch at Cisco
Usually when Cisco launched a new product the process turned into a costly activity. The cost more precisely was applied to:
- Flying in more than 100 executives and press members from more than 100 countries to the HQ in California.
- Time taken from the CEO and other executives to prepare and present the launch.
- Designing well-crafted and statistical press releases.
- Distributing press releases.
- E-mailing customers.
- Running print ads in major business newspapers and magazines.
In 2008 Cisco therefore decided to launch their product campaign, for
their newest ASR 1000 series router, entirely through social media using
videos, images and product specifications. The changes in the product launch
strategy more specifically lead to:
- Saving 42.000 gallons of gas for travel.
- Top executives not spending more than one hour recording the video presentations.
- Expensive printed ads replaced with social media exposure.
Reflections of the change
in ROI at Cisco
I
really think Cisco did a good job in including both tangible and intangible
costs in their analysis, having the specific calculations available would,
however, increase the validity of the study. As the source of this case study
unfortunately do not provide either the net profit, the contribution margin or
profit ratio of the product it can be hard to say how crucial the change in the
marketing grant is compared to the overall ROI.
When
viewing the product launch in a bigger perspective, all things being equal, I
would actually be bold to claim that the most beneficial part of the new
product launch strategy, in terms of the ROI, was not the money saved but the
money earned; from the following facts:
- 9,000 people attended the social media product launch event – 90 times more attendees than in the past.
- Three times as many press articles were published.
- Over 1,000 blog posts and 40 million online impressions were recorded.
In
other news
Finally
in the clip below you can see how other major and minor companies have also
increased their ROI using social media:
Before signing off I just like to give a huge thanks to the people providing
valuable inputs to my blog helping me “Discovering Enterprise 2.0”. I had a
good time, learnt a lot and hopefully you did too :-)
Rererences
