Last week I posted about finding benefits for social media solutions. To recap: for the most effective benefits you want to look for (in order) 1) opportunities to directly reduce costs, 2) opportunities to improve productivity, and 3) opportunities to increase revenue. This week, I’m going to look at some of the obvious ways a social media solution might realistically be used to cut costs. Keep in mind that not all these benefits I’m going to discuss may be relevant to your particular solution: your mileage may vary.
Perhaps the most obvious benefit provided by social networking is the ability to Reduce Customer Support Costs. The use of member-supported forums is widespread in the technology industry, so this is not a new or Earth-shattering idea. Instead of having customers call a support line and get help from an actual person, directing customers to a forum where other members have posted questions and answers to common questions is often a more economical solution than an actual help desk. Of course, you probably won’t eliminate the help desk function altogether, but if you can use a forum to eliminate some percentage of calls that require support, you can probably justify a cost savings. Note that there may be several potential benefits that can be called out in this regard: you might be able to Reduce Customer Support Staff (which is a hard-dollar benefit if you can truly justify needing fewer people); you might be able to Reduce Customer Support Facility Costs (fewer people might require less floor space, less environmental controls, less trash pickup, etc.); perhaps Reduce Customer Support Telecommunications Costs (fewer phone lines, fewer PBX switches, etc.); and perhaps Reduce Customer Support Equipment Costs (fewer computers, chairs, desks, etc.).
Another obvious potential benefit is Reduce Marketing Costs. Using a social network can often be a more cost-effective way of getting marketing messages in front of the appropriate eyeballs. Even if the cost per impression (the cost of getting your message to one viewer) is higher than traditional methods (TV, Radio, Newspaper, Magazines, etc.) you might be able to demonstrate lower total costs in terms of marketing to the people you really want to market to. In other words, it might cost you $10k to put out a radio add intended for your customers that’s heard by 100k people (most of whom are not customers); it might cost $5k to put out a social network add to 5k existing customers who are already members of your social media site: A higher cost per person, but a lower overall cost.
Two more related benefits may also be possible to justify on the basis of reducing actual costs: Reduce Cost of Customer Turnover and Reduce Cost of Employee Turnover. In both cases, you calculate how much it costs to replace a customer or an employee, then calculate the amount saved by how much your social networking solution might reduce turnover. The tricky part in this calculation is estimating how much turnover you will reduce. To build a credible case for either of these benefits, you need good metrics, preferably from the same vertical in which your enterprise resides (if you are in technology, you need metrics from other technology companies; if you are in manufacturing, you need metrics from other manufacturing companies). Bear in mind if you are in an environment with already low customer and/or employee turnover, this probably won’t be a benefit worth trying to justify.
One final cost reduction item I’ll mention this week is Reduce Travel Costs. If your social media solution has elements of collaboration (file sharing, chats, group chats, content management, video, etc.) you may be able to justify some level of savings from reduced travel. When employees in diverse locations can more effectively collaborate, the need for them to travel for physical meetings might be reduced. Again, the key to justifying this benefit is gathering metrics on what other organizations like yours have been able to achieve with a similar social media solution.
There are probably lots of other potential direct cost reductions that might apply to any given proposed social media implementation. Next week, we’ll talk about some indirect cost reduction benefits and some revenue increase benefits that you might consider.
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