You can use this tool to calculate an estimate of cost and return on investment for the recruitment and fundraising efforts of your staff in social networking sites like Facebook or MySpace. It works sort of like an online mortgage calculator. Just enter the starting assumptions in the yellow boxes below and the tool calculates results automatically.
Need some metrics guidelines? You might check out some of the online advocacy and fundraising benchmark studies. If you don't measure results strictly by fundraising -- maybe your results are based on advocacy or branding only -- you can just look at the "cost per friend" or "cost per email name" to compare with the costs of recruiting people elsewhere. You can also see how that translates into cost per action or email viewed (opened).
If you would like to see the assumptions and equations behind the magical calculations, they are available on the original Excel spreadsheet and you can download a copy here.
- Opportunity cost: what else could I have my staff or volunteers doing if they weren't spending time in social networks?
- Viral benefit of social networks: if you have a network in place, you might increase your chances of reaching a lot of people during a crisis. Some social networks are set up to enable communications with a lot of people quickly.
- Demographics: is the audience you're recruiting from the social network appropriate for your organization?
- Message control: your message is likely to get picked up by others, and to be successful, some amount of message control will likely need to be sacrificed.
- Investing in the future: Maybe the younger demographic of the social networks will be interested in your organization in the future, so it may not be a bad idea to start building awareness now.
Enter the cost per hour of your staff, and other basic web and email metrics, and you can get a realistic snapshot of how you're doing.I'll preempt the typical response of "well, there are other intangibles and other types of ROI" by saying that if that's your world, that's fine, you're right - there are interesting and good things that happen as a result of social media, and you should do it, but I wouldn't expect a lot of direct response in terms of dollars, and you might want to hold off if you haven't done some of the basics, first.
And if you're going to spend time on social media, and you aren't leveraging your email list to do so, you're doing things the hard way.
ROI (Return on Investment) in its simplest form has has a very specific mathematical definition. ROI = (gain from investment - cost of investment)/(cost of investment). That will give you a percentage that you can compare against other potential investments. You usually want to go with the highest percentage or percentages if you're making a decision as to where you spend budget.
I think social networks have huge potential - but if you're being asked by your boss (or you're a boss asking your employees or volunteers) to do the near impossible, and beat the numbers, then this tool is for you. You can quickly see the actual cost per friend you recruit, the supporter you recruit, or cost per donation and hopefully compare that to other options - web traffic, direct mail, ads, email, events, etc.
This tool was designed to assess OPPORTUNITY COST; namely, if you're spending time doing something with a lower return on investment than another opportunity, you should stop doing it and choose the investment with the higher potential return.
So... let 'er rip. Bring on the peer review. I'm sure all you highly opinionated folks have a lot to say about this now that we have been watching the gold rush for four years NOT pan out to be the viral miracle we dreamed of early on for MOST nonprofits.
It's time to bust out the calculator and have a realistic look.
My hope is that people will help me refine this to make it a more user-friendly tool, and hopefully save the nonprofit sector millions of dollars.
http://ow.ly/1XgIb or http://www.socialnetworkcalculator.com if you want to tweet it. (Ha! The irony).
Coming soon - I'm working on an overall online ROI assessment calculator. Email me (Justin at care2team.com) if you'd like to help beta test it.