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Posts Tagged ‘R.O.I.’

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

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Today, instead of doing all the talking, I will let people with a whole lot more experience than me give you some tips about how to become a better leader.

Great stuff that transcends the typical quotation mill.

Anne Mulcahy – Former CEO of Xerox:

In a crisis, you have the opportunity to move quickly and change a lot – and you have to take advantage of that.

Change doesn’t happen if you don’t work at it. You’ve got to get out there, give people the straight scoop, and get buy-in. It’s not just good-looking presentations; it’s letting people ask the tough questions. It’s almost got to be done one person at a time.

There’s not a lot of room anymore for senior people to be managers. They have to be leaders. I want people to create organizations that get aligned, get passionate, get really inspired about delivering.

Stories exist at every level of the company. Whether it was saving a buck here, or doing something different for customers, everyone has a story. That creates powerful momentum – people sense that they’re able to do good things. It’s much more powerful than the precision or elegance of the strategy.

I communicate good news the same way I do the bad news. I thank people and make sure they feel a sense of recognition for their contribution. But the trick is always to to use the opportunity to talk about what’s next, to pose the next challenges. Where do we want to go? How do we want to build on it?

Margaret Heffernan – Author, The Naked Truth:

Nothing kills morale like a staff’s feeling helpless. This often plays itself out when there are rumors of a new strategic shift or a major personnel move, or worse, when the papers are littered with bad news about your company. A big part of boosting morale is about constructing a haven of logic that offers individuals shelter from any storm. At its most basic, leaders have to communicate their awareness of business conditions and place their plans in that context. Each time [a CEO outlines] a future that comes true, he demonstrates his own competence and reinforces trust.

The happiest people aren’t the ones with the most money but those with a sense of purpose – a sense that they are contributing to something bigger than themselves. At least some of this has to derive from work. The purpose of a business, then, must be explicit and go beyond boosting the share price or fulfilling some bland mission statement. People want to believe that they are part of something meaningful. The sense of purpose doesn’t have to be grandiose or revolutionary, merely credible and anchored in values.

Purpose is achieved through goals, and the acid test for any leader is defining the appropriate ones. Too small, and celebrations soon ring hollow. Small goals breed cynicism. But too-big goals produce helplessness. Although it can be temporarily thrilling to rally around a big corporate slogan like “kill the competition,” the reality is that employees can’t do it alone and they can’t do it quickly.

Alignment between corporate goals and personal development has never been more critical. The more unpredictable the outside world, the more urgent the personal quest for self-determination. What employees look for in leadership is a sense that their personal journey and the company journey are part of the same story.When these goals aren’t aligned, employees tend to whine with others, eager to share their sense of anger and injustice, polluting morale. The only way to combat this and get back on track is proper feedback. Give employees the tools to influence their own fate.

Get a life. Keeping morale high is like being on a diet: It requires constant effort and is never over. New ideas, stimuli and motivation come from all around you. It’s the larger life, after all, that gives purpose to the climb.

Alan Deutschman – Senior Writer, Fast Company – writing about how IBM builds new businesses:

Look for opportunities that can become profitable [billion-dollar] businesses in five to seven years. You’ll probably find them by talking to customers rather than to brilliant researchers in the labs, who are are looking further ahead.

J. Bruce Harreld – IBM:

You want to celebrate failure because you learn something. You need some level of security to say ‘I screwed it up,’ and be comfortable that you won’t be fired.

Marcus Buckingham – Author, Break All The Rules:

Turn anxiety into confidence. For a leader, the challenge is that in every society ever studied, the future is unstable, unknown, and therefore potentially dangerous. By far the most effective way to turn fear into confidence is to be clear – to define the future in such vivid terms that we can see where we are headed. Clarity is the antidote to anxiety, and therefore clarity is the preoccupation of the effective leader. If you do nothing else as a leader, be clear.

Effective leaders don’t have to be passionate, charming or brilliant. What they must be is clear – clarity is the essence of great leadership. Show us clearly who we should seek to serve, show us where our core strength lies, show us which score we should focus on and which actions we must take, and we will reward you by working our hearts out to make our better future come true.

See? Told you these folks know what they’re talking about.

Thanks to Fast Company‘s March 2005 issue for providing much of today’s content. (My collection goes way back.)

It’s a brand new week. Make it count. Cheers.

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Social Media ROI – Managing and Measuring Social Media Efforts in your Organization is the reference manual for business managers involved with  social media program development, strategy, management, measurement and reporting. If your boss doesn’t yet have a copy, time to fix that. If your team doesn’t have copies, get them their own. Tip: you’ll want to have a highlighter ready. Earmarking of pages is strongly recommended.

Now available in English, German, Korean, Japanese and Spanish.

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

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As valuable as it may be to peel back the layers of a poorly put-together list of social business ROI examples, let’s now talk about how to do it right. Below is a quick 5-step guide in case you ever want to publish your own report or list of social business ROI examples:

1. Do your research.

This means talking directly with the company or agency involved with the campaign or program, not just bookmarking Mashable  articles and collecting a few white papers. Actually talk with the program or campaign lead. Have a discussion about what worked and what didn’t, what was done and why, etc. Obtain financial data, not just digital and marketing metrics. Without this data, you will not be able to add this campaign or program to your list.

2. Know the difference between writing a list of social business case studies and a list of social business ROI examples.

– Case studies may focus on a breadth of criteria for success or failure. Some may focus on the impact a campaign had on consumer perceptions while others may focus on customer acquisition or nipping a PR crisis or any number of things.

Case studies can focus on ROI but they don’t have to.

Case studies tend to be written in sections: Objective/problem to solve, theory, strategy/plan, tactics/execution, what happened, what we learned. The formula isn’t rigid but for a case study to be written properly, it has to actually study a case, hence the name. It has to have a beginning, a middle and an end. It has to show the connection between intent and outcomes.

Case studies can’t only be about what worked. They also have to be about what didn’t work. There’s value to that as well. Report on both.

– A list of social business ROI examples focuses on just one thing: Listing social business programs or activities with quantifiable ROI.

There are three parts to a social business ROI report: An explanation of the activity’s purpose and nature, the cost of that activity, and the ultimate financial benefit to the company.

The focus here is much more specific than that of a case study.

3. Format your reporting properly. 

Here is an example of how not to format an example of social business ROI:

Electronic Arts. EA was 2nd UK brand to use promoted tweets and trends to promote FIFA 12 video game. Trend engagement level was 11%, well above Twitter’s average ‘benchmark’ for trends, of 3% to 6%. Promoted tweet engagement averaged 8.3% over two-week campaign vs. Twitter benchmark of 1.5%. (Marketing Magazine, 2011) Source: Peter Kim.

Note that in spite of the short formatting the above example does not  include any ROI data whatsoever. It focuses instead on trend engagement levels and promoted tweet engagement. This not what you want your ROI reporting to look like.

Here is an example of how to properly format an example of social business ROI:

Joe’s Pie Factory. JPF wanted to increase QoQ sales of carrot cakes by 25% by the end of Q4-2011. Leveraging its Facebook page, Twitter account, Youtube channel and blog, JPF launched an awareness campaign for its carrot cakes at the start of Q4-2011. Total cost of campaign: $27,391 (for video production and content & community management). Outcome: A 23% boost in QoQ sales resulting in $59,782 in net new revenue. (Add link to case study in case readers want to learn more.)

Note that this example focuses on campaign objectives and includes both cost and net revenue data for the activity. These are the three ingredients needed to properly qualify an example for a social business ROI list or report. (See item 4.)

You could stop there or you could do the math for your readers:

Joe’s Pie Factory. JPF wanted to increase QoQ sales of carrot cakes by 25% by the end of Q4-2011. Leveraging its Facebook page, Twitter account, Youtube channel and blog, JPF launched an awareness campaign for its carrot cakes at the start of Q4-2011. Total cost of campaign: $27,391 (for video production and content & community management). Outcome: A 23% boost in QoQ sales resulting in $59,782 in net new revenue. ROI of campaign: 118%. (Add link to case study in case readers want to learn more.)

4. Make sure that all of your social business ROI examples always contain these four pieces of information:

  1. A brief synopsis of the campaign or program.
  2. The cost of that program.
  3. The financial outcome of that program.
  4. A link to the case study / your source for the ROI data.

Anything other than those three pieces of information is unnecessary. Remember that you are writing a list of social business ROI examples and not a list of social business case studies.

Failure to include all four of these pieces of information will result in incomplete reporting.

5. Make sure that your documentation is in order.

Do not rely on anecdotal information to compile your list or report. Ever.

This means: do not assume that because a social business program was in place during a period of lift in sales revenue, the social media program was the cause of that lift. Don’t assume that if a digital marketing manager tells you that he knows customers responded positively to a campaign, they actually did. In fact, don’t assume anything. Back up every hypothesis and assertion with data. Disprove alternative cause-and-effect relationships where they may exist. Make sure you aren’t being sold a big fat lie.

If you cannot prove that a company’s social business program or campaign resulted in positive ROI, do not include that program or campaign in your list or report. Period.

Just to be sure, always document the source of your data so the rest of us can check it for potential errors or foul play.

Three more tips:

Don’t worry about gimmicks. If your list only gets to 23 examples, then that’s fine. Don’t try to stretch it to 25 or 75 or 101 just to have a catchy number that will score good SEO. Just stick to the facts. Everyone would much rather have 23 solid examples of social business ROI than 101 bad ones. Substance before flash. Always.

If you don’t understand how ROI and social business fit, you might not be the best person to compile and publish reports on the subject. If that’s the case, don’t feel bad. Life goes on. Publish stuff you actually understand for now. Someday, when the ROI thing isn’t such a mystery anymore, you can come back to it and give it another shot. Until then, just do yourself (and all of us a favor) and do your homework. Come prepared. Lead with what you know.

If you want to get better at this though, here is a primer on how to calculate ROI in 4 easy steps:

What you’ll need:

  • Campaign cost data and financial outcome data.
  • The ROI equation.

Here is the ROI equation in its most user-friendly format:

ROI = [(Financial outcome of program – Cost of program) ÷ Cost of program] x 100

Step 1: Calculate the financial outcome of the program – the cost of program.

Step 2: Divide that number by the cost of the program/campaign.

Step 3: Multiply that number by 100.

Step 4: Add a % at the end.

That’s it. So simple an 8-year-old at a lemonade stand can do it.

Now go forth and be a force for good and credible business reporting in the world.

Cheers,

Olivier

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In case you haven’t yet, you might want to pick up a copy of #smROI. 300 pages worth of stuff like this in there. A full pound of knowledge.

And if your favorite social business “expert” doesn’t seem to get this stuff yet, don’t feel bad about sending them a copy. Knowledge is never a bad gift.

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

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How do I write this piece without making Peter Kim hate me? I guess I’m just going to have to give it a shot and hope for the best. It’s important to remember that this post isn’t about him. It’s about a piece of content.

None of this is personal. I even think I like the guy. (We’ve never met in the real world, so I don’t know for sure.) I have a lot of respect for him and for what I think he does. (We’ve never worked together so I don’t know for sure either.) But I have to be honest, the 101 Examples of Social Media ROI list he published this week is crap seriously flawed. Here’s why: Most of these 101 “examples” don’t show ROI at all, “social” or otherwise. Either the title is wrong or the list is wrong for that title. One or the other.

Before I get into specific examples and illustrations of where I think the list fails, let me give you four basic problems I have with it as it stands today:

1. Many of the examples on it could potentially show positive ROI but – as presented – only reference selective gains from social activity and not actual, factual, empirical ROI. If that made no sense, that’s okay. Let me explain:

For something to be ROI, you need two ingredients: The cost of the activity and the gain from that activity. (That cost is the investment. The gain is either revenue or cost savings.) It’s math. Really really really simple math. ROI is an equation and it generally looks like this:

($ Gain – $ Cost) ÷ $ Cost = ROI

or

($ Revenue – $ Investment) ÷ $ Investment = ROI

(You can also multiply the result by 100 to get yourself out of the decimals, but that’s a personal choice. You can do that in your head.)

Anything that isn’t the result of the ROI equation is not ROI.

Note that a gain is just a gain,like cost is just a cost. Neither gain nor cost is ROI on its own. Ever. Not in any known universe.

Put another way, bread and ham  may individually be part of the ham sandwich equation but ham alone is not a ham sandwich. Ham is just ham. The problem we face today: This list pretty much mistakes ham for a ham sandwich. Good thing it was free or we would all be asking for a refund (or a word with the chef).

Take this example:

61. Paramount Pictures. #Super8Secret Promoted Trend created a tremendous spike in conversations: Tweets of the hashtag reached nearly nine million impressions in less than 24 hours and mentions of the movie skyrocketed to more than 150 per minute. Receipts for the sneak preview exceeded $1 million, and Paramount said weekend box office surpassed expectations by 52%. (Twitter, 2011)

Cool story, bro. What was the cost of the campaign?

Yes, this is an example of a successful use of social media (through a “promoted trend” media buy). Awesome. But where’s the bit that compares the $gain and the $cost? That would be an ROI example. This isn’t.

What’s sad is that there is probably an ROI piece hiding in the background but instead of focusing on that, the example dishes out a healthy helping of random gain data: Impressions. Mentions. Tweets. Retweets. Sales too, which is nice but no cost data… so thanks for playing but no. Without the cost piece, you don’t have an ROI example.

Your example needs to include this information or it doesn’t belong on that list:

($ Gain – $ Cost) ÷ $ Cost = ROI

Tip: If you can’t measure ROI or adequately prove it in this instance, that’s okay. Just don’t add it to a list of ROI examples.

(Speaking of proving cause & effect, let’s not forget that Super8 was a well anticipated $50M summer fare from director J.J.Abrams and producer Steven Spielberg. Not exactly a grass-roots indie phenom that would have flopped without a promoted trend on Twitter. Let’s not go crazy over the role that social media really played in opening weekend ticket sales. A little perspective goes a long way.)

More examples of this disappointing absence of actual ROI metrics later. In fact… almost the entire list suffers from this single basic flaw. But hey, at least this type of example makes the effort of including at least a portion of the data that goes into an ROI discussion. Not all examples on the list do.

2. Many of the examples on the list don’t even reference financial gain at all, let alone ROI. I list more later in the post but these will get things started:

“68% of respondents said they were “much” or “somewhat” more likely to purchase post-project.” (Subaru. 80.)

“32,000 video views, 25% regular return visits to the site, and average of almost seven minutes spent on the site per visit.” (UPS. 96.)

Community drove a +20 NPS increase.” (Sage Software. 69.)

“58% higher engagement rate than people coming in from other channels.” (TurboTax. 91.)

These are very cool little successes, great things to celebrate and be happy about, but as valuable as they may be they are not ROI. Not one part of any of those numbers even fit in the ROI discussion. At least other examples on the list make an effort to list one element of ROI: Money saved or money earned. These don’t. Sorry but that’s a little perplexing.

Here’s an example of my own to illustrate how far these examples are from ROI: I love carrot cake and when people compliment me on my impeccable taste in carrot cake, that isn’t ROI either, no matter how much of those interactions happen online.  I could call it ROI and score the number 102 spot on the list, thus:

102. Olivier Blanchard. Increased engagement with carrot cake enthusiast community by 37%. (The BrandBuilder Blog, 2012)

Except… no. It doesn’t work that way. Just because something is a success doesn’t mean it qualifies as ROI. Did my example mention that I even sold carrot cakes? Did I factor in the cost of making them or selling them online? Did I save money in any way by talking about carrot cakes with my twitter friends? Nope, I didn’t think so either.

Again, your example needs to include this information or it doesn’t belong on a list of ROI examples:

($ Gain – $ Cost) ÷ $ Cost = ROI

3. Some of the examples could have been bunched into one but legitimate examples were somehow omitted. Case in point: Cerner’s three examples (15, 16 and 17) are really one program / one example, but IKEA somehow didn’t make the list. (For more details on that particular program, click here.)  Maybe scratching Giffgaff (32.) and replacing it with IKEA would have made sense?  But okay, I’ll back off from this particular point. Lists tend to be incomplete. Someone always gets left out and sometimes you have to stretch yourself a little thin to get to the magic number. It’s no big deal.

4. Because of the source (Peter is well respected in this industry as far as I can tell), a lot of people will naturally accept this list as fact. It will become a template to be shared and passed around and referenced for the next couple of years. When marketing execs and digital agencies look for examples of ROI in social business, they will pull this thing from the Googlenets and use it as a resource for all sorts of things: Training of new social business recruits, client pitches, presentations at conferences, etc. They will do so without questioning the validity of the information they are not only ingesting but also sharing because they trust that Peter vetted the list before publishing it. That’s the unspoken contract of being a respected leader in the social business world.

Except… what if this one time, the information wasn’t properly vetted? What if much of it wasn’t even properly presented (using the right metrics, for instance)? Or what if the title is so wrong for the actual list that you end up confusing “value” with ROI for another 3 years as a result? Then what? No thanks. We can do better.

If you have 10 minutes to really get into it, read on. If not, you get the idea. (By the way, the list isn’t all bad.) Feel free to skip ahead to the end all the same. 😉

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Let’s look at a few of these examples a little more closely.

We’ll get to more obvious cases of “no, this isn’t ROI at all” a bit later. I want to start with some of the more subtle “maybe this could be ROI” examples first because a) they’re tricky and b) they illustrate pretty well some of the common traps people fall into when trying to establish ROI too quickly:

1. Aflac. Community drove online payments increase of 3% led to $95,000 in savings. (Lithium Technologies, 2011)

Q: What’s the problem with this one, Olivier? It looks legit to me. What’s your deal?

A: Yes it does look legit. And it might be. But do we know anything about other activity from Aflac that might have contributed to that 3% increase in online payments?

Could a concurrent email or advertising campaign have triggered a significant portion of that shift? Could the addition of a flyer in the mail to existing customers prompting them to make online payments have been the real cause of the shift? We can’t attribute the success of “the community” until we have ruled those out. If we know for a fact that this was 100% the result of community engagement, great. Roll on. If not, we need to find out before we high-five the community management team.

Lesson #1: Assumptions are dangerous and attribution is tricky. If you are going to present an ROI example, make sure it is rock solid. Don’t assume that social business was the biggest (or sole) cause of your success.

A better way of presenting this one would have been to maybe connect the 3% lift in online payments to the $95,000 in processing costs (context here would be nice so we know how the two might be connected). Tying these metrics to a specific campaign or activity on social channels wouldn’t be a bad thing too. Connect the dots a little bit: +3% in online payments isn’t ROI unless it results in $x savings. None of it is an outcome of social business unless you also show how “the community” helped you get there.

Not saying this isn’t a potential ROI win, but as presented, we can’t know for sure. Not yet. We’ll give that a cautious MAYBE. Just watch those assumptions though.

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2. Alberta Common Wealth Credit Union. Blog, YouTube, Facebook – 2 million impressions, 2,300 new accounts, and $4 million Canadian in new deposits. (Forrester, 2008)

First, scratch the 2 million impressions bit. It’s a distracting metric and not super reliable (or even relevant to this discussion).

$4 million in new deposits sounds like a great outcome for the program though. Here are the three problems with that:

Assumptions again: How do we know that these 2,300 new accounts and resulting $4 million in new deposits were tied to the social media program (Blog, Youtube, Facebook) and not a combination of social and other factors (traditional marketing, advertising, PR, etc.). Can ACWCU realistically assign the 2,300 new accounts and $4M in net new deposits to the social media program?

If the answer is yes, great. They’re on the right track. Time to back that up. Show me how that happened.

If the answer is no, then we have a problem right off the bat. Remember that thing about assumptions.

– What about costs? What was the cost of the program? This example (and many others) don’t mention cost at all. They only mention gains. The ROI equation also factors in costs.

Here’s why this is kind of important in an “ROI examples” discussion: if the program or campaign cost $4,000,001 and the net new deposits amounted to $4,000,000, then your ROI was actually negative. Just sharing the gain from the campaign or program doesn’t give us any idea of what the ROI actually was.

Lesson #2: Don’t confuse ROI with gain. ROI is the ham sandwich, not just the ham. (Google the ROI equation, print it and tape it to your office wall. Before you tag something as ROI, make sure it fits the definition of ROI.)

– No benchmarking: What the example doesn’t tell us is what the time period for this gain was, and how the credit union normally trends for similar time periods. What if ACWCU usually sees the same amount of new accounts and deposits for the same time period even without social media? Say that ACWCU saw 2,300 new accounts for the exact same period preceding the start of their social media program? Wouldn’t that mean that the social media program might have had no impact at all? You have to factor in time frames and set up benchmarks before you can weigh gains before and after the launch of a program.

Result: As presented, we have no way of knowing if the program perpetuated a trend or brought in new business above and beyond normal performance trending.

Lesson #3: Without adequate benchmarking, your ROI “reporting” is incomplete and doesn’t stand up to scrutiny.

File that one under MAYBE. (As presented: An incomplete report of gain but not an example of ROI.)

Way too many of this kind of anecdotal “example” on this list to make me comfortable with it. Sorry.

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8. Blendtec. Viral videos increased company sales +700%. (Barnraisers, 2010)

That one actually does stand up to scrutiny. BlendTec’s hilarious videos (and live demos at trade shows) a) became such a hit and b) demonstrated the effectiveness of the blenders so well that orders for the blender increased almost overnight.

The reporting here is still pretty incomplete though: 700% over what time period? What else could have caused the increase? That’s a gain but not an ROI figure: What was the cost of the program vs. that 700% net gain in sales?

File that one under YES: ROI but with reservations. (As presented: another report of a successful gain but not an example of ROI.)

I really wish the legitimate ROI examples on this list actually focused on ROI instead of using disjointed metrics.

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10. Bonobos. Exclusive sale on Twitter generated 1,200% ROI in 24 hours on promoted tweet. (Twitter, 2011)

First, proceed with caution if the list is about Social Business and you are just talking about a one-time media buy on a social channel. Social business is a little more elaborate than buying the odd promoted tweet for a one-day promotion.

Second, we have absolutely no idea how that 1,200% ROI figure comes from. What is it based on? Could the figure erroneously reference a 1,200% increase in sales rather than ROI? As presented, we don’t really know. Red flag.

Third (and perhaps most important) we have no idea what the cost of that promoted tweet was in relation to the gain in net sales.

Knowing nothing about this one, I want to give it the benefit of the doubt. Filing it under MAYBE. (I can’t believe I am being so nice. This would never pass muster during a legitimate business audit.)

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13. Burger King. Subservient Chicken video increased chicken sandwich sales 9% per week a month after launch. (Adweek, 2005)

Again: At a cost of…?

If the 9% increase in chicken sandwich sales amounted to less revenue than the cost of the campaign or program, then the ROI was negative. This example (like most on the list) mentions gain without factoring in cost. This is the list’s biggest problem.

Footnote: Subservient chicken wasn’t just a social media campaign. Subservient chicken was an advertising campaign with interactive digital components. This is very different from a business like Best Buy or Ford engaging with people via social channels to grow mindshare, improve the brand’s image and ultimately increase preference in the minds of x% of car buyers. When looking at this type of hybrid model of social and traditional media, you cannot legitimately talk about the ROI of “social”.

Lesson #4: When a campaign (note my choice of the term campaign and not program) is as much social marketing as it is traditional marketing, you cannot attribute its success to “social media” or even “social business.” An advertising campaign, even with social channel components is still an advertising campaign.

Effective, sure, but still just advertising.

File that one under a cautious and suspicious MAYBE. (As presented though: No ROI was actually demonstrated here. Value: yes. ROI: nope. Again.)

Let’s move further down the list.

*         *        *

Let’s leave the gray area of “maybe” for a minute and look at a few examples that don’t fall anywhere near ROI (as presented):

15. Cerner. Community resulted in 13% fewer customer support issues logged. (Jive Software, 2011)

16. Cerner. Community resulted in 70% decrease in internal HR issues logged. (Jive Software, 2011)

17. Cerner. Community resulted in shorter approval cycles for writing technical documentation, from 2-6 weeks to hours or days. (Jive Software, 2011)

19. Charles Schwab. Online community drives 56% increase in Gen X customer base versus year ago. (Communispace, 2007)

20. Cisco. Community deflects 120,000 support cases each month. (Lithium Technologies, 2011)

24. Electronic Arts. EA was 2nd UK brand to use promoted tweets and trends to promote FIFA 12 video game. Trend engagement level was 11%, well above Twitter’s average ‘benchmark’ for trends, of 3% to 6%. Promoted tweet engagement averaged 8.3% over two-week campaign vs. Twitter benchmark of 1.5%. (Marketing Magazine, 2011)

25. Elsevier. Wiki drives 80% reduction in interdepartmental e-mail volume. (Socialtext, unkn)

28. FICO. Community: 850k customers served, resulting in 10% improvement in call deflections annually. (Lithium Technologies, 2011)

30. FONA International. Wiki eliminated almost 50,000 e-mails a year from one specific process. (Socialtext, unkn)

32. giffgaff. 100% of questions answered by community members in average time of 93 seconds. (Lithium Technologies, 2011)

34. Hershey’s. House party: 10,000 parties, reached 129,000 people, and say their campaign was seen by 7 million people. (Forrester, 2008)

35. Honda. Friending Honda campaign increased Facebook fans from 15k to 422k, generated over 3,500 dealer quote requests. (RPA, 2010)

36. HP. More than 4.6 people have told HP that the forum solved their support issues which HP says makes customer happier and saves the company millions in support costs. (Forrester, 2010)

42. Intuit Quickbooks. Business owners engaged with rated ProAdvisors 555% more often than unrated counterparts. (ratings and reviews). (Bazaarvoice, 2011)

No ROI in any of those examples whatsoever. There are more but I will let you find them all on your own.

Lesson #5: If it isn’t a $cost vs. $gain equation (or whatever currency you need it to be), it isn’t ROI. Customer base, leads, referrals, links, clicks, retweets, HR issues logged, email volume, estimates of future sales, deltas in NPS, quote requests, parties reached, impressions, engagement, etc. = not ROI.

Note: Too bad HP (36.) didn’t lead with the “saves company millions in support costs.” That looked like a legitimate ROI example. (Right company, wrong metrics to illustrate the ROI piece.) It matters that 4.6… wait. 4.6 people?

Maybe it was 4.6 million? Or 4 out of 6?

Anyway, whatever the number is, it matters but it is irrelevant to the ROI discussion. What would have been relevant would be how many millions in savings HP enjoyed as a result: The cost of implementing and managing the program vs. the $x million savings would have been a perfect way to illustrate ROI here. Missed opportunity #36 on the list so far.

Speaking of how to properly present ROI “examples,” here are a few quick tips on how to turn these examples into legitimate ROI stories:

It would have been great for the three Cerner examples to talk about actual cost reductions from the drop in customer service and HR issues, for instance, but they didn’t The metrics used had nothing to do with ROI. Financial gains (either via revenue or cost savings) were never mentioned. The cost of implementing and managing the program(s) was also never mentioned. Why? Those are far more relevant metrics than the ones presented.

Same with Elsevier: An 80% reduction in email is great but what is the impact on operational costs? That would be a potential ROI story.

Honda (35.) would have a great ROI story to tell if it could show the net number of sales from those 3,500 dealer quote requests and then scrubbed from that list every buyer who was going to buy a Honda anyway, regardless of the company’s social media activity. Presenting the example with “likes” and “dealer quotes” as the two principal KPIs (key performance indicators) instead of net sales (for example) puts the example squarely outside of a legitimate ROI discussion.

Intuit is another example of a company listed here with a legitimate ROI story to tell, but the description references a KPI that has nothing to do with ROI whatsoever. “555% more engagement resulting in net new $… versus a cost of $…” would have scored a bullseye. “555% more engagement” alone doesn’t.

Is it too much to ask for a list of ROI examples to actually use cost vs. gain numbers? As in… the actual ROI equation? Because that would be simple, clear and nice… and relevant. Instead of…

19. Charles Schwab. Online community drives 56% increase in Gen X customer base versus year ago.

… try this:

19. Charles Schwab. Online community cost: $X. 56% YoY increase in Gen X customer base attributable to online community resulted in net new revenue of $Y FY2011. ROI: $Z.

Simple. That’s how it’s done.

Perhaps there is an ROI story hiding somewhere in the background of every single example here. In fact, there probably is. But these examples, as presented, don’t talk about ROI at all. They reference non-financial gains without establishing any link whatsoever to ROI. So… Sorry, that’s a big zero on all of those.

Filing these under: NO ROI ANYWHERE (except for the vague afterthought in number 36).

My thinking: Far too many of these on this list as well.

*          *          *

Okay… I’m starting to feel bad about this so let’s look at a legitimate example on the list. #22: Dell.

22. Dell. @DellOutlet on Twitter generated $2 million direct sales, influenced $1 million addt’l (2007 – 2009). (Direct2Dell Blog, 2009)

Yes. Tweets linked to offers were tracked and a direct path of tweet-to-purchase was clearly established. Empirically.

File that one under YES: ROI. (But it would have been nice to see it as an ROI example and not as just another example of gain.)

Cost of program vs. $ in net sales from the program. Simple. Another missed opportunity to demonstrate ROI properly.

Moving on…

*         *        *

27. Epson. Reviews drove 98% higher revenue per visitor for Epson. (Bazaarvoice, 2011)

First, I have absolutely no idea how one leads to the other. How do we know that “reviews” drove higher revenue per visitor? Show me how you came up with that figure.

Second, what does that have to do with ROI? (Gain from reviews – Cost of reviews) ÷ Gain from reviews = … oh wait. What was the cost of those reviews again? #Fail. Value: Yes. Correlation between A and B: Maybe. ROI: Nope.

Sorry but I have to file this one under NO. Interesting but not ROI.

*          *          *

Dancing back into ROI territory now. (I still feel guilty about pointing out the problems with this list.)

See? It isn’t all bad.

37. IBM. developerWorks community saves $100 million annually from people who use this resource instead of contacting IBM support. (Forrester, 2010)

38. IBM. Crowd-sourcing identified 10 best incubator businesses, funded for $100 million, generatiung $100 billion in total revenue for a 10-to-1 ROI with a 44.1% gross profit margin. (Barnraisers, 2010)

Now we’re talking. ROI can come from cost savings, not just net new revenue. Well done, IBM.

Filed under YES: ROI.

*          *          *

45. Jewelry TV. Customer reviews boost mobile sales by 30% (ratings and reviews). (Bazaarvoice, 2011)

Aside from the obvious problems already encountered with previous examples, this one introduces us to a new one: The 30% boost in mobile sales. Is this 30% net new sales or simply a shift from non-mobile sales to mobile sales? Whether someone buys from a mobile device or their land line, is there really a difference? Does it have anything to do with ROI?

53. Mattel. Despite product recalls, online community helped support Q4 2007 sales increase of 6%. (Forrester, 2008)

How do we know that the online community helped support a Q4 2007  sales increase of 6%? isn’t it more likely that back in 2007, advertising, product placement and good PR might have been more responsible for that 6% increase than an online community?

Also, 6% versus what? Is this YoY or QoQ? Was it normal for Mattel to expect 6% growth in Q4 of 2007 with or without an online community?

Too many unanswered questions = too many assumptions.

Filing these and others like them under NOT SURE WHAT THAT WAS. MAYBE.

Another reason why benchmarking matters. Just throwing numbers around without establishing a context for them doesn’t really tell you anything. Data can be manipulated to tell wonderful stories when no one is there to ask hard questions like “prove it.”

*         *        *

I want to end on a positive note, so here are several examples that either have potential or are clear examples of ROI (in no particular order):

11. Bupa. Community drove £190,000 savings through collaboration, online events. (Jive Software, 2011)

100. Vistaprint. Community tracked $30,000 in social revenue in 2009. (Lithium Technologies, 2011)

23. Domino’s Pizza. Foursquare drove 29% pre-tax profit through promotions. (Barnraisers, 2010)

71. SAP. Community drive 5% increase in partner sales. (Jive Software, 2011)

57. National Instruments. Community resulted in 46% of all support questions answered by peers instead of support. (Jive Software, 2011)

84. TomTom. In one month, community handled 20,000 cases resulting in $150k of savings. (Lithium Technologies, 2011)

65. Precyse Technologies. $250,000 savings in crowdsourcing new product design. (InnoCentive, 2010)

92. TVG. Community members spend 36% more than average. (Lithium Technologies, 2011)

67. Rhapsody. 50% decrease in support costs and 53% decrease in weekly support contacts via sCRM solution. (GetSatisfaction, unkn)

60. Orange. Listening: saved a few million euros in support costs and helped avoid several potential PR problems. (Forrester, 2010)

75. Secret. Among women viewing the video, 57% said their impression of the Secret brand improved and purchase intent among women who participated on Facebook went up by 11% (33% for teens). Clinical sales increased 8% despite a 70% decrease in TV support. (Forrester, 2010)

85. Toshiba. Saved $213,000 by adding online component to 5 events, doubling attendance. (Jive Software, 2011)

95. University of London. Internal social network allows students to collaborate remotely, expected to deliver future savings in the region of £300,000 per year in print, courier and administration costs alone. (IBM, 2008)

While examples like Secret (75.) and SAS (71.) require you to make leaps of faith (as presented) and don’t actually give us ROI data (not just gain but relative cost of the new activity vs. traditional spend), you can see an ROI story forming in the background. It’s still vague but you can tell it’s there.

Let’s file those in the “PROBABLY ROI (if we dig a little more)” folder.

Examples like Orange (60.), Precyse Technologies (65.) and TomTom (84.), on the other hand, are cut and dry: The cost savings are empirical. You can tie the cost of the activity to the financial gain to the company.

We’ll file those in the “YES: ROI” folder.

Special mention for actually listing both gain and cost:

88. TransUnion. Estimated $2.5 million in savings in less than five months while spending about $50,000 on a social networking platform. (Socialtext, 2009)

If only all 101 had done that.

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(If you skipped ahead, pick up the post here. You’re almost done.)

Conclusion:

If you look at the list from the perspective of “these are 101 examples of where social business has benefited or added value to a company” then it is solid. Kudos to Peter and his team. Great title, lots of value there, please share with the world. Just make sure you scratch out the title or petition Peter to change it.

If you look at the list as a collection of “101 examples of social business ROI,” then the list is almost entirely wrong. Back to the drawing board. Sorry. It doesn’t work.

I don’t want to just point out the flaws without offering Peter a way to fix it, so here are the only two options:

1. Change the title to something along the lines of “101 examples of successful Social Business campaigns”. (Remove the ROI bit from it if you aren’t actually going to focus on ROI.)

2. Include actual ROI numbers for each of the 101 examples. (Those can just be the cost and the gain from activity figures. Real simple.) Even if some of those ROI numbers turn out to be less than impressive, the list will still be factual and valuable.

Oh, and 3. Include IKEA. It deserves a nod.

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I almost forgot…

Lesson #6: Ask the hard questions. Don’t assume that information (or insight) from anyone in any industry that touches marketing in any way is accurate. Not even mine. Put everything through your own stink test. Use your noggin’. Challenge everything that raises a red flag. Learn the definition of business terms too. They matter. Worth keeping in mind next time a list like this pops up (and there will be more like it).

Or your could just Google “R.O.I. calculation” for crying outloud. Every kid with a lemonade stand grasps that math. Why can’t social media gurus? It boggles the mind.

Cheers,

Olivier

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

PS: Everything in this book could also be dead wrong. It could all be pure BS. Scrutinize it as well. I’m not immune to the occasional wrong conclusion either. You never know. 😉

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This week, I had the pleasure of being interviewed on #mmchat (episode 68). We talked about social media (social business) integration, which is a pretty crucial topic. Pushing content through social media channels and setting up monitoring practices is the easy part. Making it all work and flow across an organization is where the real difficulties arise.

For almost every company adopting social media, the biggest challenge is not a lack of great ideas or social media expertise, but rather a lack of change management planning and execution. (Theory, presentations and case studies are great, but making someone else’s stories actually work for a business, that’s where the rubber really meets the road – or doesn’t, for the most part.)

Here were the questions:

Q1: So our topic tonight is on Social Media Alignment in organizations, can you describe your view on what this means?

Q2: [In reference to social media] what are some of the negative consequences experienced by organizations that are not aligned?

Q3: How should organizations begin when it comes to aligning their social media efforts with the rest of the business? Who should lead this initiative and how?

Q4: Are there specific steps required to align social networking within organizations?

Q5: Once alignment is achieved, can it be easily scaled or are there suggestions you can male to facilitate this process?

Q6: Are there different challenges & solutions for trying to align around the world in global organizations?

Q7: How does a company know when they have succeeded in the alignment quest? What are some of the major signs and benefits?

Because of the short amount of time allotted to the chat and the limited 140-character format, my answers and ensuing discussion don’t get super in-depth, but that comes with an advantage: They are VERY accessible. Even if you are still unsure how to effectively plug social media into a company so it doesn’t end up being just a marketing add-on, you will understand the fundamental principles covered here.

To access the chat’s full transcript, click here.

For a far more in-depth look into how to actually plug social media into a business (large or small), grab yourself a copy of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que/Pearson).

It isn’t a “social media” book. It is a management book that focuses on social media for business. Big difference. If you aren’t sure that it is for you, download a free chapter here, then make up your mind.

Very special thanks to @thesocialcmo and @karimacatherine for hosting the #chat.

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The danger of content-centric strategies in Social Business:

Let me preface this short post with the catalyst behind it – this article by Sarah Shearman for Marketing.co.uk: “Content key to marketing in social media says P&G exec.” Let me throw a few bits and pieces of the article your way, and we’ll get started.

Content is the best currency in social media, according to Usama Al-Qassab, e-commerce marketing and digital innovation team leader at Procter & Gamble.

Speaking at a panel debate at the Social Media World Forum today (29 March) on the role of social media in traditional marketing strategy, Al-Qassab said: “There is a lot of talk about social commerce, but the average person is not yet there yet. On sites such as Facebook, the majority of people do not go there to purchase and still prefer their traditional online retailers. In order to monetise social media, it should not be seen in isolation and needs to be integrated into the wider marketing mix. But unless you have content, there is no point. The content you deliver and the investment behind that is key, much bigger than straight media dollars.”

And this (edited for brevity):

“To grab people’s attention in social media, you need to do something amazing and to do this, [what] you need is a function of how good your product is and how human you appear. The less good your product is and the less human you appear, the more spectacular, giving and generous the thing you do as an organisation needs to be.” – John Willshire, head of innovation at PHD

“There is so much content out there that is great and excellent, [but that] does not mean anyone will be able to even see it. The only way you can get people to see things and talk about things is by giving them a big push. Everything, whether it be business cards, letterheads, the website, the TV advertising, should all drive to one specific thing you want people to do. People don’t talk about things because they think they are great, they talk about them because they think they ought to, or because other people talk about them. Popular things get more popular, as a result of being in the public eye. It is about driving the content and hoping to get additional benefits, when people start getting involved.” – Nick Butcher, global head of social media and digital innovation at ZenithOptimedia.

First, let me begin by saying that I have absolutely no problem with what is now called creative/content, or even a proper focus on it. Content is important. It helps communicate to consumers the value and advantages of buying a product or service. It makes consumers discover, desire, crave, and develop a preference for a product. Now more than ever, content is easy to share, which ads to its value and power. Content also pulls people to websites, which is pretty damn important if you are trying to keep consumers interested and/or primed to visit websites and click on buttons. For these reasons, content is at the core of all things digital marketing, and great content is worth its weight in gold. You will get absolutely no argument from me there. All of this is true.

But here is where experienced marketing executives around the world – including pretty brilliant guys like John, Nick and Usama – fall into a common trap: Mistaking social media channels for marketing channels.

The problem is simple: Marketing professionals see the marketing opportunity in these powerful new channels – as well they should. Their reflex is to do what they know, which is to adapt their marketing thinking to the social space: shift some of their communications, strategies,creative and content to the Facebooks, Twitters and Youtubes of the moment. It’s their job after all. It’s what they know. “Push” has always worked everywhere else, therefore it will work in the social space as well. (And in spite of what social media purists claim, “push” does work quite well on social channels. Ask Dell and Old Spice, for starters.) The problem, however, is that digital social channels are not solely marketing channels. In fact, they are mostly not marketing channels. They are social channels (hence the nomenclature). As such, they favor dialog rather than monologue, which is to say actual conversations rather than messaging.

Publishing content and creative might be seen as a conversation starter, but it is not in any way, shape or form a dialog. It is a monologue through and through. And there is the rub.

At the root of the confusion between social marketing and social business are two distinct operational world views:

The easiest way to illustrate the problem is – as always – with a silly picture of old white dudes in suits sitting around a table.

Below is the functional view of social media channels as perceived (and expressed) by marketing professionals like John, Nick, Usama and thousands upon thousands of others around the world, including the majority of CMOs:

The problem with a unilateral functional view of SM channels

This begins a chain reaction of tactical thinking in which “content” – whose importance to the marketing function (on and off the web) is without question – becomes the core component of marketing-driven social media programs: If “content is king” for marketing on and off the web, then content must also be king for marketing in social media channels.

Logical, right?

If you have ever wondered why “content” was such a recurring theme and point of focus in the social space – when it clearly doesn’t need to be, this is why. What you are looking at in the above image, and what you are hearing from John, Nick, Usama and their peers isn’t representative of either social business or a social media program for business. What it illustrates is limited to social media marketing: The traditional marketing function adapted and applied to social media channels. This world view reflects a belief that social media management is primarily a marketing function.

This view point is of course a little too limited to work super well in a social medium, where people value non-marketing interactions at least as much (if not a lot more) than marketing-related ones.

Since social media channels and the social space are not inherently marketing-focused channels, the correct approach for a business looking to see both short and long term results, is one that is NOT primarily marketing-centric, and therefore NOT primarily content-centric. Here is what that more integrated social business model looks like:

Social Business favors multi-functional adoption across the org

The above image reflects the nature of social business. This multi-functional approach to social media, marked by the adoption of social channels by all functions and departments across an organization, stands a much better chance of yielding results in a space that is not inherently marketing-focused (and can be, at times, openly hostile to overtly marketing-focused exploitation by companies that haven’t yet thought things through).

This model does not focus on “content” as the key component of its social media program “strategy.” Instead, the model focuses on creating new types of value for consumers and stakeholders:

1. Pragmatically this is done to gain a competitive advantage, or – because the more value an organization creates for its customers, the more win becomes associated with its reputation.

2. From the consumer side, as long as the organization driving such a program seems to be genuinely interested in improving the lives or the experience of people it comes in contact with, as long as it seems to want to foster a relationship with them that isn’t automated, that is as truly human and genuine as an old fashioned handshake or a kiss on the cheek or a warm and honest hello, this business socialization activity won’t come across as one-sided and self-serving. This is important.

Sometimes, the best marketing isn’t marketing at all. It grows out of the personal connections that happen between the impression and the purchase, the thousand little personal interactions that happen between the purchase and the coffee shop, and the bonds consumers form with human beings around them. These human beings can be fellow customers of Brand x or employees or Brand x, or perhaps future customers of Brand x. For the purposes of this piece, let’s just focus on employees of Brand x.

Thus, having your marketing department push content all day long via Facebook pages and Twitter accounts and Youtube channels basically amounts to executing a simple social media marketing strategy. It doesn’t build anything. It doesn’t stick either. It’s just marketing spend at a lower cost and with a higher content velocity. Not bad, but that won’t get you very far in the social space.

Moving beyond “social media marketing” – A short list of business functions in social media that do not require content to create value and yield results:

We have seen how Marketing, advertising and PR all tend to focus on content in and out of social channels and why. (And again, there is nothing wrong with that.) Now, let us briefly look at a few other functions that can find a profitable home in the social space that require zero content creation, publication or curation.

  • Digital Customer Service
  • Business Intelligence
  • Digital market research
  • Consumer Insights Management
  • Online Reputation Management
  • Digital keyword and sentiment monitoring
  • Digital campaign or program measurement
  • Digital crisis management
  • Community management
  • Digital technical support
  • Digital concierge services

There are more, but you get the idea. None of these are particularly “content” driven functions, are they. Yet… “content” is supposed to be at the core of social media programs, right?

An emphasis on “content” in social media and social communications is simply code for “we think of social media primarily as a marketing channel.” It clearly needs to be treated as far more than that.

Organizations whose executives come to believe that “content” is key or central to social media success, equity or potential are making a grave mistake: Content doesn’t in fact drive engagement, traction or success in social media. “Content” drives marketing and responses to marketing in social media. As important as that is, we all have to be realistic about the limits of this kind of approach.

Realistically, content doesn’t drive customer service, crisis management, reputation management or market research in social media, nor does it drive conversations about customer service, crisis management, reputation, market research or even shopping experiences about a brand in social media. Since these and other key business function are principal building blocks of every successful social media program (for business), you see how an emphasis on content can hobble an organization’s social media program right from the start if its importance is mistakenly overstated.

Content’s relation to old vs. new forms of media:

Old media was 100% about messaging and distribution. Marketing was a monologue, primarily because the media used by marketing didn’t give consumers a voice. Viewers didn’t talk back to brands through their TV. Listeners didn’t talk back to brands through their radio. Billboards, print ads, posters, point of sale displays, coupons and even Web 1.0 websites functioned the same way: You created the message and pushed it out. The channels were basically one-way pipelines with marketers at one end and consumers at the other, the latter being the receiving end.

Social media channels are very different. Dialog rules in the social space. Marketing is at best suspect, and tolerated only if it doesn’t come across as exploitation of the channel by a company. Moreover, marketing in social media is permission-based: Too much marketing, or the wrong kind, and social media denizens will disengage from an offending brand. The wrong approach in these social channels can even do more harm than good for a company that forgets to treat consumers like individual human beings.

Though occasional monologues and messaging can find their place in the social space within a healthy mix of engagement activity, an operational emphasis on any kind of marketing monologue doesn’t work. Put simply, companies need to stop shoving “content” through social media channels like sh*t through a goose for ten seconds, take a step back, and start placing as much – if not more – emphasis on listening to consumers in order to then respond to them and begin a process of socialization. That is at the core of true engagement, and the fuel that will drive companies’ loyalty engines in the social space. The recent emphasis on content creation and publishing isn’t helping companies engage better. Instead, it is creating a wedge between brands and consumers. A wall of noise, even. It has become terribly counterproductive.

Two more things to think about:

1. Engagement and buzz are not the same thing. Pushing content through social media channels to generate buzz is perfectly fine and it can work very well. But don’t kid yourselves: Generating buzz around content or a campaign isn’t engagement. Not by a long shot. So next time someone tries to tell you that content and engagement go hand in hand, ask them to explain the difference between engagement and buzz. Chances are that they have the two mixed up. (Beware: That kind of confusion can send organizations down the wrong road fast.)

2. Saying hello or thank you doesn’t qualify as content. By the same token, having a conversation with someone is not content creation or curation. Responding to customer service requests via twitter is not content either. In fact, the more your communications resemble a conversation or dialogue, the less your communications qualify as “content.” The flip side of this is that the more focused an organization is on content when it comes to its social media presence, the more anti-social it will appear to be.

Strike for a balance. Always. The social space is far too complex and filled with opportunities to put all of your operational eggs in one basket – even the one tagged “content.”

Cheers,

Olivier

*          *          *

For more in-depth insights into how to properly build a social media program for your company, department or organization, pick up a copy of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que / Pearson), the definitive business guide to social media program management.

(Click here for a sample chapter.)

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A few months ago, I shared with you the 5 basic rules of calculating the value of a Facebook fan (or like, tweet, share, follower, etc.). If you missed it, check it out here. This week, I bring you a little more on that topic.

Above (click on the image) is a short video that touches on many of the same topics:

– The $ value of a fan (or follower, subscriber, etc.) is based on transactions, either from that individual or from someone whose transaction behavior they can be shown to have influenced.

– These transactions are usually reflected in one of three ways: Net new transactions (new/recently acquired customer), increased buy-rate/frequency (existing customer starts buying more often), and increased yield (existing customer starts spending more, on average, per transaction).

– The $ value of a fan is therefore variable.

– The value of a fan changes from fan to fan.

– The value of a fan changes from company to company (or brand to brand).

– The value of a fan often changes over time. (Insight: This change is what your social media activities are supposed to be influencing.)

– Social media activity that is expressly intended to be connected to actual ROI should, as a principal aim, focus on increasing the $ value of the brand’s fans, followers and subscribers – either by converting them into new transacting customers, increasing their yield and/or buy rate, and/or having the same effect on peers within their circle of influence.

The video also brings up the danger of cookie-cutter equations or “values” for fans and followers, and the danger of mistaking costs for value (media equivalency equations).

If the video doesn’t play for you, go watch it here.

Production notes: The video was shot in London in July of 2011. I dug it out of the vault just for you guys. The background noise is a little high. Sorry.

*          *           *

As always, if you want to dive a little deeper into this and other social media program / social business topics, pick up a copy of Social Media R.O.I.: Managing and Measuring Social Media Efforts in Your Organization (Que/Pearson) at your local boostore (or just order it online through Amazon, B&N, etc.)

The book is a must-have for any manager or executive involved, directly or not with the development, integration, management and measurement of social media activities in their organizations.

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