Calculating the Value of Online Reputation Management ROI Recover Reputation Steven W. Giovinco
Calculating the Value of Online Reputation Management
How Much?
One Negative Review Costs 30 Customers • Most small businesses or professionals understand that online reputation management is important, but:
Two Sides to ROI Equation • Building a positive online presence equals sales.
Two Sides to ROI Equation • Calculation of lost revenue due to negative content.
What is Online Reputation Management?
What is Online Reputation Management? • Online reputation management (ORM) is anything online about a business or business owner.
What is Online Reputation Management? • • • • • • •
Blog posts. Comments on blog posts. Web sites. Tweets. Facebook likes. Instagram. Pinterest.
Online Reputations Reflect
“Reputation management is the understanding or influencing of an individual's or business's reputation.� -Wikipedia
Trust
Goals of ORM: Build and Repair
Goals of ORM: Build and Repair 1.Build or boost a positive presence.
Goals of ORM: Build and Repair 2.Remove or suppress negative reviews.
For professionals such as lawyers, accountants, financial advisors or others:
If a negative link shows up on the first page of a Google search page, a client stops calling.
Bottom Line • What is the bottom line for lawyers, financial advisors, executives, those in the art world?
Value of Positive ORM
Value of Positive ORM • Generates more site traffic. • More phone calls, visits, and inquires. • More repeat transactions over the lifetime of the business.
Negative Reputation Leads to Lost Sales
Negative Reputation Leads to Lost Sales • A negative reputation leads to lost sales. • Prospect will move on to a competitor. • They probably will never return as a customer—ever.
Value of ORM Repair Process •
Value of ORM Repair Process • Determine how much revenue decreases due to negative links.
Value of ORM Repair Process • Calculating how much money is lost will determine the value of online reputation management.
3 ROI Formulas
3 ROI Formulas 1.ORM Building. 2.One Negative Review Equals 30 Lost Customers. 3.Lifetime Customer Loss Calculation.
1. ORM Building
1. ORM Building • Calculate how much each client spends per transaction. • Estimate the average number of transactions. • How long a client stays with the business. • Find the number of site visitors per month. • Evaluate how many visitors actually become a customer: this is the conversion rate.
1. ORM Building • Reviewing these five factors: – It’s possible to calculate the overall value a customer represents for a business.
1. ORM Building Example: • New client spend=$1,000. • Number of yearly transactions=2. • Client stays with the business=4 years. • New visitors per month=100. • Conversion rate= 2%.
1. ORM Building
• Results in: • $32,000 in new sales
2. One Negative Review Equals 30 Lost Customers
2. One Negative Review Equals 30 Lost Customers • One single negative online review can cost the business an average loss of 30 customers.
2. One Negative Review Equals 30 Lost Customers • Results in a sizable decrease of income. • Is usually devastating.
2. One Negative Review Equals 30 Lost Customers
2. One Negative Review Equals 30 Lost Customers • Determine how much the customer spends for the service. • Multiply by 30. • Equals total revenue lost.
2. One Negative Review Equals 30 Lost Customers For example: • Customer spends=$1,000. • Multiply by 30. • Total revenue lost=$30,000.
2. One Negative Review Equals 30 Lost Customers In this scenario: • If one customer is worth $1,000 to the business. • One negative post equals a loss of $30,000.
2. One Negative Review Equals 30 Lost Customers • If the repair process costs less than $30,000: • The business should clearly go forward with the repair project.
3. Lifetime Customer Loss Calculation
3. Lifetime Customer Loss Calculation • Alternative way to calculate the ROI for the repair process. • This determines the lifetime impact.
3. Lifetime Customer Loss Calculation • Take average sale amount. • Determine the number of lost customers per review. • Identify the number of negative reviews. • Calculate number of years a client. • This equals the lifetime lost revenue.
3. Lifetime Customer Loss Calculation For example: • Average sale amount=$1,000 • Number of lost customers=10 • Number of negative reviews=2. • Number of years a client=3 • Lifetime lost revenue=$60,000.
3. Lifetime Customer Loss Calculation
This seems like a lot‌but:
3. Lifetime Customer Loss Calculation • If the repair process costs less than $60,000, • The business should clearly move forward with the repair process.
The Bottom Line
The Bottom Line • There are ways to calculate rates of return (ROI). • They provide a fairly accurate monetary value.
The Bottom Line • Use for revenue gained due to building a positive online reputation • Or money lost due to negative reviews.
About Recover Reputation • Boutique online reputation firm, focused on professionals • 20+ years IT, writing experience • Personal, hands-on approach
Steven W. Giovinco Owner, Recover Reputation
Recover Reputation • • • •
Questions for Steven W. Giovinco? Connect! Call 347-421-7598 Email steve@recoverreputation.com