Rags to Riches

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Ever since businesses has jumped on social media platforms to take advantage of marketing, it has all skyrocketed for many. But is this worth all the hassle? So many companies nowadays have engaged with Facebook, Twitter, Instagram - the list is endless. In this post I will be talking about how MasterCard moved from danger to brand building opportunity through enterprise 2.0 technologies and the return on investment on this project. But firstly, what is ROI?

 Return On Investment - ROI


ROI is the most common profitability ratio used to evaluate the efficiency of an investment. (Investopedia, 2012) The most frequently used method to determine ROI lies in the formula above, dividing net profit by total assets where it is expressed as a percentage or ratio. Easy right? 

 Conversation Suite - Priceless 



Throughout the world, MasterCard processes payments between the banks of merchants and the card issuing banks of the consumers who use the cards to make purchases ever since 1966. ( MasterCard, n.d. ) Basically helping you and me online shop.  

 MasterCard realised the potential of social media usage in the workplace as a security threat to the organisation five years ago. Managers and employees in the financial services sector also had an impression that they were not allowed to mention the company on their personal social medias as it was a public company and fear of inadvertently sharing confidential details. As the employee demographics of the company grew younger and the company slowly accepted that regardless of age or generational cohort, that they were all digital citizens. 



MasterCard's Adaptation to Socia Media 
From there, MasterCard CEO transformed the entire company from a business to business financial services company to a  payments technology company that is consumer focused. (Cameron, 2013) MasterCard combined social and digital media so that each employee was also a brand ambassador. With their launch of the Conversation Suite - a social media program to keep track of conversations about the brand, it is also aimed to educate, empower and encourage all MasterCard employees to become successful brand ambassadors. (Meister, 2014)

 $$$


The Conversation Suite was created over a six month period including 18 months of updates after the launch.
Note: these numbers are only based on assumption  
  • During this six month period, MasterCard outsourced their market research to a company named Prime Research
  • This market research was conducted on approximately 40 million people where the data gained through emailing 200 costing $3000
  • Therefore giving the investment cost a total of $600 000 000 by 40 000 000 / 200 x $3000
  • McKinsey's analysis of 250+ engagements over 5 years with companies focusing on data with marketing and sales decisions also improves their marketing ROI by 15% to 20%. The annual marketing spend is estimated at $1 trillion therefore, it might have cost MasterCard a bit more for the Conversation Suite. 


Watch the video here.
Through creating such an innovative suite, many benefits come along with it. Here, I will talk about the tangible and intangible benefits and the many strengths and weaknesses that may impact on the company.

 Intangible Benefits:

 MasterCard created a sense of employee loyalty as they are all considered brand ambassadors. This is an advantage where 100% to 150% of an annual salary to replace middle level employees ($75 000 per year). (Goldschein & Bhasin, 2011) The average turnover in financial services of 18% costs an employer with 100 employees $1 million per year. 
  • MasterCard has 8500 middle level employees therefore costing 85 million per year. A decrease of 5% turnover sees a net gain of $25 million per year due to brand/employee loyalty.
Tangible Benefits:

 Gives MasterCard access and the ability to interact with people talking about the brand which gives them an insight on the customer's wants and needs. However, this may take time and money out of the budget to keep a team of people speaking directly with the public.
  • Focus groups cost $50 per person where Conversation Suite can talk directly with up to 40 million people. (Lee, 2002)
    • Gain = 50 x 40 mil = $2 billion 
MasterCard transformed a security threat into increased brand awareness where they eliminated the chance of confidential information of being exposed to the public and minimising litigation costs. This is a weakness as the company is in need of a team of brand ambassadors which can be costly. 

  • It is assumed that 50 employees can cost a company a loss of $65 000 by wasting time on social media (Goldschein & Bhasin, 2011) However, MasterCard trained all of their employees into Brand Ambassadors to be involved with the Conversation Suite.
    • Gain = 8500 / 50 x 6500 = 11 mil + litigation costs 
Allows MasterCard to gauge new developments with the public through Paypass. This gives the ability to be more competitive in the global market knowing what each region wants specifically. 

  • With the use of Conversation Suite, it directly leads to MasterCard being able to gain public insight to Paypass before the launch, tweaking it to meet consumer demands. 
    • ROI = ((2000 + 25 + 11) - 600 / 600) x 100 
    • That equals a 230% ROI a year, continuing to increase over the years. 
References