Social business

Companies need to rethink return on investment to evaluate the benefits of social business.

Written by: Ofer Guetta


How do you quantify return on investment (ROI) of a social business? By its very nature, social technologies are more free-forming, making their potential exponential, yet unpredictable.

A successful social business can benefit both externally and internally. Internal ROI can often be realised almost immediately. When you add the application of analytics to social business initiatives, where actionable insights from social networking can arise anytime, anywhere and be put to work in real-time, businesses have a recipe for success.

Internal or “soft” benefits such as greater employee collaboration, streamlined communication or improved product development, are clearly beneficial for an organisation. Yet these benefits cannot be quantified as easily as heightened customer satisfaction and skyrocketing sales. Focusing solely on forms of new revenue or sales resulting from social engagements means organisations are overlooking some of the main components of social business ROI. More attention must be paid to shifting the nature of work and structure of businesses and the impactful results organisations enjoy by making such transformational changes.

Companies that are seeing real business value from social capabilities are doing more than launching an ad-hoc Twitter campaign or throwing up a corporate Facebook page. They are embedding social tools into business processes, enabling the business as a whole to become more strategic, engaged, transparent and nimble.

Social tools combined with a culture of collaboration enable a more effective workforce – across all departments within an organisation. By enabling employees to locate experts quickly and collaborate across geographically distributed teams, employee productivity and engagement is higher. This, in turn, leads to benefits such as reduced travel expenses or speedy development of new products or sales approaches.

UK-based Newly Weds Foods, a global leader in food ingredient technology, is using social business technologies to share information, exchange ideas and discover region-specific recipes. By collaborating in the cloud, Newly Weds Foods has reduced travel and meeting costs by 10 percent.

Lowe's Home Improvement uncovered a new way of selling paint based on an employee's idea that was generated via an internal social collaboration solution. As a result of the new sales approach, the company realised a million dollars in additional revenue.

At the crux of every business is the need to attract new customers and retain existing ones. Imagine a call centre for a large national bank where all customer inquiries are funnelled through one general number. Social enterprise tools enable customer service representatives to work more efficiently and provide higher-quality service as there is more immediate access to content and expertise within the organisation. By streamlining this process, there is a better customer experience, deepening customer loyalty and boosting future sales.

As knowledge and idea sharing increase, the rate of innovation is accelerated, an important asset to businesses now more than ever. Moving from idea sharing sessions with a handful of C-level executives behind closed doors, to collaborative and transparent brainstorming across a company, leads to shortened product development cycles and improved revenue streams.

For example, Cemex, a Mexico-based building materials manufacturer, implemented an enterprise-grade social networking and web experience software solution in 2010 to help connect 47,000 employees in 50 countries. Within the first month of implementation, 5,000 users signed on with 20,000 users signed on after the first year.

By creating communities and microblogs, Cemex has the ability to crowdsource new product and business ideas. The company began innovation challenges to engage employees and enable them to come up with new, innovative ideas for the company. During one of these challenges, an employee came up with the idea for ready-mix cement which has now become one of Cemex’s most profitable products. By allowing employees at any level to bring ideas to the table, businesses create a flat, collaborative environment leading to ideas that are more profitable.

The days of turning your back on social tools are gone. Companies that have adopted social practices and tools early on to create a more collaborative work environment are gaining competitive advantage in their market and becoming more profitable.

It is important to remember that we are still in the early years of social business and like any innovation, we need to track what we’re doing and continue to evolve the technologies and practices before we can truly have a barometer to measure ROI. As social businesses evolve, we’ll continue to see numerous studies around the ROI of social and just how transformative this cultural and technological shift can be. 

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Ofer Guetta is social collaboration sales leader, IBM. For more information about IBM’s Social Business, please see