online reputation management return on investment (roi)

Calculating the Value of Online Reputation

ManagementROI

Recover ReputationSteven W. Giovinco

Calculating the Value of Online Reputation Management

How Much?

• Most small businesses or professionals understand that online reputation management is important, but:

One Negative Review Costs 30 Customers

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.

“Reputation management is the understanding or influencing of an individual's or business's reputation.”

-Wikipedia

Online Reputations

Reflect 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%.

•Results in:•$32,000 in new sales

1. ORM Building

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 lot…but:

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. GiovincoOwner, Recover Reputation

Recover Reputation

• Questions for Steven W. Giovinco?• Connect!• Call 347-421-7598• Email steve@recoverreputation.com