Calculating The ROI Of An Enterprise Social Network (ESN)

August 21, 2018 - 4 minute read

We’re guessing you’re already sold, right? Whether you come from the HR space, are an internal comms expert or focus on operations and customer experience, you already intrinsically know - are fundamentally certain deep down inside - that an employee communications platform is the way forward for your organisation.

You’ve read the literature, digested the case studies, watched the videos… but unfortunately your Senior VP, CMO, regional GM, or whoever holds the purse strings, doesn’t share your gut instinct for ESNs (and also lacks the time to do all the research). They think in Excel; they dream in Powerpoint.

The problem with engagement

Traditionally, the challenge with calculating ROI and creating a robust business case for platforms that connect and bring organisations closer together has been that their benefits are both logical and emotional. But they’ve not been numerical.

It stands to reason. A platform capable of radically transforming and improving the way you do business can be looked at from so many angles: from streamlining the communication of HR processes (better onboarding, etc.) at one end of the spectrum, to arming frontline employees with more real-time information to better serve your customers at the other end… with so much more in between. When there are so many ways to look at the advantages of a solution, it does make it difficult to calculate a more linear ROI.

However, here at Speakap, we have our own method for calculating business value that we use with our customers who want to better connect their organisation.

The magnificent five

There are five areas we focus on for working out the positive ROI and savings (more on this later) of communications tooling:

  1. Increased engagement
  2. Decreased turnover rate
  3. More efficient onboarding
  4. Increased productivity
  5. Lower absenteeism

Based on a combination of Speakap’s own usage data, as well as reports on ESN usage and benefits from McKinsey and Forrester, we’ve calculated the following (per employee connected to your ESN):

  1. Higher engagement = 0.1% revenue increase due to higher employee involvement and product knowledge
  2. Employee turnover = a 2.5% decrease in churn due to higher engagement and better communications with management
  3. Increased productivity = 0.02 hrs/month per employee due to time saved looking for information or shared between locations
  4. More efficient onboarding = employees reach full productivity and efficiency 25% faster
  5. Decreased absenteeism = 1.11% for both non-desk and desk-based employees

If you use these figures and multiply them out across your entire workforce, you should come to a solid estimation for your positive, gainable ROI.

What is a negative ROI?

But this doesn’t yet represent the true ROI or business case of the ESN. Chances are you’re already sinking pretty extensive sums into communicating unsuccessfully with your workforce through newsletters, company magazines, email or tools that are either legal risks or unfit for purpose, like an intranet.

The average cost of a company email and licence (as is required for most intranets and tools, such as Yammer) is around £5 per user per month. Again, multiply this out across your workforce and the calendar, and you’ll see what you’re already spending.

Of course, ESNs don’t come for free either, and - even though you’ll be sure to reach a much higher percentage of your workforce in a way that they want to be reached - you’ll still need to factor in the cost of your ESN per user.

Keep it simple, stupid

Lots of words, lots of theory, but time to cut to the chase:

(Positive ROI + Negative ROI) - Cost of ESN = Your Business Case!

Want it even simpler? We have an all-singing, all-dancing ROI calculator which does the heavy lifting for you…

Fill in the relevant numbers, fall off your chair in shocked awe at how much savings and efficiency you could be achieving, then get in touch. Our consultants love nothing more than discussing how an ESN could turbo-charge your organisation. 

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Matt Warnock

Written by Matt Warnock

Matt is an experienced journalist-turned-content marketer who writes about all things tech, SAAS and B2B.