If your organization is new to using social media for sales, you may have to explain Social Selling ROI to your management or executive leadership team.
There are 2 ways to determine the ROI of a Social Selling program.
1. Cumulative Revenue Creation or Cumulative Pipeline Growth
For companies that are looking for a “sum is greater than the whole of its parts” result, look at the total revenue or pipeline growth with have on your company, knowing you’ll have Superstars, Core Performers and Laggards. You care about the total effect on your business.
If your sales cycle is on average is much longer than the training program, use Pipeline Growth as your main KPI (as long as you know the Probability to Close ratio), so that you have a true representation of the program AS IT’S HAPPENING IN REAL-TIME. I would recommend that you extend your analysis months later to capture revenue, knowing it takes that long to close a deal.
The formula is:
Breakeven = Cost / AVG Deal Value OR Cost / Opportunity Value @ a discount rate of % Closing Ratio
2. Revenue per Sales Rep
For companies that want to measure individual contributors to determine the demographics and bio of a “successful sales rep”, look at the cost of training per student and then reverse engineer the # of Opportunities or Deals required to Breakeven. You will need to factor in the average deal size, volumes, velocity, and so on.
See the figure below for a sample calculation.
My video below explains these two ROI calculation methods in more detail.
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