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HBO’s “The Newsroom.” Image courtesy of Melissa Moseley/HBO.

Last night, I finally watched the first few episodes of Aaron Sorkin’s “The Newsroom,” and something struck me about the first episode: All of the on-shift newsroom staffers are sitting around, working at their computers, and a story comes on the AP wire, which turns out to be the explosion at BP’s Deepwater Horizon well in the gulf of Mexico. The date is April 20, 2010. The rest, as they say, is history. What’s interesting though is that the camera gives us several closeup shots of the screen, and it basically looks a lot like an email inbox: each new story pops up on a vertically arranged list, probably arranged in chronological order. To make things easier or journalists, each story is tagged with a different color, yellow, orange and red indicating increasing levels of urgency and relevance. (Probably something along the lines of AP ENPS.) Now, don’t get me wrong: It’s a good system. It’s simple, it’s clear and it works. But being in the business of making things work better, something struck me about the limitations of that design: All it is is a whistle, a bell. Integrated into some basic productivity applications, sure, but my immediate reaction was to ask “what… that’s it? Where’s the rest of the info?”

The rest, of course, being something like this:

(Keep reading this story on the Tickr blog.)

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Oh, and while you’re here…

Social Media ROI – Managing and Measuring Social Media Efforts in your Organization was written specifically to teach managers and executives how to build and manage social media friendly business programs and incorporate social technologies and networks into everyday business operations. The book is divided into four parts: social media program strategy & development, social media program operationalization, social media program management, and best practices in measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If everyone on your team doesn’t yet have their own copy, fix that too. It makes for a great desk reference.

(Now available in several languages including German, Korean, Japanese and Spanish.)

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

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Today’s post is over on the Tickr blog. You should go check it out.

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Oh, and while you’re here…

Social Media ROI – Managing and Measuring Social Media Efforts in your Organization was written specifically to teach managers and executives how to build and manage social media friendly business programs and incorporate social technologies and networks into everyday business operations. The book is divided into four parts: social media program strategy & development, social media program operationalization, social media program management, and best practices in measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If everyone on your team doesn’t yet have their own copy, fix that too. It makes for a great desk reference.

(Now available in several languages including German, Korean, Japanese and Spanish.)

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

Read Full Post »

Good news: A sizeable piece of the Social Media ROI question seems to have just been answered by tech company called Ohtootay. Here’s what they offer:

According to this story in TechCrunch, “the solution lets companies track their efforts on Facebook, Twitter, Pinterest and elsewhere. But one of its more unique features in this crowded space is something which allows businesses to track their posts all the way through to website conversions, even when the original post didn’t point directly to their e-commerce site.”

This is big. And it only gets bigger.

It also goes beyond last click attribution, which has been a sticking points for all of us working to a) attribute transactions back to social activity when that activity is followed by a daisy chain of pre-transaction behaviors, and b) clearly map these paths to purchase. For instance, say that an investment in a social media program results in specific social activity that, in turn, enables discovery of a product for potential net new customers. (Lead generation.) That discovery may not trigger a purchase for days, weeks, even months. It was just the initial hand shake, the first of a succession of triggers that eventually culminated in a first transaction for that new customer. To prove ROI as it relates to social activity, you have to be able to connect all of those dots. Easier said than done, right? Most tools work backwards from the transaction to the point of origin just before the click that led them to an e-commerce site. That’s last-click attribution.

Most of the time, Google is going to get the credit for that last click attribution even though it really was just the last step in a daisy chain of purchase triggers and touch points.

Let’s look at Pinterest, for instance: Ohtootay lets companies “track Pinterest pins all the way through to website conversions and associated sales.” So far so good, right? But then there’s this: “This works even when a client shares a pin that doesn’t point to their own e-commerce site. […] What if a customer clicks on your pin that points to a relevant infographic not on your own site, later Googles you, and then decides to buy? Other analytics software will mistakenly tell social media managers that ‘Google’ caused this sale even though the customer’s first contact was through content you curated on your Pinterest boards.”

How does it do it? Well, it’s kind of simple, actually: “Ohtootay generates custom URLs (a company can use their preferred URL shortener as well), and then uses cookies to track the user. When that user arrives on the company’s e-commerce site, custom code embedded there will tell Ohtootay when a conversion actually happens.”

If that sounds familiar, it’s because it is the exact same principle you have heard me describe for years. These guys actually built an app around it, and for that, I thank them.

A word of caution though: Ohtootay doesn’t do everything you need it to in terms of calculating the ROI of your social activity. It doesn’t necessarily track offline purchases, for instance, which is a pretty big piece of the social media ROI question. (It’s hard to connect offline and online purchases 24/7, though it is pretty easy to run tests at regular intervals.) It also doesn’t get into the cost-savings piece of ROI. But for those types of limitations, Ohtootay is a huge step forward for companies looking to a) justify their social media program spending, b) connect specific social activity to specific financial outcomes (especially digital ones), and c) understand what channels and activities are having positive effects on transactions and which ones are not.

In terms of helping companies determine the ROI of their social programs, this may be the most important tool out there yet. The price tag may be a bit of a hurdle for smaller businesses though, so an SMB version with a more appropriate price-point wouldn’t be a bad idea. (Hint. Hint.) I will definitely be giving them a shot to see what’s what. (I haven’t yet.)

Okay, that’s it for today. Go forth and kick ass. Oh, and feel free to check out some of my other blog posts over on the Tickr blog (different kind of social media solution altogether: that one is all about monitoring).

Cheers,

O.

Disclosure: I have no material connection to Ohtootay whatsoever. They aren’t a client or a partner, they haven’t reached out to me, I haven’t received as much as smile from them let alone a single shiny peso. I wrote this post purely to share with you this little find because it’s a bit of a game-changer in the context of the #smROI discussion.

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Social Media ROI – Managing and Measuring Social Media Efforts in your Organization was written specifically to teach managers and executives how to build and manage social media friendly business programs and incorporate social technologies and networks into everyday business operations. The book is divided into four parts: social media program strategy & development, social media program operationalization, social media program management, and best practices in measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If everyone on your team doesn’t yet have their own copy, fix that too. It makes for a great desk reference.

(Now available in several languages including German, Korean, Japanese and Spanish.)

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

Read Full Post »

The 5 basic rules of calculating the value of a Facebook ‘fan’

A question that routinely comes up in social media circles is what is the value of a Facebook fan? (The question also applies to the value of a Twitter follower, Youtube subscriber, email recipient, etc.)

Invariably, whenever the question is asked, some mathematical savant – typically a self-professed digital alchemist – produces a proprietary algorithm that has somehow arrived at answer along the lines of $1.07 (Source: WSJ) or $3.60 (source: Vitrue) or even $136.38 (source: Syncapse), and so begins the race to answer this now quasi-hallowed question of the new digital age. The lure: He who can convince companies that he can calculate the value of a Facebook fan might have a shot at selling them on the notion that fan the more fans they acquire, the more value they generate for their business. (You can imagine the appeal of answering the “what is the ROI” question by explaining to a company that 10,000 net new fans per month x $136.38 = a $1,363,800 value. At a mere $75,000 per month, that’s a bargain, right?

All that is fine and good, except for one thing: Assigning an arbitrary (one might say “cookie-cutter”) value to Facebook fans in general, averaged out over the ENTIRE breadth of the business spectrum, is complete and utter BS.

To illustrate why that is, I give you the 5 basic rules of calculating the value of a Facebook fan:

Rule #1: A Facebook fan’s value is not the same as the cost of that fan’s acquisition.

Many of my friends in the agency world still cling, for example, to the notion that estimated media value or EAV (estimated advertising value), somehow transmutes the cost of reaching x potential customers into the value of these potential customers once reached. Following a media equivalency philosophy, it can be deduced that if the cost of reaching 1,000,000 people is generally $x and you only paid $y, the “value” of your campaign is still $x.

A hypothetical social media agency-client discussion regarding EAV: “Using social media, we generated 1,000,000 impressions that we converted into followers last quarter. At $1.03 per impression/acquired fan, the total cost of the campaign was $1,030,000. The average cost of an impression through traditional media being $3.97, the estimated media value of your campaign was $3,970,000.”

Next thing you know, the client believes 2 things: The first, that the value of each Facebook ‘fan’ is either ($3.97 – $1.03) = $2.94 or simply $3.97 (depending on the agency). The second, that the ROI of the campaign is ($3,970,000 – $1,030,000) = $2,940,000.

So you see what has happened here: Through a common little industry sleight of hand, a cost A vs. cost B comparison has magically produced an arbitrary “value” for something that actually has no tangible value yet. In case you were particularly observant, you may also have noticed how easily some of the authors of the posts I linked to in the intro mixed up costand value. Ooops. So much for expert analysis.

A word about why cost and value cannot be substituted for one another when applied to fans, followers and customers: Cost may be intimately connected to value when you are buying the family car, but the same logic does not apply to customers as a) you don’t really buy them outright, b) they don’t depreciate the way a car does, and c) they tend to generate revenue over time, far in excess (you hope) of what it cost to earn their business.

Even with the cost of acquiring a fan now determined, why has the value of that fan not yet been ascertained? Rule #2 will answer that question.

Rule #2: A Facebook fan’s value is relative to his or her purchasing habits (and/or influence on others’ purchasing habits).

Illustrated, the value of a fan can be calculated thus:

 a)      Direct Value: If a Facebook fan spent $76 on your products and services last month, her value was $76 for that month. If a Facebook fan spent €5697 on your products or services last month, his value was €5697 for the month.

The value of a fan/transacting customer is based on the value of their transaction. It is NOT based on the cost of having acquired them.

Example:

– Cost of acquiring Rick Spazzyfoot as a Facebook fan: €4.08

– Amount Rick Spazzyfoot has spent on our products and services since becoming a fan five months ago: €879.52

Which of the above two € figures represents the value of that fan to the company?

(If you answered €4.08, you answered wrong. Try again.)

 b)     Indirect value: If a fan seems to be influencing other people in his or her network to become transacting customers (or increase their buy rate or yield), then you can factor that value in as well for those specific time-frames. Because measurement tools are not yet sophisticated enough to a) properly measure influence and b) accurately tie it to specific transactions, I wouldn’t agonize over this point a whole lot. As long as you understand the value of word-of-mouth, positive recommendations and the relative influence that community members exert on each other, you will hold some valuable insights into your business ecosystem. Don’t lose sleep trying to calculate them just yet. Too soon.

The point being this: Until a Facebook ‘fan’ has transacted with you (or influenced a transaction), the monetary value of that fan is precisely zero.

One could even say that if each fan cost you, say, an average of $1.03 to acquire, the value of a fan before he or she has been converted into a transacting customer is actually -$1.03.

That’s right: A significant portion of your Facebook fans might actually put you in the negative. Something to think about when someone asks you to calculate the “value” of your “community,” especially if you purchased rather than earned a significant portion of your fans and followers (it happens more than you realize).

Rule #3: Each Facebook fan’s value is unique.

Every fan brings his or her unique individual value to the table. One fan may spend an average of €89 per month with your company. Another fan might spend an average of $3.79 per month with your company. Another yet may spend an average of ₤1,295 per month with your company. Is it reasonable to ignore this simple fact and instead assign them an arbitrary “value” based on an equation thought up by some guy you read about on the interwebs?

Three points:

1. The lifestyles, needs, tastes, budgets, purchasing habits, cultural differences, online engagement patterns and degree of emotional investment in your brand of each ‘fan’ may be completely different. These, compounded, lead to a wide range of behaviors in your fans. These behaviors dictate their value to you as a company.

2.  Many of your fans may only do business with you only on occasion. Because of this, you have to factor in the possibility that a significant percentage of your fans’ value may fluctuate in terms of activity rather than spend. How many of your fans are not regular customers? How many do business with you each day vs. each month? How many do business with you once a quarter vs. once every three years? Are you figuring your on/off customer-fans into your value equation?

 3. Lastly, we come to the final type of Facebook fan: The one that doesn’t fall into the transacting customer category.  They might remain “fans” without ever converting into customers. Do you know what percentage of your fans right now falls into this non-transacting category? Do you really think that their value is $3.97 or $139.73 or whatever amount an agency, guru or consulting firm arbitrarily assigned to them? No. They clicked a button and left. Their value, until proven otherwise, is zero.

 With this kind of fan/customer diversity within your company ecosystem, you come to realize that arbitrary values like “the value of a Facebook fan is $x” can’t be applied to the real world.

Rule #4: A Facebook fan’s value is likely to be elastic.

Because the value of a Facebook fan is a result of specific purchasing habits (and impact on others’ purchasing habits), a fan’s value is likely to be elastic over time. If you aren’t familiar with the term, it simply means “flexible.” As in: the value of a Facebook fan will change. It will fluctuate. It will not always be the same from measurement period to measurement period.

Let me illustrate: A Facebook fan might spend $76 on your products and services one month and $36 the following month. This means that her “value” was $76 one month and $36 the following month. If next month, she spends $290, $290 will become her “value” for that month.

Because transaction behaviors change, the value of a fan is also likely to change.

You can average this out over time (the fan’s value might average out to $97/month over the course of a year, for example), or just total her value per month, quarter, or year, depending on your reporting requirements. That is entirely up to you.

Example 1: “Based on her transactions, the value of Jane Jones, a fan since 2007, was $2,398.91 in 2010. Thanks to our fan engagement (digital customer development) program, Jane’s value increased to $2,911.02 in 2011.”

Example 2: Chris Pringle’s average monthly value in Q2 of 2011 was $290.76. His average monthly value in Q3 of 2012 was $476.21. He is one of 17,636 fans we managed to shift from a basic package to a premium package via our Facebook campaign.”

Note: In order to figure this stuff out, you are going to have to either get creative with the way your CRM solution interacts with your Facebook analytics suite or wait until Social CRM solutions get a little more robust. Some are getting close.

Examples of exceptions (where fan value may be somewhat inelastic):

 – You are a bank and a fan’s only transaction with you is a fixed monthly payment.

– You are a cable company and a fan’s only transaction with you is a monthly cable bill.

– You are a publisher and a fan’s only transaction with you is an annual magazine subscription.

– Your fans don’t transact with you. They clicked a button and left. If their value was $0 a month ago, it is still $0 this month.

If your business charges for a monthly service that tends to not fluctuate a whole lot, chances are that the value of each of your fans will remain rather constant. This compared to a Starbucks, a Target or an H&M.

Rule #5: A Facebook fan’s value varies from brand to brand and from product to product.

If a fan/customer’s value can fluctuate from month to month and that value can vary wildly from individual to individual within the same brand or product umbrella, imagine how much it can vary from brand to brand, and from product to product.

Compare, for example, the average value of a fan/customer for Coca Colaand the average value of a fan/customer for BMW. (Hypothetically of course, since I don’t have access to either company’s sales or CRM data.) What you may find is that a fan’s annual value for Coca Cola might average,say, $1,620 per year, while a fan’s annual value for BMW might average $42,000. Why? Because the products are entirely different. One costs less than $3 per unit and requires no maintenance. The other can cost tens of thousands of dollars per unit and requires maintenance, repairs, not to mention the occasional upgrade.

Moreover, a single strong recommendation from a fan can yield an enormous return for BMW, while a single recommendation from a fan will yield a comparatively smaller return for Coca Cola.

You can see how the notion that the “value” of a Facebook fan can be calculated absent the context of purchasing habits, brand affiliations, fluctuations in buying power, market forces and shifts in interests and even value perceptions is bunk. Unless of course you find yourself being asked to transform cost into value. (Less work. Easier to sell.) But that is a completely different conversation.

I hope this helped. From now on, if anyone seems confused about the topic of fan/follower/subscriber “value,” point them to this post.

Cheers,

Olivier

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If you haven’t already, check out Social Media R.O.I.: Managing and Measuring Social Media Efforts in Your Organization. Lots of vital advice in there for anyone working with social media in a business environment. Makes a great gift to employees, bosses, contractors and clients too. You can even read a free chapter here: smroi.net

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So I published this over on the Tickr blog, but I thought it would be relevant for you guys as well.

2007 – 2011: Adapting to the new complexities of social business

Five years ago, when businesses – from the enterprise down to smallmom & pop retailers – started using social media to enhance their business processes, things were simpler than they are today. You had your blog. You had your Facebook page. Maybe you had your Youtube channel and your Flickr account. If you were really ahead of the curve, you were already using this new thing called Twitter.

Back then, it was already becoming obvious that social media might be a bit of a time-suck. Not only were you supposed to manage your business and take care of customers, now you had to be a multi-platform publisher as well. You had to write stuff. You had to take pictures of stuff. You had to make videos and edit them and put them on the web. If you were really ahead of the curve, you were spending parts of your evenings looking for forums and discussions, watching, listening, taking notes, maybe even participating.

Already, it became clear that managing a social media presence for your business – or rather, managing the digital aspects of your transformation from a traditional business to an increasingly social business – would soon become a full-time job. You can almost trace the early discussions of social media ROI to that point in social business’ early evolution. It wasn’t really the “should I be on social media” question that did it. It was the “should I pay someone to do this instead of what I know will help my business” question, because it quickly became obvious that social business could never be an after-thought or just a part-time thing.

But this isn’t a post about ROI or social business evolution. This is a post about complexity – specifically, social business complexity. Perhaps more to the point, this is a post about managing that complexity. From the very beginning of this shift to social business, one of the biggest problems business owners and department managers have had to deal with (independently of assigning resources to the task) was simply information overload. Over the course of a very short time frame, businesses went from being disconnected from market intelligence and consumer insights to being flooded with both. Where in the past, organizations could expect consulting and market research firms to act as a collection agent, filter and translator of data, they were now confronted with a volume of information they simply were not capable of managing on their own. Social media monitoring seemed like a great idea. It looked great on paper. In reality, it was a very difficult thing to execute on. Too many sources. Too many hours in the day. Too many platforms to track. And even if it was possible to make sense of it all, then what? What did you do with it? It was hard enough to come up with content and respond to comments and tweets. The entire web had to be monitored and managed as well? Operationally, the task seemed gargantuan. Worse yet, it didn’t scale. (No worries. Scale is a topic we will cover soon.)

While some companies dove into the process of figuring out how to do this all on their own, it wasn’t long before a chunk of the market threw up their hands and decided to outsource the process rather than taking care of it themselves. And for a while there, it was rough for everybody. But then, something cool began to happen.

Necessity, after all, is the mother of invention.

2011-2013: the rise of social monitoring ecosystems

After a few years of experimentation with various social media dashboards and monitoring tools, it became clear that managing a social media program was not an either/or equation when it came to hardware and software. The question began to shift from “what’s the best tool for social media management” to “what else should I be using.” It was clear that certain social media tools, when used side by side, could not only increase the overall effectiveness of an entire program, but also amplify the value of each individual tool. If the word popping into your head right now is symbiosis, you’re on the right track.

Symbiosis:

1. Biology A close, prolonged association between two or more different organisms of different species that may, but does not necessarily, benefit each member.
2. A relationship of mutual benefit or dependence.

Let’s geek-out a little and get a little more specific, because symbiotic relationships come in three types:

Commensalism: A symbiotic relationship in which one organism derives benefit while causing little or no harm to the other. (Good.)

Parasitism: A symbiotic relationship in which one organism (the parasite) benefits and the other (the host) is generally harmed. (Bad.)

Mutualism: A symbiotic relationship in which both organisms benefits from their relationship with the other. (Best.)

Needless to say, you don’t want parasitism. At worst, combining several social media management tools together falls into a commensalist symbiosis scenario – one where some of these tools (and associated) functions will benefit from the utility of other tools, while the utility of these stand-alone tools will not be affected. At best, combining several social media management tools together will create a mutualist symbiosisscenario – on in which every one of these tools will see their utility and value enhanced by the others.

Walk into any company’s digital  ”mission control” center today, and what you will find is an illustration of one or the other of these two ecosystems – and sometimes a combination of both.

Simplifying Digital Mission Control centers: too little vs. too much

So now that we are talking about digital mission control centers (a topic we will revisit often in the coming months), let’s look at them from the perspective of trying to minimize the complexity of social media management…

read more…

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Social Media ROI – Managing and Measuring Social Media Efforts in your Organization was written specifically to teach managers and executives how to build and manage social media friendly business programs and incorporate social technologies and networks into everyday business operations. The book is divided into four parts: social media program strategy & development, social media program operationalization, social media program management, and best practices in measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If everyone on your team doesn’t yet have their own copy, fix that too. It makes for a great desk reference.

(Now available in several languages including German, Korean, Japanese and Spanish.)

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

Read Full Post »

2010 MIMA Summit: Featured Speaker – Olivier Blanchard from MIMA on Vimeo.

I know it’s been a while since I’ve released a video (well… one that doesn’t involve hanging out with an octopus or trying to crash my bike on mountain descents), so here’s one fished out of the vault by @KrisColvin that might come in handy. It hails back to the 2010 MIMA summit, but everything in the video is fairly straightforward and still applies to your social business programs today, so it’s well worth another pass.

If the embedded video at the top of the post doesn’t launch, watch it here.

Also, some news:

You know by now that I am generally pretty guarded about who my clients are, but my latest project calls for a little bit of transparency since I am giving them some visibility on Facebook and Twitter and helping manage some of their accounts. I have recently started working pretty closely with the folks at Tickr. They’re the folks behind the one-screen multi-channel aggregator you’ve probably seen in videos of social/digital control centers – like the one PepsiCo built for Gatorade. It’s kind of hard to run into a mission control center that doesn’t have a screen dedicated to Tickr now. Anyway, they’re launching a free version and a pay-as-you-go version to complement the enterprise version that big brands are already using, so they’ve asked me to help out for a few months. Check it out and tell me (or them) what you think.

Aside from the shameless plug, you may be interested to know that I’ll be blogging there as well as here for a bit, so if you are looking for more basic social media how to stuff than what I usually post here, news about the world of digital monitoring, digital brand management, and the rise of digital mission control centers, look for some of that there. The short list:

The blog

The Facebook page

The Twitter account (@TickrUS)

The website

You can start a free account and test drive Tickr in minutes, so give them a shot. It’s a pretty cool little app that works super well with the Radian6’s, Alterians and Spiral 16’s of the world.

Cheers. Let me know if you want more videos. There are more in the vault.

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Social Media ROI – Managing and Measuring Social Media Efforts in your Organization was written specifically to teach managers and executives how to build and manage social media friendly business programs and incorporate social technologies and networks into everyday business operations. The book is divided into four parts: social media program strategy & development, social media program operationalization, social media program management, and best practices in measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If everyone on your team doesn’t yet have their own copy, fix that too. It makes for a great desk reference.

(Now available in several languages including German, Korean, Japanese and Spanish.)

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

Read Full Post »

That.

 

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Problem? Solution:

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

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