Facebook Graph Search explained in 15 seconds

 

Facebook Graph Search explained in 15 seconds. It’s really simple. Ready?

Think search your community/network instead of search the web.

That’s all it is.

If that doesn’t work for you, think about search in terms of degrees of separation. Remember David Armano’s influence ripples? Imagine search working the same way. It’s basically search coupled with social relevance.

If that still doesn’t work for you, here’s Zuck:

Also check out Christopher Penn’s insights here. (Relevant to marketing, digital and bizdev pros.)

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Looking for straight answers to real questions about value, process, planning, measurement, management and reporting in the social business space? pick up a copy of Social Media R.O.I.: Managing and Measuring Social Media Efforts in Your Organization. The book is 300 pages of facts and proven best practices. (Go to smroi.net to sample a free chapter first, just to make sure it’s worth the money.)

And if English isn’t your first language, you can even get it in Spanish, Japanese, German, Korean and Italian now, with more international editions on the way.

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

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Customer Lifetime Value: one of the keys to measuring long term ROI, among other uses.

LTV infographic by Kiss Metrics

“People pay you. Not pageviews.” That pretty much says it all. (image source.)

This is as badass as it is self-explanatory. For those of you who don’t know how to estimate customer lifetime value (LTV, or CLTV), this infographic should be a pretty handy little tool. (Just ignore the Starbucks references.) Why is this important? 3 reasons:

1. When justifying an investment in a marketing program whose goal will be to acquire (create) new customers, you can sift through your customer data and determine what the average customer spend (their value to the company in terms of net revenue) should be over time. You can drill into demos or average out every customer category to arrive at a gross average – that’s up to you. This helps you set targets. If the investment is $100,000 and management expects a x10 return on their investment for a certain timeframe, you can now figure out what your net new customer target needs to be for this campaign by performing some basic 8th grade math. If the brass still isn’t sure about the value of the investment, you can make your case by projecting the lifetime value of net new customers rather than monthly, quarterly or even annual sales. For that alone, it’s a handy little set of equations

2. Good marketing is about more than customer acquisition. It also has to focus on customer development and customer retention. When making your case for a program that focuses on keeping existing customers from leaving, being able to present LTV/CLTV figures provides you with a compelling argument for the funding of such programs. (It is a lot more cost effective to develop and retain customers than to acquire new ones.) Use LTV to model for management what breaks in the conversion chain will cost the company in lost revenue over time, and loyalty programs will be a lot more likely to get a little more love. If you spend $5,000,000 to onboard 10,000 new customers per year only to lose 60% of them by the following year, you can see whether or not your marketing plan is in fact a leaky bucket. You can’t know what you don’t know. Calculating LTV gives you parameters with which you can properly analyze your programs’ efficiencies and inefficiencies, including long term ROI.

3. Once you know your customers’ overall average LTV, you can start attacking not only the net new customers piece (acquisition) and the retention piece (loyalty), but the development piece as well. Say your overall customer LTV average works out to be $14,099. Why not try and move that needle up to $15,001, then $15,100, then $15,250?  This is the purpose of the customer development side of marketing (or business development, even). Devise ways to grow wallet-share. Increase average spend per transaction (yield) and buy rates (frequency). [Remember FRY? That’s what we’re talking about right now.] Tracking this number not only gives you baselines from which to devise targets and tactics, but it also gives you a dashboard needle with which to gauge your progress AND revise long term sales projections.

Do you know how many product managers and CMOs know how to do this (or bother to do this kind of analysis even if they do)? Not many. If you smell an opportunity to suddenly become a whole lot better at your job and maybe even impress higher paygrades with your business acumen, it means your nose is working.

One quick piece of advice: Don’t just file this away for later. Do something with it. Print the infographic, start playing with the equations, and see what you come up with. Create a baseline. Play with projections. Sift through customer data to see if certain demos might be more receptive to different types of messages and offers. Then use the data; don’t just collect and report it.

Very big hat tip to Business Insider and Liz Scherer for starting the information daisy chain, and of course a big thank you to Kiss Metrics and @avinash for putting together such a clean, clear and concise infographic detailing the LTV calculation process.

PS: If you aren’t familiar with F.R.Y. methodology, it’s all spelled out here:

Score your own copy of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que) just about anywhere business books are sold, if you haven’t already. The book is actually about a whole lot more than ROI and focuses on a lot of business fundamentals with applications reaching beyond the digital world. (The Chapter on F.R.Y. will be particularly helpful given today’s blog topic.)

You can also check out smroi.net to dig deeper into the book and even sample a free chapter, or let the reviews on Amazon.com help you decide whether or not it is worth the price of a turkey sandwich.

Cheers,

Olivier

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Social Media and ROI: Some clarity. (Again.)

I told you I would bring back this post regularly. Here it is again, until the day when everyone understands how simple this is. Okay, here we go:

If you are still having trouble explaining or understanding social media R.O.I., chances are that…

1. You are asking the wrong question.

Do you want to know what one of the worst questions dealing with the digital world is right now? This:

What is the ROI of Social Media?

It isn’t that the idea behind the question is wrong. It comes from the right place. It aims to answer 2 basic business questions: Why should I invest in this, (or rather, why should I invest in this rather than the other thing?), and what kind of financial benefit can I expect from it?

The problem is that the question can’t be answered as asked: Social media in and of itself has no cookie-cutter ROI. The social space is an amalgam of channels, platforms and activities that can produce a broad range of returns (and often none at all). When you ask “what is the social media or ROI,” do you mean to have Facebook’s profit margins figure in the answer? Twitter’s? Youtube’s? Every affiliate marketing blog’s ROI thrown in as well?

The question is too broad. Too general. It is like asking what the ROI of email is. Or the ROI of digital marketing. What is the ROI of social media? I don’t know… what is the ROI of television?

If you are still stuck on this, you have probably been asking the wrong question.

2. So what is the right question?

The question, then, is not what is the ROI of social media, but rather what is the ROI of [insert activity here] in social media?

To ask the question properly, you have to also define the timeframe. Here’s an example:

What was the ROI of [insert activity here] in social media for Q3 2011?

That is a legitimate ROI question that relates to social media. Here are a few more:

What was the ROI of shifting 20% of our customer service resources from a traditional call center to twitter this past year?

What was the ROI of shifting 40% of our digital budget from traditional web to social media in 2011?

What was the ROI of our social media-driven raspberry gum awareness campaign in Q1?

These are proper ROI questions.

3. The unfortunate effect of asking the question incorrectly.

What is the ROI of social media? asks nothing and everything at once. It begs a response in the interrogative: Just how do you mean? In instances where either educational gaps or a lack of discipline prevail, the vagueness of the question leads to an interpretation of the term R.O.I., which has already led many a social media “expert” down a shady path of improvisation.

This is how ROI went from being a simple financial calculation of investment vs. gain from investment to becoming any number of made-up equations mixing unrelated metrics into a mess of nonsense like this:

Social media ROI = [(tweets – followers) ÷ (comments x average monthly posts)] ÷ (Facebook shares x facebook likes) ÷ (mentions x channels used) x engagement

Huh?!

Equations like this are everywhere. Companies large and small have paid good money for the privilege of glimpsing them. Unfortunately, they are complete and utter bullshit. They measure nothing. Their aim is to confuse and extract legal tender from unsuspecting clients, nothing more. Don’t fall for it.

4. Pay attention and all the social media R.O.I. BS you have heard until now will evaporate in the next 90 seconds.

In case you missed it earlier, don’t think of ROI as being medium-specific. Think of it as activity-specific.

Are you using social media to increase sales of your latest product? Then measure the ROI of that. How much are you spending on that activity? What KPIs apply to the outcomes being driven by that activity? What is the ratio of cost to gain for that activity? This, you can measure. Stop here. Take it all in. Grab a pencil and a sheet of paper and work it out.

Once you grasp this, try something bigger. If you want to measure the ROI of specific activities across all media, do that. If you would rather focus only on your social media activity, go for it. It doesn’t really matter where you measure your cost to gain equation. Email, TV, print, mobile, social… it’s all the same. ROI is media-agnostic. Once you realize that your measurement should focus on the relationship between the activity and the outcome(s), the medium becomes a detail. ROI is ROI, regardless of the channel or the technology or the platform.

That’s the basic principle. To scale that model and determine the ROI of the sum of an organization’s social media activities, take your ROI calculations for each desired outcome, each campaign driving these outcomes, and each particular type of activity within their scope, then add them all up. Can measuring all of that be complex? You bet. Does it require a lot of work? Yes. It’s up to you to figure out if it is worth the time and resources.

If you have limited resources, you may decide to calculate the ROI of certain activities and not others. You’re the boss. But if you want to get a glimpse of what the process looks like, that’s it in its most basic form.

5. R.O.I. isn’t an afterthought.

Guess what: Acquiring Twitter followers and Facebook likes won’t drive a whole lot of anything unless you have a plan. In other words, if your social media activity doesn’t deliberately drive ROI, it probably won’t accidentally result in any.

This is pretty key. Don’t just measure a bunch of crap after the fact to see if any metrics jumped during the last measurement period. Think about what you will want to measure ahead of time, what metrics you will be looking to influence. Think more along the lines of business-relevant metrics than social media metrics like “likes” and “follows,” which don’t really tell you a whole lot.

6. R.O.I. doesn’t magically lose its relevance because social media “is about engagement.” 

If your business is for-profit and you are looking to use social media in any way, shape or form to help your business grow, then all of your questions regarding the R.O.I. of investing in social media activity are relevant. Any social media consultant who tells you otherwise is an idiot.

Concepts like Return on Engagement, Return on Influence, Return on Conversation are all bullshit. Nice exercises in light semantic theory, but utterly devoid of substance. First, they can’t be calculated. Second, they bring absolutely zero insight or value to your business. In fact, they pull your attention away from legitimate outcomes. Third, they are not in any way shape or form substitutes for Return on Investment.

Fact: If a social media “expert” tells you that ROI isn’t important, he (or she) is a hack. Remove them from your organization immediately.

Fact: A social media “expert” who doesn’t know how to calculate ROI properly (or teach you how to do it) might just be an expert at blogging, and not social media program management or social business integration.

Note: Integrating social media and business requires more experience than just making it look like 100,000+ “people” follow you on Twitter. Anyone can become a speaker nowadays. Anyone can publish a book and make themselves look like an expert. Unfortunately, at least 9 out of 10 social media speakers/experts/gurus/authors couldn’t effectively manage a Fortune 500 social media/business practice if you infused their brains with an extra 100 points of IQ and enrolled them in an executive MBA course. Be very careful who you hire, whose blogs you read, and whom you elect to influence your business decisions.

“Digital Influence” does not necessarily reflect competence. Always remember that. Some of the dumbest and most dishonest people in this business have enormous followings on Twitter, blogs and G+, and very high Klout scores to boot. (They spend an enormous amount of time making sure they do.) Conversely, some of the most brilliant, competent, ethical people in this business aren’t all that visible. Why? Because they are too busy doing real work to focus all of their efforts building personal brands and better mouse traps.

There are other litmus tests, but the ROI bit is a pretty solid one: A so-called expert who skirts the issue or fails a simple ROI problem/test from your CFO probably isn’t as qualified to advise you as his or her Klout score might have suggested. 😉

7. … But R.O.I. isn’t relevant to every type of activity.

Having said that, not all social media activity needs to drive ROI. As important as it may be to understand how to calculate it and why, it is equally important to know when ROI isn’t really relevant to a particular activity or objective.

Technical support, accounts receivable, digital reputation management, digital crisis management, R&D, customer service… These types of functions are not always tied directly to financial KPIs. Don’t force them into that box.

This is an important point because it reveals something about the nature of the operational integration of social media within organizations: Social media isn’t simply a “community management” function or a “content” play. Its value to an organization isn’t measured primarily in the obvious and overplayed likes, followers, retweets and clickthroughs, or even in impressions or estimated media value. Social media’s value to an organization, whether translated into financial terms (ROI) or not, is determined by its ability to influence specific outcomes. This could be anything from the acquisition of new transacting customers to an increase in positive recommendations, from an increase in buy rate for product x to a positive shift in sentiment for product y, or from a boost in customer satisfaction after a contact with a CSR to the attenuation of a PR crisis.

In other words, for an organization, the value of social media depends on two factors:

1. The manner in which social media can be used to pursue a specific business objective.

2. The degree to which specific social media activity helped drive that objective.

In instances where financial investment and financial gain are relevant KPIs, this can turn into ROI. In instances where financial gain is not a relevant outcome, ROI might not matter one bit.

Knowing when and how ROI matters (or not) will a) help you avoid costly mistakes and will b) hopefully help you make smart decisions when it comes to assigning precious resources and budgets to specific social media/business programs.

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By the way, Social Media ROI – the book – doesn’t just talk about measurement and KPIs. It provides a simple framework with which businesses of all sizes can develop, build and manage social media programs in partnership with digital agencies or all on their own. Check it out at www.smroi.net, or look for it at fine bookstores everywhere.

Click here to read a free chapter.

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

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Digital marketing and the state of the mobile web: Think bigger.

From MediaPost.com, this story about the growing importance of the mobile web for advertisers (and business development programs):

Mobile experts have long advised brands and publishers to set up mobile-optimized sites that they can drive consumers to via mobile advertising. It looks like they may be catching on, with nearly half (49%) of mobile campaigns sending people to their mobile sites in April, representing a 28% increase from a year ago, according to the latest data from mobile ad network Millennial Media.

Obviously, the evolution of the mobile web as a gateway between consumers and brands is still in its infancy (and evolving slowly at that), but the potential is clear. Once advertisers finally push past the “establishing a general market presence” and “lead generation” phase, they will begin to focus on specific types of functions and services that will focus not only on customer acquisition, but also customer development and retention. (More on that below.)

One finding from Millennial Data that tends to indicate we still have a very long way to go before advertisers adopt the new realities (and capabilities) of digital is this:

Ads that involved some social component still only made up 17% of the total. By comparison, 40% of ads included a click-to-call feature.

and…

Targeting by demographic and behavioral audience made up 34% and 10% respectively.

With the effectiveness gap growing daily between the familiar sets of generalizations making up demographic modeling versus the increasing specificity of behavioral modeling through social monitoring, it is surprising to see that demographic modeling still outweighs behavioral model by a ratio of 3 to 1.

And finally this, which may be the most telling comment of all:

Social media continues to play a growing role in mobile advertising. Campaigns that let consumers take some sort of social action, from liking a Facebook page to leaving feedback on a new product, grew 39% from the prior month.

That’s great, but it means advertisers are still pushing “likes” and “follows” and “shares” as campaign outcomes. This isn’t inherently bad, mind you. These types of basic social interactions between consumers and advertisers are valuable. No question about it. But they are still 101-level outcomes reminiscent of early digital metrics like “hits” and “uniques,” which constitute only the thin (and sadly the most obvious) outer layer of metrics illustrating consumer behaviors in response to marketing, advertising and other business development activities.

Notably absent from the trends reported by Millennial’s data is an evidence of adoption of the more pioneering strategies and tactics employed by advertisers looking to distance themselves from their competitors – like Ford, Starbucks, Virgin America and even Intercontinental Hotel Group – whose use of the medium now extends beyond the obvious “presence and acquisition” play. Let me illustrate this point with a few diagrams.

First, if you are a business, let’s look at what your digital strategy should look like:

Forget for a second everything you have been told about the importance of content, reach and impressions, and typical marketing or media points of focus. Put it all aside for now, so you can focus on this. You can go back to that stuff in a few minutes.

Take a look at the above daisy chain of customer development phases. Generally speaking, a business first begins with presence (to create awareness, desire and preference), then moves into acquisition (turning a prospective customer into a transacting customer). What comes next is the development phase, where a freshly acquired customer becomes a better educated customer. This phase is often characterized by a shift from entry-level products to more advanced-level products, or from basic products to premium products. – Think of the evolution of a typical consumer in regards to a hobby like photography, triathlon or digital publishing, for example. Most people don’t start out with the pro-level stuff. They start with entry-level or mid-market products, then work their way up. This is what businesses typically focus on during the development phase. – Following this (and often overlapping it) is the retention phase, where a business and a consumer manage to keep their relationship relevant and interesting well beyond the honeymoon phase. In this phase, the consumer may have reached the end of the development journey. He or she has become a premium customer. There are no more new or exciting products to buy for a while. They’re all set. Now the trick is to make sure they don’t get bored with you, and aren’t lured away by a competitor. Finally, the last phase is the maintenance of long term loyalty (a topic we will cover again very soon).

Note that creating mechanisms of evangelism and positive WOM (word-of-mouth) can be a secondary focus for the brand in phases 2, 3, 4 and 5, which in turn help drive all five phases of development. (Again, the subject of a future post.) Worth keeping in mind as every phase, when managed properly, also enhances the others, creating new customers and developing them into loyal, frequent, eager partners for the brand.

Every business on the planet is subject to some version of this customer development process, which is why it is so relevant to our discussion today. Now let us look at what is happening today in the digital (marketing) world:

What the above diagram shows is the current digital and social media model for most brands and advertisers, the focus being on presence and acquisition, but not yet on development, retention, or long term loyalty. (Notice that I say most, not all.) This is a serious problem, and the reason why is simple: By focusing almost exclusively on presence and acquisition, current digital strategies interrupt a natural business and customer development process that must follow its course.

Think of the emphasis on presence and acquisition vs the more complete model that also encompasses development, retention and loyalty as the difference between focusing all of your energy on scoring as many one-nigh-stands with complete strangers as possible, and building healthy relationships with other human beings. The parallels aren’t exact (in business, healthy relationships still have to scale), but the metaphor helps illustrate the inherent flaw of the incomplete model: Shallow objectives produce shallow results. Not to mention that acquisition devoid of development, retention and loyalty essentially signals a slightly less than social behavior. One might even make the argument that it signals a rather anti-social type of behavior.

This isn’t to say that an incomplete digital strategy will utterly ruin a company’s efforts in the development, retention and loyalty-building phases of the process, but it will – at best – fail to support these efforts, and – at worst – either hinder or interrupt them in regards to increasingly important digital channels.

Would it not be simpler, then, to make sure that your digital strategy supports every phase of this process? Of course. Why is it, then, that so few digital strategies – with social media components or not – fail to focus on post-acquisition phases? Think about that.

Simple stuff, but you have to be aware of these types of mechanisms in order to see where marketing strategies tend to fall short. If you are an agency especially, don’t just focus on specialized tasks and familiar service models. See the bigger picture. “See the field,” as a military commander would say. For a digital strategy to be effective, for it to bear fruit, it has to be complete, it has to cover all the angles, it has to generate more opportunities for both the client and the agency than existed yesterday.

Stop and ask yourselves the question: Are your digital activities mostly geared towards establishing a presence on digital channels and attracting customers, or do they also help develop and retain them? What about long term engagement and actual relationship-building with loyal customers (not just a default ‘community management’ stopgap)? Are you really there yet? Still think all this is mostly about content, impressions, media value, follows and mentions?

Think bigger. You’re on the right track, but you’re still stuck in first gear.

Cheers,

Olivier

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Since it’s June, here are this month’s three quick little announcements:

One – If you haven’t read “Social Media ROI: Managing and measuring social media efforts in your organization” yet, you will find 300 pages of insights with which to complement this article. It won’t answer all of your questions, but it will answer many of them. If anything, the book is a pretty solid reference guide for anyone responsible for a social media program or campaign. It also makes a great gift to your boss if you want him or her to finally understand how this social media stuff works for companies.

You can sample a free chapter and find out where to buy the book by checking out www.smroi.net.

Two – If you, your agency or your client plan on attending the Cannes Lionsfrom June 19-25, I am planning something a little… “unofficial” during the festival. If you are interested in being part of it, let me know.

You can send me an email, a note via LinkedIn, a Twitter DM, or a facebook message if you want to find out more. (The right hand side of the screen should provide you with my contact information.)

Three – If the book isn’t enough and you can’t make it to Cannes later this month, you can sign up for a half day of workshops in Antwerp (Belgium) on 30 June. (Right after the Lions.) The 5 one-hour sessions will begin with an executive briefing on social media strategy and integration, followed by a best practices session on building a social media-ready marketing program, followed by a PR-friendly session on digital brand management, digital reputation management and real-time crisis management, followed by a session on social media and business measurement (half R.O.I., half not R.O.I.). We will cap off the afternoon with a full hour of open Q&A. As much as like rushing through questions in 5-10 minutes at the end of a presentation, wouldn’t it be nice to devote an entire hour to an audience’s questions? Of course it would. We’re going to give it a try. Find out more program details here. Think of it as a miniRed Chair.

The cool thing about this structure is that you are free to attend the sessions that are of interest to you, and go check your emails or make a few phone if one or two of the sessions aren’t as important. The price is the same whether you attend one or all five, and we will have a 15 minute break between each one.

The afternoon of workshops is part of Social Media Day Antwerp (the Belgian arm of Mashable’s global Social Media Day event), and I can’t help but notice that the price of tickets is ridiculously low for what is being offered. The early bird pricing is… well, nuts. Anyone can afford to come, which is a rare thing these days. (Big props to the organizers for making the event so accessible.)

The event is divided into 2 parts: The workshop in the afternoon, and the big Belgian style party in the evening. You can register for one or both (do both).

Register here: Social Media Day – Antwerp

My advice: Sign up while there are still seats available, and before #smdaybe organizers realize they forgot to add a zero at the end of the ticket prices. 

Cheers,

Olivier.

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What being member #149 taught me about how Klout Perks could really rock

Every once in a while, I receive a package in the mail that I wasn’t expecting. The doorbell rings, I go to answer, and sitting there on my doorstep is a box. Brown waves at me, drives off, and I walk back into the house with the mysterious package under my arm. I weigh it in my hand. Too heavy for a T-shirt. Too light for a book. Too quiet for an 8lb bag of m&ms. I let Chico sniff it for explosives. Clear. Cholula sniffs for pot, in case it’s from my sister. Clear. Chiquita sniffs for anthrax. Clear. I set the box on the kitchen table, swing my ninja sword at its edges in a blur and a woosh, and voila. Inside the box, I find… stuff like this:

Now, for the sake of disclosure, I should point out that I know Kamran Popkin (@swagclub). We are both members of Social Media Club Greenville and fellow mischief-makers. He had a hand in getting me to the BMW driver school a while back, which was a pretty awesome thing to do. And yes, Kamran and I have become fast friends over the last two years, mostly because he’s a straight-up guy, fun to be with, and he too is a major Steven Pressfield fan (always a good sign). I trust, respect and like him.

When we aren’t drinking really good sake, trading sushi war stories or making soap over on Paper Street, Kamran, being the business samurai that he is, likes to show me, rather than just tell me, what kind of impact good swag and a personal touch can have. That’s why he routinely sends me cool stuff in the mail. My package from Audi/Klout Perks earlier this week reminded of how effective Swag Club’s personal touch really is. It’s the little details that make all the difference: You can treat your relationship with potential customers and “influencers” as merely a numbers game, or you can focus on building lasting relationships with people you want to bring into your cool little business universe.

Let me let you in on one of Kamran’s little secrets: He doesn’t want customers or clients. He just wants to do business with people he likes. His funnel is built to only attract people he can have fun with. His business circle caps off at 149 people. That’s it. If you want in, you have to earn your spot. And trust me, you want in. Being one of the 149 is something none of us takes for granted. We’re part of a tribe of miscreants and instigators. We’re all in on the same inside jokes. We are a real community, bound by the same thread. The free stuff has very little to do with it. It’s a vehicle, nothing more.

The difference between a company that puts its logo on koozies and key chains, and a company that uses perks and swag to build relationships may seem imperceptible to the average person, but it is crystal clear to those of us who find ourselves touched by the latter. Exclusivity is part of it. Feeling valued as a human being is another. Kinship and like-mindedness are never far. These are some of the elements that help build strong communities and word-of-mouth movements. Before sending gifts to “influencers,” remember that the end-game isn’t the mailing of a box. The end-game is the development of a community of influential evangelists. This is a key insight that EVERY advertiser partnering with Klout Perks needs to learn and think about.

And beyond building the kind of internal culture that both fuels this type of thinking and drives effective outreach programs is a basic methodology – a framework, if you will – that can be broken down in five simple lessons. Swag Club follows them with Swiss-like precision, and the results speak for themselves, which makes me wish I could somehow bring Kamran and Klout together to build a playbook for every new Klout Perks partner.

Audi could have sure used a little Swag Club flair this past week. Imagine how cool their promotion would have been if Mr. Popkin had been involved in the project somehow. All 830 of us might be enthusiastically selling Audis to everyone we run into well into 2015. Why not.

Let me give you a taste of what I am talking about:

1. Presentation is important.

You saw the way Swag Club’s package was arranged. Compare that with the box I received from Audi’s Klout Perks promotion this week:

Clearly, one says “I care. I want to start off this relationship on the right foot.” The other says “I don’t care. I’m just doing my job.”

Which do you want to be? Which do you think will yield the results your company is hoping for? Who’s in charge here?

2. Always include a personal note.

Here is the kind of note Kamran sends with every Swag Club package, along with the flip side of his business card. Note to every company sending swag and goodies through Klout Perks rewards programs: Write a personal note. Sign it. Put your Twitter or Facebook thingamajig on it. Don’t just have a guy in a warehouse somewhere pack stuff in a box.

This is where the real gold is. Trust me, nobody cares how big and bad your new koozie is. We’ll grow tired of it after a few minutes. You want to influence an influencer? Become his friend. His brother. Invite him into your tribe, and make him want to extend the same invitation to you.

And no, you can’t outsource this. Invest in a good pen and actually write these yourself. That’s what makes them special. That’s what gives them their magic. There is no corner-cutting here. Remember: You aren’t sending this stuff to 10,000 people. If you get it, you are sending it to just a few dozen.

3. Bespoke your swag.

Nothing says “you’re important to me” like a generic coffee mug trapped inside a plain dusty brown box. Don’t go there.

This is a completely different mechanism from mass marketing. Anyone can score your latest bottle opener with your logo on it by walking by your booth at a trade show or buying it from your website. If it’s already sitting on a shelf in your swag warehouse, it isn’t special. You aren’t really going to “wow” anyone with it. If you want to impress “influencers,” if you want them to sing your praises all on their own for years to come, you have to at least try to make an effort. That means giving the perk itself (not just the packaging and the handshake) a little extra flavor. Customize something for them. Make the gift unique and meaningful. If not, it won’t make a lasting impression. Here are two simple examples from Swag Club that Klout Perks partners might want to draw inspiration from:

Note that bespoke swag doesn’t necessarily have to be drink/glass-oriented. (People just like to give me booze, for some reason.)

See the laser etching? Notice that it isn’t just about the “influencer’s name but that there is more there. The whole “instigator,” “Space Monkey” and “member #149” references have meaning. It’s the inside joke, the secret handshake. Simple stuff, but it works.

What Swag Club manages to do here that Klout doesn’t is create a bond between itself and the person it is trying to build a relationship with. What a bespoke swag/perk says is “not only do I care enough to present this to you with a little finesse, not only do I care enough to throw a little personal note in there for you, but I also care enough to give you something that is just for you. Something with your name on it. Something that will forever be uniquely yours.

The term “talisman of friendship” comes to mind. This isn’t marketing, folks. This is relationship building. It’s evangelist development. This is the sort of thing that requires a little more care than the odd mass mailing. Do it right.

If your budget doesn’t factor in fancy laser etching, custom embroidery or velvet paintings, consider decals. See what happened with this bottle of Brockman’s gin in the image below? It might not last as long, but the swag doesn’t have to be long-lived. It just needs to make a lasting impact.

Yes, that’s a decal of a Twitter avatar, stuck to that bottle. Here is an inexpensive way to turn just about any kind of gift into instant swag, and do it in a memorable way. And like every great signature, it is also an invitation to connect.

The bonus lesson here is that “clever” works on the same parts of the brain as “cool.” Which leads me to my next point…

4. Do the unexpected.

Creating “wow” moments isn’t just about bling, perks and VIP treatment. First, you want to build anticipation and excitement. Then, like any good showman, you want to surprise and delight. There’s a little undercurrent of misdirection here that you need to get good at. Make your new friends pay attention to the left hand while you prepare the surprise with your right. Make them think they know what to expect, then surprise them with something even cooler.

One thing that Kamran likes to do is tell me he is sending me something in the mail ahead of time. Usually, it comes in the form of a quick Tweet or email:

@SwagClub: “Are you in town this week?” Me: “Yep.” @SwagClub: “Good.” That’s it. That’s all it takes. For the next 2-3 days, I watch my mailbox like a hawk. If a FedEx or UPS truck drives within three miles of my house, I somehow hear it. When the package finally comes, I know it could be anything: Some new Space Monkey business cards. Fake tattoos. Project Mayhem decals. A bottle of French liqueur with a bespoke tumbler. A Russian bride. Who knows? Whatever it is, the element of surprise always works in Swag Club’s favor: I am never underwhelmed.

How this applies to Klout Perks promotions: If your campaign discloses that participants will receive a bag of chocolates, don’t just send them a bag of chocolates. Send them something else too, like movie tickets, or a gift card, or a custom sock monkey designed by your creative director. Something. Anything. Surprise them by upping the ante. Overwhelm them with something cool and unexpected. Make an impression.

5. Follow through.

You aren’t done once the “influencer” has received his or her perk. That was just the beginning. Now comes the relationship-building time. Now comes the regular chats on Twitter or by email or by phone. You want to invest in influence? You want to build a small army of highly connected word-of-mouth evangelists? Make it about more than the gift. Trust me. You want to build the kind of good will and mutual respect that will last longer than a week. Otherwise, you’re just another koozie panderer. Your stuff will hit a landfill inside of six months. Where’s the value in that?

You know how we like to talk about best practices in social business and community management? When it comes to the new digital influence game, you don’t really have to look much further than this.

@Klout, if you’re listening (and I know you are), consider reaching out to @SwagClub. If you guys can put together some best practices or guidelines for your Perks partners following this general methodology, both the relevance and longevity of your perks program will be assured. I can almost guarantee it. Think of the possibilities.

Cheers. 🙂

***          ***          ***

 

And if you haven’t already, don’t forget to pre-order Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que Biz-Tech / Pearson). Available for pre-order now on Amazon.com and at Barnes & Noble, and on the shelves next month at fine book sellers everywhere.

 

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Cutting Through The Noise: Tying Social Media Program to Business Objectives

The debate over whether or not social media programs should show positive ROI (a financial outcome) or not is kind of silly. It’s a dogmatic argument: People who believe social media activities shouldn’t be about making or saving money for the organization can articulate with conviction why they shouldn’t be. They will use terms like “engagement” and “conversations.” Their measurement methodology will shun terms like ROI (return on investment) in favor of terms like ROE (Return on Engagement) and ROC (Return on Conversations).

Conversely, people who believe social media programs should focus on the P&L and the bottom-line have their own set of valid arguments to support their point of view. They tend to use terms like “net new customers” and “buy rate.” Their social media programs’ measurement methodologies tie ROI to net new revenue, customer acquisition and retention, cost efficiencies, and various types of conversion funnels.

Both sides of this argument have been fighting over the same piece of turf for going on three years now, and with little to show for it. In the end, the argument itself is rubbish. The simple truth is this:

1. An organization’s social media program doesn’t have to focus on generating positive ROI, but it can. That is why professionals who work in the Social Media program management space have to understand the ROI piece.

2. An organization’s social media program can (and should) serve more than one purpose. One purpose may be to generate revenue for a particular group, or cut costs for an existing program. (This increased revenue/cost savings type of objective, being financial at its core, is the basis of the ROI issue in Social Media programs as it is with all business programs.) Injecting ROI and business justification into a Social Media program, however, does not mean social media activity cannot also serve PR, marketing and business intelligence functions. Generating positive ROI and pushing non-financial outcomes can coexist perfectly within the same social media program. Most successful Social Media program managers don’t make the mistake of taking sides in this pointless profit vs. “purity” debate.

3. Whether a Social Media program should generate positive ROI is really up to the organization’s leadership. The CEO is the ultimate arbiter here. Every organization has different sets of goals and objectives. Social Media is merely a tool kit. How it is used – and in support of what types of objectives – is unique to each organization. There is no universal right or wrong way to apply Social Media to an organization’s business model. There is only the way that best benefits each unique organization. Sometimes, monetizing Social Media is relevant. Sometimes, it is not.

Take the example of a fully funded NFP (Not-For Profit organization) or a government program. Such an entity isn’t looking to acquire new customers because it doesn’t have customers. It may not even be interested in recruiting donors or benefactors. Its sole purpose in creating a Social Media program may be to increase its reach, educate the public, and improve awareness about an issue – like teen pregnancy or the health risks of smoking cigarettes. ROI may not ever be a factor, yet Social Media can be integrated into the organization’s communications mix with potentially powerful results.

Likewise, a for-profit company may realize that at some point, it will have to deal with a major PR crisis that will involve consumer outrage in the social media space. Companies whose PR departments find themselves both unprepared and out-gunned in the social media space on the day a crisis hits tend to take a brutal beating by angry digital denizens that leaves a lasting stain on their brands, at least in the world of search engines. Among them recently were BP, United Airlines, Southwest Airlines, Nestle, and more recently Kenneth Cole. Digitally-savvy PR professionals understand that the faster a crisis can be defused in the social media space, the smaller the footprint both in consumers’ collective psyche and in the world of Google. To this end, new digital PR functions such as keyword monitoring, online reputation management, and digital crisis planning and management form an invaluable insurance policy against sudden unpleasant (and potentially damaging) situations. This takes planning, diligence, and a lot of front-end work in terms of building relationships with consumers through social media channels, participating in the activities of various communities (digital, in this case),etc. Some companies may decide that building this type of digital protection mechanism should be the primary focus of a Social Media program, and that is perfectly fine if that is what they want to focus on.

For other organizations, the focus of their Social Media program seems to naturally fall into any number of business functions like customer service, marketing, lead generation, advertising, market research, customer retention, consumer insights management, etc. Every business is different. Coca Cola and Pepsi don’t use social media in the same way in spite of the fact that they have very similar business models. In the same way, GM and Ford’s both use social media in their own unique way, and each works well for them. An organization’s decision to focus on financial outcomes and non financial outcomes (or the degree to which they focus on both) is entirely up to the leadership of the organization.

As advisors, program managers, social business directors, consultants, agencies or partners, our job isn’t to steer companies towards financial or non-financial outcomes. It isn’t to push our own skewed dogmatic beliefs about what Social Media and Social Business should be about. (The term “social media evangelist” suddenly comes to mind.) Our job is to first understand all of the ways in which Social Media fits into our organization – in other words, how it can benefit the organization, – and second, properly implement its use in support of key business objectives.

If an organization then wants to only focus on using social media to guard itself against a PR crisis, so be it. If it only wants to use social media to push out promotions and special sales, that is perfectly fine for them to start there. (It worked well enough for Dell.) If it wants to focus on combing the Twitternets for potential customer service opportunities, start there. (Comcast didn’t fare too badly in this area either.) If it feels most comfortable using social channels to simply extend its digital marketing efforts and make them more interactive, that works too (Old Spice, Pepsi and Coca-Cola come to mind). Likewise, if a company decides that it wants to build a more robust, operationalized program that plugs social media into every department and business function, then be ready to build that type of program as well. (Companies like Ford, GM, Starbucks and Best Buy are well on their way.)

 

Whether an organization starts out with one area of focus and naturally gravitates towards expanding social media into other areas of its business, or starts out looking to build a comprehensive social media program that plugs into every facet of its business, the basic process of turning a social media program into what my friend Brian Solis calls “Social Business” is at its core fairly straightforward:

1. Take a step back and look at your entire organization, talk with your department heads, and together figure out how social media might fit into every single business function and process, from marketing, sales and customer service, to internal collaboration and data analysis. This is primarily a strategic discussion.

2. Follow the “how does it fit?” discussion with a “how do we make it fit?” series of sessions. These will be operational discussions rather than strategic ones, so you may want to invite a different set of people to participate in this phase of the process.

3. It isn’t enough to vaguely attach facets of a Social Media program to business functions. You also have to identify specific goals proper to these functions that your social media program will be tasked with supporting. There is no need to create a different set of goals for your social media program. Start with existing business goals. In regards to sales, this could be increasing sales by 13% YoY. In regards to marketing, it might be to reach 300,000 net new households in Q2, or generate 5,000 new leads. The PR department’s objective may be to both create a digital crisis response plan and improve its media outreach efforts. Each function has its set of objectives. Identify them, understand them, and make sure that your social media program supports these objectives.

Note that whether or not those objectives are financial or non-financial doesn’t matter. The distinction is irrelevant to the purpose of the Social Media program’s activities. It can support both financial and non-financial objectives with equal effect and fervor.

 

4. Once you have established what business functions your Social Media program will support, how it will plug into each of these functions from an operational perspective (who does what and how, who do does everyone report to, etc.), and what objectives the program’s activities will focus on achieving, specific goals have to be set. This is the process of converting sometimes vague objectives into specific numbers. “More sales” is thus turned into “$20,000,000 net new revenue in Q2.” “Improve brand perception” becomes “increase positive sentiment for the brand by 20%.”

The question this step aims to answer is “How will I measure my program’s success for each of those objectives?” Measuring the ROI of a Social Media program may be tied to specific increases in net new revenue or cost savings so this part is important. Having said that, measuring a Social media program’s value to an organization beyond financial justification requires an equal degree of accountability. PR, for example, is rarely asked to show ROI. Like Customer Service and Human Resources, it is a function whose purpose touches on aspects of the business that do not directly impact sales. As Social Media becomes integrated into the PR function, ROI (financial justification) may not be nearly as relevant a topic as focusing on properly measuring its impact on the PR department’s effectiveness.

You can see how setting adequate targets is pretty crucial at this juncture. PR is just one example. The same reasoning can be applied to every business function: If the business function is not generally asked to show ROI, introducing a social media element to that business function may not necessitate an ROI discussion. A discussion about how adding a social media component to its activities will help it hit specific targets (in this case non-financial) may be more appropriate. If, however, the business function or program is tasked with showing a positive financial return on investment, then an ROI discussion is appropriate when it comes to assigning resources to social media roles in support of those financial targets. What setting targets teaches us is that the ROI question is case-specific.

What this part of process also teaches us is that the effectiveness of a Social Media program should not only be tied to typical social media metrics like the number of followers, fans, likes and subscribers, but also to the program’s ability to help each business function it supports hit its targets. In fact, the latter should be your priority. Each business function has its own set of objectives, and each of these objectives must have its own set of targets.

 

This is how you start to build functional Social Media programs, by the way. Not by treating social media as a 5th marketing wheel or a vague consumer “engagement” engine, but as a fully-integrated competency deployed across every department in your organization.

So the lesson here is this: Don’t get all tied up in the philosophical arguments regarding social media and business, the ROI question, or even the pros and cons of monetizing social media. debating personal opinions can be pretty entertaining, but from a practical standpoint, these types of discussions don’t lead to either answers or solutions.

Instead of picking a side or arguing over conjecture, look at Social Media’s role in business from a practical perspective: Understand all of the ways the Social space, with all of its tools and capabilities, can help an organization improve everything it does. Figure out how the organization you serve can use Social Media to become safer, smarter, faster, friendlier and more successful in every way that matters. Some of it will hinge on financial outcomes and some of it won’t. Learn to be equally comfortable with both and you will find that building and managing social media programs that bear fruit will become a lot easier.

I hope I didn’t confuse anyone with this.

Cheers.

PS: You can find a lot of this stuff in Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que Biz-Tech / Pearson), due out in March, but available for pre-order now on Amazon.com and at Barnes & Noble. Order it now:

Additional reading:

Vadim Lavrusik’s The Evolution of the Social Media Manager – Social Monetization Manager? (Mashable) – Finally, businesses are beginning to look past the “it’s really about conversations and engagement” evangelism and into a more complete approach to social media operationalization. Vadim’s post made me realize it was finally time to start sharing some of this with a broader audience.

Sean McDonald’s Dell – A Leader in Social Media Innovation (Ant’s Eye View) Hat tip to @RichardatDELL for pointing this one out. The statement that “You will never fully scale your operation by just adding more headcount to a central social media team. You scale smartly when you enlist your existing employee population to listen and engage on behalf of the brand” echoes my sentiment exactly. Social media isn’t a department or a function. In order to yield the best results (whatever they may be, based on the organization’s needs) it must be a fully-integrated competency deployed across every department in an organization.

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Mister Blanchard goes to England.

I am pretty excited to announce that I will be speaking at the Like Minds Conference on October 16th in Exeter, England. The conference is the brainchild of Scott Gould, Trey Pennington, and Andrew Ellis who… presumably got the idea for this event while holding on to a pint or two. (At least I hope so.)

What I like about Like Minds so far:

1. The conference will focus on two things dear to my heart:

a) Sustainable social media practices (how to develop, manage and integrate social media programs, how to turn customers into brand advocates through social media, how to blend social media into your business mix, etc.), and

b) Best practices for social media measurement (particularly how to define and measure social media ROI).

Already, you can see how this is right up my alley. We’re finally tucking evangelism away and getting to methods and best practices. It’s about time.

2. It’s in Exeter, England.

As much as I love living on this side of the pond, it’s nice to fly back to the other side every once in a while and reconnect with my roots. (Yeah, I need a regular dose of euro living every once in a while, just to make sure all my systems are still properly calibrated.) And given the proximity of the UK to France, I’m guessing I’ll probably take advantage of being in the EU to pay my patria materna a quick visit, stuff my face with croissants and brie, shake my fist at a moped or two, and argue about art and literature with complete strangers.

Not to mention some of the sight-seeing I intend to do in the UK.

On a more serious note, the prospect of speaking at a conference in England is pretty cool, but more importantly the opportunity to learn from social media practitioners in in the UK and EU, compare notes, share stories, etc. is pure gold to me. Sometimes, you kind of have to hop out of the fishbowl a little bit and go see how the other fishies swim. I know I am going to come back with my head abuzz with ideas. (I won’t sleep for weeks.)

3. The roster of speakers.

Aside from moi, this is what it looks like so far:

Andrew Ellis @drewellis

Andrew is a creative director with extensive startup experience, a seasoned innovator, and co-founder of Like Minds. He pioneered Eyetoeye Digital as one of the earliest ‘new media’ agencies in 1993, working with both household brands, and multinationals. His work has received international acclaim, from the iconic slogan T-Shirts for Kathryn Hamnett in the early 80s, to Grammy nominations, and most recently, ‘Orbit’, a documentary-come-musical with extensive CGI of explored universe which is touring the US in 2010. Drew’s accomplisments, past and present, are available in full at his personal blog.

Trey Pennington @treypennington

Trey is leveraging social media to connect with audiences around the world. HubSpot ranks his Facebook profile as the #4 most influential in the world. Since January 2009, Trey has started or helped start ten Social Media Clubs—eight in the southeastern United States, one in the United Kingdom, and one in Australia. His home club now has over 550 members and was, for most of 2009, the second largest Social Media Club in the world. Trey’s book ‘Spitball Marketing’ is being launched at Like Minds. For more information, visit http://www.treypennington.com.

Laura Whitehead @littlelaura

Laura is a web developer and a consultant on social media integration and online community development. Based in South Devon and the founder of Popokatea, she works with awide range of clients including the nonprofit and public sector, and small business enabling them to use innovative methods and online technology to extend their reach, engage with their audience and achieve their goals. Laura was quoted in Fast Company as “the queen of nonprofit technology in the UK.” (Pretty cool.)

Andrew Davies @andjdavies

Andrew is co-founder of idiomag.com, an personalised publishing platform that is at the cutting edge of the digital publishing revolution. He also previously co-founded thruSITES, a London-based social media development agency with clients such as Universal Studios, Sky, ITV and Number 10.

Carl Haggerty @carlhaggerty

Carl is the Enterprise Architect at Devon County Council. He guides social media usage and change in businesses and organizations, creating and installing frameworks and policies for social media and networking. He has a broad background ranging from Sustainability and Community Development, Tourism & Economic Development to Business Administration and Communications. Carl’s blog is at http://carlhaggerty.wordpress.com.

In other words, no fluff. And some new voices, which I like.

4. Meeting a whole new batch of tweeps in the real world, all of whom will have really cool accents.

You can’t beat that.

5. The price of admission.

While some social media conferences charge upwards of $1000 for the privilege of listening to celebrities talk about their twitter adventures, this one made sure to make admission affordable, therefore open to all. I like that. If you book now, You’re only looking at 25 quid. At the door, 35 quid. I have a lot of respect for that.

So if you’re able to make it to Exter on the 16th of October, I encourage you to drop by, share your stories, listen to ours, and join the fun. Find out more here, or just go ahead and book today.

And if you intend to be there, drop me a note. 😉

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Social Media R.O.I. – Part 8: An introduction to timelines

Okay. Last time, we covered what ROI is (financial outcomes) and what it isn’t (non-financial outcomes). We also went over where financial outcomes are measured vs. where non-financial outcomes are measured. In previous posts, we also established that the process involved in tying financial outcomes (the R/Return in ROI) to the initial investment (the I/Investment in ROI) takes more time and work than simply creating a spreadsheet or magical ROI Calculator. Now, let’s take our ROI methodology discussion to the next chapter: Timelines.

Today’s post won’t blow your mind or anything. It’s actually VERY simple. Almost too simple. And I hate to insult your intelligence, but bear with me. I don’t want to skip any steps, and this one is one of the most fundamental building blocks of the general methodology we are going to cover, so as simple as it may seem, it is crucial that everyone understand it clearly before we move on. (Look at the bright side: This post will be short and sweet for once.) And I am even going to share some pretty important notes that will save you LOTS of time and effort when you build a measurement practice. (If I didn’t share these with you, you would curse my name in about six months when you realize you should have done a few extra little things on the front end.) More on that in a few paragraphs.

Check out this quick video, and we’ll cover the meat of this chapter in about three minutes:

I know you guys are probably used to measuring outcomes based on calendar cycles, right? You have your start date, then you have your weekly reviews, then your monthly reviews, quarterly maybe, even by Half. I’ve seen programs and campaigns measure outcomes annually as well. Typically, these measurement milestones are scheduled to coincide with meetings and reports coming due for the client or the boss, right? Right.

If you’re used to that type of schedule, this won’t be too far of a stretch. It’s a little different, sure, and requires a little more diligence, but anyone can do this. (Heck, you can even assign the task of creating and managing action timelines to a team of interns. Bonus: It will teach them a lot about how businesses manage their resources and their time in a linear way.)

What you are going to start doing (assuming you don’t already do this – and my hunch is that you aren’t doing it) is simply this: You are going to create and manage a timeline of every significant activity visible to the public done by your company. Here’s how it works: First, create a blank timeline. (You can use any number of tools to do this. Excel works well for most, but feel free to use whatever works for you.) Figure 1:

Step 2: Divide your timeline into quarters, months, weeks and days. If you are planning on truly measuring real-time impact of your social media activities, go ahead and add hours to the mix. It’s okay if you don’t yet, but chances are that your timelines will become that specific at some point. (Even more so since some web and social media monitoring tools already give you the ability to monitor impact in web traffic, social mentions and other metrics into 10-minute increments.) For the sake of simplicity though, we’ll stick to months, weeks and days in our example. Figure 2:

Once you have your timeline neatly organized and divided into time packets, you can start adding your milestones. These are individual activities you want to plot along this timeline. Press releases going out. Trade shows. New product launches. Blog posts. Podcasts. Workshops. Presentations to business organizations. Employees launching twitter accounts or blogs. New blog posts. Ad campaigns. Publishing e-books or white papers. Anything that the public is going to see, go ahead and plot. (As you can see, your timeline is going to get crowdedvery fast, so make sure to make it extensible.)

This will require a pretty constant level of communication with PR, Marketing, advertising, sales, business development, investor relations, IT, sales, etc. What you are doing is creating a time-stamped inventory of a lot of activities touched by potentially dozens of people and departments throughout your organization, so it’s best to start getting organized.

Note 1: Each of these activities should come with its own little info packet. Depending on the tool(s) you are using to plot this timeline, you can make each activity searchable and easy to reference. Ideally, you want to keep a detailed file on every single activity. This file should include content, source, destination, channels, cost, notes, etc. You can tie the file to urls, CRM, project folders housed online or on a server, etc. Thorough is good. If one of these activities turns out to be a huge success, you will want to be able to go back and see what you did right, who was involved, etc. (Conversely, if the activity was a monumental flop, you will also want to know where you went wrong.)

Note 2: One of the elements of each info packet should be cost: How much did each activity cost? Why? Because that’s the “I” in R.O.I.: Investment. You want to be able to tie a cost (investment) to each activity. This information will come in handy when you start tying financial outcomes to activities that got you there. (Do it now, as you plot each activity. Don’t wait until the night before your R.O.I. review/report is due.) If you don’t know what a press release or blog post costs you, find out. (You can’t measure return on investment if you have no idea what your investment is.)

Note 3: Assign categories to each type of activity. Color-coding is nice, but if you are using Excel, think about adding a little line of code for specific categories. This will help you create macros for your ROI analysis later. (Instead of just looking at the ROI of specific activities, you will also be able to batch them. Examples: PR, Blog, Twitter, Trade show, John Smith, Advertising, YouTube videos, Podcast, etc. This will give you a richer analysis of what types of efforts are working well vs. not so well. You will also be able to identify and confirm seasonal cycles – assuming there are some. It would be unfortunate not to have access to that level of analysis, so make sure you don’t forget to do this.

Tomorrow, we start looking at how your activity timeline, overlaid with social media monitoring and other media measurement tools will help you connect the dots between activities and outcomes, and eventually tie financial return to individual investment in specific activities (and types of activities). Simple right? In theory yes. But it takes work and some tech savvy (remember the category tags and information packets?). I told you this would be a little bit more involved than plugging numbers into an ROI calculator, didn’t I.

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Impossible? Think again.

“The person who says it can’t be done is always interrupted by the one who just did it.”

– From the movie “Daylight,” with Sly “Rocky/Rambo” Stallone

To every Social Media pundit or measurement “guru” out there who claims that calculating the ROI of Social Media is either impossible, too imprecise or even irrelevant, I have an ice-cold bottle of reality waiting for you: You’re wrong and you don’t know what you’re talking about.

I’ve said it before and I will say it again: Just because you don’t know how doesn’t mean it’s impossible. 😀

Fact: R.O.I. calculation isn’t rocket science. I can teach a 10-year-old the basics of R.O.I. calculation in 30 minutes.

Fact: R.O.I. calculation is media-agnostic. (It isn’t an old media or new media discussion. Not even close. If you are talking about impression, CPMs, clickthroughs or other media metrics as R.O.I. values, check your map: You are hundreds of miles off course.)

Fact: R.O.I. matters to people who run businesses because it either validates or invalidates an investment (Social Media or otherwise). So you can’t skirt it, blow it off or make it up.

Fact: R.O.I. monitoring allows companies to fine-tune their marketing and business-development efforts on the fly and improve outcomes over time. (If you don’t understand R.O.I., you can’t measure the effectiveness of your activities, and if you can’t measure effectiveness, you can’t truly impact performance. It’s kind of like driving blind.)

Fact: If you don’t understand R.O.I. from a business (P&L) perspective, you just don’t understand R.O.I. Sorry. That’s just reality. Deal with it. (And fix it. For your own sake.)

Fact: Claiming that Social Media R.O.I. is difficult or impossible to measure is as ill-informed as saying that changes in transaction trends are difficult or impossible to measure.

Fact: Every time I turn my head to see who just used the word “impossible,” all I see is the ego of someone who thinks they have nothing new (or old, in this case) to learn.

Fact: The more specialized a measurement “expert” is (especially when it comes to media measurement), the less likely it is that they will be able to help you put all of the pieces of the Social Media R.O.I. question together. So beware the gurus. Their focus is likely too narrow to be of any use to you when it comes to calculating R.O.I.

The truth is, R.O.I. measurement takes work but is relatively simple to do. You just can’t get caught up in mistaking media metrics and “impact” measurement (like increased traffic to your site, social mentions or positive WOM) with actual R.O.I. analysis. (Apples and oranges.)  Those of us with practical business management experience (in which R.O.I. analysis and real business performance come in daily doses) AND  in community or brand management have been doing this sort of thing for years. We know how to measure what matters, and it’s simple.

So if you’re a business executive who feels frustrated by the lack of R.O.I. understanding in the Social Media “expert” community (or the media measurement community), relax. Don’t buy into the “it can’t be done” cop-out. That tired old line is about to be swept out the door for good.

Hang tight. We get into the “How” in just a few more days.

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ROI vs. “Impact on X” – Understanding what Social Media ROI is and isn’t.

Don’t want to read the post? Watch the video. (It’s faster.) Note: That last little part got cut a little short, but you’ll get the point.

Okay, so it became obvious to me last week that the term R.O.I. has been seriously corrupted in Marketing and Social Media circles lately, and it might not hurt to bring some clarity to the Social Media R.O.I. discussion again.

(I swear I was going to talk about other things this week, but I keep getting pulled back in.) 😀

First things first: You have to understand the difference between Impact and Return On Investment.

Impact can be anything: Increased traffic on a website, more visitors to your store, increased participation on your blog, more mind share, being discovered by people who may become customers, a rise in positive social mention, and even increased sales. There are hundreds if not thousands of potential incidences of impact when it comes to your Social Media activities, and every single one can be easily measured using a variety of tools – from Google Analytics to Radian 6. As a matter of fact, every possible kind of impact you deem relevant should be measured and taken into account when it comes to gauging the effectiveness of a Social Media program. In this, we are all in agreement.

Impact can be measured in eyeballs. Impact can be measured in comments on a blog post. Impact may be measured in conversations. Impact can be measured in responses to a BOGO offer or discount offer. Impact can even be measured in smiles.  When it comes to impact metrics, the sky is the limit and every business has its own mapping to figure out and play with.

But then you have ROI, which is a completely different animal: ROI is a very specific subset of Impact in that it relates specifically to the business’ bottom-line. In other words, Return on Investment cannot be measured in eyeballs, unique visitors, conversations, mentions, impressions or smiles. ROI can only be measured in currency. (Think of ROI as the subset of impact that specifically addresses revenue and nothing else.)

There is no “Return on Impact”.

There is no “Return on awesomeness.”

For the sake of this discussion, there is no “Return on conversations” either.

These things are cool, they’re fun to tweet about, but they don’t exist in the world of revenue, payroll and pragmatic business decisions. “Return on investment” is simply that: A business commits a certain dollar amount to a program and expects to see that program produce just like any other investment. If it doesn’t, it gets cut and a program that will produce better R.O.I. will take its place faster than you can say “huh?”. It’s that simple.

Some businesses are okay with cost-neutral investments: If they put in $100K and get $100K back as a direct result, you’re fine. The program has paid for itself, and the collateral impact was worth it. (More visibility, more conversation, more word-of-mouth, etc.) But many don’t. When I was learning FRY from Microsoft, their R.O.I. expectations for any program they funded in their distribution channel was 10:1. In other words, for each dollar Microsoft invested, they expected to see $10 back.

Trust me: In that kind of environment, you learn how to define and calculate ROI pretty quickly. And while eyeballs, unique visitors and social mention are nice, they don’t fall into the realm of ROI. Nice try, but no dice.

All of this to say that no business will invest in a program that offers a negative return on investment. Conversations, transparency and positive WOM may be the currency of choice for many of us, but unless you can show that they generate dollars, you are not demonstrating ROI. You are only demonstrating impact, and that is not enough.

What everyone needs to start realizing right now is that the business world is not going to change in just a few months just because a few thousand of us evangelize the immense potential of the social web. Business managers are not going to change anything they are doing because you have introduced them to transparency or dialogue or the power of communities. PR directors are not going to suddenly going to stop crafting press releases or relinquish control of the “messaging” they get paid to create. CEOs aren’t going to drop what they are doing and start blogging because you tell them to. CMOs aren’t going to fire their copywriters and replace them with community managers. Customer Service managers are not going to cancel their call center contracts with India and the Philipines and hire US-based Tweeps to replace them. None of these things are going to happen UNTIL you show business owners that Social Media can actually improve their bottom-line, their balance sheet, their P&L, and how.

This starts with a basic understanding of what ROI is and isn’t: If you don’t understand what your client or boss is asking for when s/he brings up ROI, you cannot help them. If they repeatedly ask you for ROI and you keep giving them impact on X instead, how disconnected are you? Think about that.

If you can’t give them what they want, if they don’t get what they keep asking you for, before you know it, they will give up on your Social Media program. And all because you didn’t know how to connect the dots between activity, impact, and ROI.

Likewise, if you are a business manager and your resident Social Media consultant/expert doesn’t understand the difference between impact on X and ROI, it’s probaly time for a new expert.

One last thing:

Anyone who tells you that Social Media ROI cannot be calculated, that the tools don’t exist yet, or that Social Media is about conversations and not ROI is putting up a smoke screen. What they should be saying is “I don’t know how to do that yet,” but it’s a lot easier to perpetuate the myth that Social Media ROI cannot be calculated – for obvious reasons. It’s a terribly self serving and counterproductive thing to do, and “professionals” in the Social Media world need to stop hiding behind that argument before business leaders looking for real traction give up on Social Media altogether. At some point, all that hot air has to actually turn into something real.

The irony in all this is that the ROI calculation process is the same regardless of the medium: Old Media, New Media, Print media, Digital media – The medium doesn’t matter. ROI is ROI. Anyone who talks about Social Media ROI as being somehow radically different from other types of ROI is demonstrating a profound lack of understanding of ROI as a whole. Red flag. BIG red flag. Learn to spot it.

I hope this helped reframe the ROI vs. impact conversation a bit. If so, do me a big favor and pass this on to someone who will get some value out of it. The faster we help people use the right terminology when talking about this stuff (and dispel myths about ROI measurement), the more likely we are to see broad Social Media adoption for business actually happen (and be done well).

Thanks for hanging out with me, and have a great day. 🙂

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