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Do you remember your Managerial Accounting class back in college? One of the foundations I remember being drilled into us right on day 1 was the Total Cost and Total Revenue curves. One of the key things was that the point at which those two curves crossed was the breakeven point -- that is, the point at which revenue exactly offset costs. Anything to the right of that point represented positive gains -- revenue exceeding costs. Areas to the left, meanwhile, represented losses.
I've used the Total Cost vs. Total Revenue diagram to help colleagues, bosses and others visualize a sort of back-of-the-envelope breakeven analysis on many past projects. There's no reason why such an analysis can't apply to social media programs in the continuing debate about methods for calculating social media ROI - Return On Investment.
Like I said in Part 1, this isn't a one-size fits all methodology. In fact, I don't think there can be a one-size-fits-all method when it comes to assessing the economic impact of an investment in social media. (What I refer to in part 1 as a Level 4 ROI assessment.)
The video above is a short presentation about visualizing a breakeven analysis using Total Cost and Total Revenue Curves. And I'm presenting it here simply to add to the collective wisdom in the dialog about social media ROI.
Let me know your thoughts.
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