Social Media 2010 – Wow, This Is Hard
From time to time our founder Brian Roy shares his observations about the state of Social Media, Social Media Analytics, tools and best practices (and any number of other topics) – and we share them here.
It is true of any “great new thing” – our initial estimate of the work required is drastically underestimated. There are a litany of examples:
- CRM
- ERP
- Service Oriented Architecture
- Outsourcing (particularly off-shore)
- Online Self-Service
- …
Now, finally, we can add Social Media to that list. There have been The MarketingProfs report The State Of Social Media Marketing – including one by Brian Solis that is particularly compelling.
In 2010, executives will measure ROI and the direct impact of social media marketing on the P&L. In order to do so, management will experience three phases.
The first will reveal that measuring social media marketing, as practiced to date, is essentially meaningless. …
Second, management will grasp the true cost of social media. In 2010, social media will cease to be free. …
Third, as the entire organization socializes affected departments, strategists will embrace a holistic and informed approach to engagement. …
I’m hard pressed to disagree with any of that. As a matter of fact, I’d actually like to expand on it in three ways:
First, in 2010 executives will measure ROI and the direct impact of social media efforts in multiple organizations. This means marketing will become just one organization using Social Media to improve practices, processes and ultimately the end to end customer experience a brand provides. We will see internal focus shift from “who is paying attention and responding to this” to “who is analyzing, interpreting and acting on this”.
Second, social media metrics and measurement will be highly individualized to the culture, strengths and temperament of the company. And this is as it should be. Intuit is very different than EA – and given that it is vital that the outcomes they pursue and the metrics they measure should be unique to them and the unique demographics of their target markets.
Third, management will begin to see social media as an enterprise wide activity funded at the enterprise level. No longer will social media be a line item on a PR or marketing budget. Multiple organizations will have social media initiatives, tool requirements and staff engaged in social media activities. Support for these activities will begin to be centralized (TIP: Look out IT – 2011 will be the year IT will have to deliver enterprise Social Media integration).
Brian Solis comes to this conclusion:
As a result, social media marketers will shred the cookie-cutter manual and expand the focus based on real world activity. This is social media marketing with a purpose.
I’d offer this slightly broadened version:
Social media will develop from a niche marketing/PR activity into a full blown enterprise solution. As with most enterprise solutions (CRM/ERP) the implementation will be highly customized to the objectives, culture and target market of the company. The solution will be required to achieve real, tangible outcomes measurable in terms of existing business metrics (e.g., revenue, sales, costs, etc).
Yep, Social Media for Business is going to be hard. There will be a lot of work making the promises a reality. It won’t transform your company overnight, but it can transform your ability to better tune your business to your target market – and by doing so grow your market share. The question is, how bad do you want it?
A Simple Prescription for Social Media ROI
From time to time our founder Brian Roy shares his observations about the state of Social Media, Social Media Analytics, tools and best practices (and any number of other topics) – and we share them here.
The consensus seems to be that creating an ROI for Social Media is hard. I’d like to suggest that it isn’t.
Formulating an ROI is a very simple formula – and until someone can rationally explain why Social Media is different I’ll get out my cookbook.
- Define the desired outcome (e.g., increase conversion rate by 3%).
- Define the specific actions that will be taken (e.g., offer specials via blog, Twitter and Facebook with specific landing pages).
- Define the metrics and measures that will be used to determine if the actions taken were the proximate cause of the result.
- Perform the actions and analyze the metrics and measures.
- Determine cost of actions and the value of the resultant change in the outcome.
The flaw in most approaches to Social Media ROI happens on the very first step. If you can’t assign real value to the desired outcome you can’t create an ROI. A perfect example is “We’d like to double our followers on Twitter and fans on Facebook”. Some people will call this a “soft ROI” – which is simply another way of saying that the desired outcome can not be assigned a real value, but affects another metric that can. The relationship between the desired outcome (more followers/fans) and the real value metric (sales) is usually highly theoretical – our just plain wishful thinking. If you believe more followers or fans equates to higher sales – say so. Design your ROI experiment and prove it.
The other flaw is in step 3. Failing to adequately define the input metrics (the metrics that are the proximate cause of the change in outcome) leads to an ROI that does not bear scrutiny. Examples of poorly defined input metrics are:
- Increase our Social Media Presence
- Get more engagement
- Have better sentiment about our brand
- Be influential in our space
Avoid those two traps and you’ll be well on your way. But there is one mistake I see more than any other:
Stop trying to create a “pure” or “standalone” Social Media ROI!!
Another way to put this – in terms of our recipe above – is:
If your desired outcome is a Social Media metric or measure – think again.
I’ll end the suspense for you right now, it doesn’t exist. The only way to ROI a Social Media effort is by showing that your Social Media effort is the proximate cause of a change in a fundamental business metric (e.g., sales, conversion rate, leads generated, churn, etc).
CRM is a great example of this – I was involved in dozens of large footprint CRM deployments. Well over half of those were done based on a solid ROI – but it had nothing to do with customers. The ROI was based purely on cost savings in IT. Do I believe those deployments had other benefits which were harder to measure and quantify? Sure. But the way to prove the investment had a return was to focus on what was proven, repeatable and tangible.
I think Social Media is much easier to ROI than CRM was. I don’t think we will end up creating ROI based on savings in IT. I am, however, certain that the ROI will have to point to real dollars saved or real dollars generated.
I’m convinced that when you focus on determining which Social Media metrics are the proximate cause of change in core business metrics you’ll find an ROI – and I’m betting it will be both larger and more diverse than you would have predicted.
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