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Posts Tagged ‘social media ROI’

While the new site is being built and I am on a well deserved workation, here is a piece from the vault that you will find just as relevant today as it was when I first posted it. Back by popular demand, Game Change: Moneyball and the reality of social business.

I finally watched Moneyball over the weekend. I’m not a big baseball fan but it held my interest, partly because it was based on a true story and partly because the movie really wasn’t about baseball at all. It was about old thinking vs. new thinking, about industry politics vs. the heresy of innovation, about dinosaurs desperate to hang on to a failing model that sustains their livelihood even when that model is clearly broken, ineffective and no longer relevant.

The scenes in which Oakland As’ general manager Billy Beane (Brad Pitt) locks horns with his cadre of coaches and scouts over how to do more with less, about how to break the cycle of mediocrity plaguing their organization, about how to get results again is brilliant, not because of the writing or the acting but because it is spot on target. How do I know this? Because I have been in that meeting hundreds of times. Well, not that particular meeting, but in others exactly like it. And every week that goes by, I find myself sitting in that meeting again and again and again.

In the US, in Europe, in Asia, the same meeting goes on almost daily. The conference table is always basically the same, the fluorescent lighting too. The players, they’re the same as well, everywhere I go. Only the vocabulary changes, the industry lingo, but the meeting, it’s the same and it goes pretty much like this:


Billy Beane
: Guys, you’re just talking. Talking, “la-la-la-la”, like this is business as usual. It’s not.
Grady Fuson: We’re trying to solve the problem here, Billy.
Billy Beane: Not like this you’re not. You’re not even looking at the problem.
Grady Fuson: We’re very aware of the problem. I mean…
Billy Beane: Okay, good. What’s the problem?
Grady Fuson: Look, Billy, we all understand what the problem is. We have to…
Billy Beane: Okay, good. What’s the problem?
Grady Fuson: The problem is we have to replace three key players in our lineup.
Billy Beane: Nope. What’s the problem?
Pittaro: Same as it’s ever been. We’ve gotta replace these guys with what we have existing.
Billy Beane: Nope. What’s the problem, Barry?
Scout Barry: We need 38 home runs, 120 RBIs and 47 doubles to replace.
Billy Beane: Ehh! [imitates buzzer]

What we see in this scene is a roomful of insiders with a century and a half of industry experience between them, and yet they haven’t figured out that their model is outdated, that their “experience,” is no longer enough to keep moving forward. They carry on day after day, season after season, doing the same thing over and over again, half-expecting a different result, but then again, maybe not. Worst of all, most of them have no idea what the problems plaguing their organizations actually are. A lot of it is just operational myopia. Some of it is also ego: they couldn’t possibly be wrong. All that experience and intuition, the entire industry’s decades-old model… how could things have changed that much, right?

And yet they are wrong, the model isn’t working anymore, and instead of listening to the guy in the room who sees it and knows how to fix it, they treat him like a punk. When he wants to do something about it, they push back. Hard. In Moneyball, he’s their boss. Imagine when he is just a Director or a VP, or even just an account manager. Imagine how quickly he gets overruled then. I’ve seen amazing people get shut down and pushed out of organizations over this sort of thing. I could give you names and dates. I could make you ill with true stories of stupidity and petty politics, of wasted opportunities and complete operational failures that turned what could have been huge wins for companies that needed them (and customers who demanded them) into case studies in wasted potential. And as tragic as  these stories would be, they are no different from the opportunities that will be wasted this week, and the next, and the one after that, always for the same reasons, always because of the exact same thinking and business management dynamics.

I see that scene, that meeting, that discussion being played out almost everywhere I go, especially when it comes to social media and social business: guys sitting around a table, treating social like it is just an extension of the same old traditional digital marketing game they all understand and desperately want to stick to. And so they make strategy decisions based on models that don’t apply at all to the social space, they insist on using measurement schemes that aren’t the least bit relevant to it or the business as a whole, and worst of all, they make hiring decisions that absolutely make no sense at all for the new requirements of social communications. Why? Because even though the game has changed, no one in the room wants to accept that it has. No one in the room wants to adapt. No one in the room wants to look reality in the eye and do what needs to be done to actually win. Talk about it, sure. Use cool new words like earned media and engagement, definitely. But actually change anything and adapt to a new model? Nope. Not happening. The change management piece that comes with social business integration, the piece that is absolutely vital to it actually working, that piece is still DOA.

Here’s another conversation that also goes on “offline” at every company (agency or brand) around the world right now in regards to hiring decisions that touch on social media management. Here it is again, through the filter ofMoneyball:

Peter Brand: There is an epidemic failure within the game to understand what is really happening. And this leads people who run Major League Baseball teams to misjudge their players and mismanage their teams. I apologize.
Billy Beane: Go on.
Peter Brand: Okay. People who run ball clubs, they think in terms of buying players. Your goal shouldn’t be to buy players, your goal should be to buy wins. And in order to buy wins, you need to buy runs. You’re trying to replace Johnny Damon. The Boston Red Sox see Johnny Damon and they see a star who’s worth seven and half million dollars a year. When I see Johnny Damon, what I see is… is… an imperfect understanding of where runs come from. The guy’s got a great glove. He’s a decent leadoff hitter. He can steal bases. But is he worth the seven and half million dollars a year that the Boston Red Sox are paying him? No. No. Baseball thinking is medieval. They are asking all the wrong questions. And if I say it to anybody, I’m-I’m ostracized. I’m-I’m-I’m a leper. So that’s why I’m-I’m cagey about this with you. That’s why I… I respect you, Mr. Beane, and if you want full disclosure, I think it’s a good thing that you got Damon off your payroll. I think it opens up all kinds of interesting possibilities.

Every company has a Peter Brand either on staff or sitting in a stack of CVs. Not necessarily in the sense that they are geniuses with statistics  but in the sense that they see the forest from the trees, that they see what needs to be done, but every time they open their mouths, they get shot down. Worse, if they open their mouths too much, they’re gone. And if their CV doesn’t have the bullet points and keywords that hiring managers were trained twenty years ago to find relevant, they don’t even get considered for the position.

If I see one more social media leadership position go by default to candidates with “big agency digital experience” or “big brand digital experience,” I am going to throw my pencil at somebody’s head. There is the medieval thinking in action, right there. There’s the primary reason why almost every social media program on the planet is failing to produce results, why three fourths of companies still can’t figure out how to calculate the ROI of their social media programs, why most brands see less than 1% of engagement from their followers and fans after the first touch, why “content is king” is failing, and why increasingly, “social media” strategy and budgets are shifting to ad buys on social networks. That’s right: For all the talk about earned media and engagement and conversations, social media account roles are starting to go to media buyers now. (Here’s some insight into it.) Everyone loves to talk the talk. Almost no company is willing to actually walk the walk. That sound you’re hearing is the banging of traditional marketing hammers pounding nails into social business’ coffin.

You want to know why most big brand social media programs aren’t gaining real traction? Why they don’t work without a constant influx of ad spending? Why nobody sticks around when the “free iPads for likes” promotions are gone? Start there: no one in the room gets it. No one in the room wants to get it. And when someone in the room does get it, he or she doesn’t keep their job for very long. You think most companies are going to hire, promote and support change agents all on their own?

So the real question is this: Do you want to actually score some real wins or do you just want to spend big marketing budgets and play at being a digital big shot?

It’s a real question. In fact, it’s the most important question you might ask yourself all year. Because the answer to that question will determine whether or not you still have a job in two years. No wait… I misspoke. The answer to that question will determine whether or not you have the job you want in two years, and yes, there’s a difference. A big one.

When you find yourself looking for your next gig (and you will eventually,) do you want to just be the guy who was SVP digital at (insert big brand/agency here) or do you want to be the guy who took (insert big brand/agency here)’s theoretical social media and social business programs, and turned them into the new industry standards, into the business model that everyone will be copying and basing theirs on for the next decade? It’s a real question. Which guy do you want to be? The dinosaur or the pioneer? If the answer is the latter, then are you going to have the huevos to go against the grain? To take chances on whom you hire, what kinds of programs you launch, where and how you invest your budgets? Are you willing to stick your neck out and do it right? Or is it more likely that you’ll just play it safe, hoping that the system will just carry you for another decade or two, that the CEO or CMO you will interview with next won’t notice that your job was basically to spend ad dollars and shuffle digital board pieces for the CEO’s monthly show-and-tell meeting?

Who do you want to be? What do you want to build? Do you want to just wear the jersey or do you want to win? Hold that thought. Here’s another key piece of dialogue from the movie, after Billy Beane’s gamble has paid off, after he has started turning some wheels in a big way. He responds to an invitation from John Henry, owner of the Boston Red Sox, who tells him this:

John Henry: I know you’ve taken it in the teeth out there, but the first guy through the wall. It always gets bloody, always. It’s the threat of not just the way of doing business, but in their minds it’s threatening the game. But really what it’s threatening is their livelihoods, it’s threatening their jobs, it’s threatening the way that they do things. And every time that happens, whether it’s the government or a way of doing business or whatever it is, the people are holding the reins, have their hands on the switch. They go bat shit crazy. I mean, anybody who’s not building a team right and rebuilding it using your model, they’re dinosaurs. They’ll be sitting on their ass on the sofa in October, watching the Boston Red Sox win the World Series.

And a couple of years later, they did.

So let’s talk about our world again for a minute. Let’s talk about what’s coming, about tipping points, about momentum: Ford not only hired the right guy (Scott Monty) a few years back but gave him the authority to build a solid program there. The result: some serious wins on just about every front, from customer perceptions to purchase intent to customer loyalty and recommendations. Evencar design was impacted in 2010 by the importance of social communications in the Ford organization. Edelman Digital seems to be doing something similar (I keep running into some pretty solid folks there, notably Michael Brito and David Armano). Want to see something cool? This is one of the things they’re working on. Starbucks caught an early train with that too. So did Dell. What sucks is that in 2012, virtually no one else has even tried to keep up with them. For all the money being spent and all the “case studies” being pushed around the conference circuit, most companies are still fighting it, still refusing to accept that the game has changed – worse, trying to keep playing with old methods, with old thinking, with old, outdated skills and CV bullet points. But there will come a day when someone will be given the authority to build out this new model, when it will blow everyone out of the water, and when the blindfolds will have to come off. That day is coming. What side of change do you want to be on then?

Old thinking will not score wins here. Old tactics, old hiring, old measurement, they’re all wrong for these new marketing, communications and business models. They just don’t work anymore. If you don’t believe me, that’s fine. Keep watching your margins erode. Keep watching your digital dollars go to waste. Keep laying people off and outsourcing every last business function you can’t afford to keep in-house anymore. Keep pretending the world is the same today as it was five years ago, and that what you were doing five years ago will still be relevant five years from now. Whatever makes you feel better. Keep doing the same old thing that used to work, back before people carried smart phones and iPads. Keep thinking that the guy you just hired because he spent ten years managing digital for a fast-food brand knows fuck-all about building capacity and traction for a social media program, let alone produce concrete business results for you. Keep coloring the same old boxes with the same old crayons and see how far you’ll get.

_ Okay good. What’s the problem?

We need to fill a VP Digital role.

_ Nope. What’s the problem?

All right… Whatever. We need to fill a VP social media strategy role.

_ Nope. What’s the problem?

We need to hire someone with proven global digital management experience, Billy. Someone with Disney or Nike on their CV. Someone with serious digital campaign experience.

_ Nope. What’s the problem, Barry?

The problem is, we’re not growing our Facebook community fast enough, and our content isn’t seeing the numbers we want. We need a…

_ Nope. [Imitates buzzer]

Get unstuck. Watch Moneyball and let the light bulb go off in your head. Then go find your Peter Brand and hire the shit out of him before someone else does. If you’re lucky, you’ll save both your career and your company in the process.

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Here it is. A whole book on how to make social media work from a business standpoint. ROI is covered, along with a lot of process elements that tie back to it. 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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During the Superbowl on Sunday, there was a little glitch with the lights. They went out. We’re talking blackout. Within minutes, Oreo released the above image across several key social media channels. Not Duracell, not Energizer, not G.E…. Oreo.

Clever. And it paid off for the brand.

Why was this a win? Four interwoven reasons: Velocity, relevance, wit and execution.

Wit, relevance and execution, most ad agencies can handle. Velocity, on the the other hand (generating ad-quality content and publishing it as meme-like social content), not so much. That’s still rare.

I want you to think about obstacles vs. enablement.

I want you to think about culture and operational agility.

Something like this doesn’t happen by accident. You have to have the right people in place, the right presence on key channels, the right support from management, the right kind of relationship with your community, and an eye towards real-time community management and content creation.

How many levels of approvals and sign-off do you think that image had to go through before getting the okay? Judging by the speed with which it appeared on the interwebs when the lights at the Superdome went out, not many. How did Oreo pull that off?

1. At some point, Oreo decided it needed a nimble, agile, self-sufficient social media team.

2. At some point, Oreo decided to trust that team to do its job without having to micromanage it.

Easier said than done? Sure. But only by fine margins. Want to guess what separates Oreo from other companies that haven’t been able to do this yet? They hired the right people.

Instead of assigning social media duties to some intern or the cheapest content creation team they could find, they made sure that the people running that piece of their digital business were witty, capable, professional people who understand brand voice, who understand their fans, and who understand how memes and social marketing work.

This happened because the right people were hired and then allowed to do their job.

We can talk about tools, we can talk about processes, we can talk about platforms, but Oreo’s real genius can be traced straight back to having the right people in place.

If you want to celebrate brand management and superbowl advertising secret sauce today, the two words you should keep in mind are velocity and competence.

 Here’s how they did it. (via Buzzfeed)

Whether or not this ultimately translates to business growth, well played, Oreo. Well played.

Let’s close with two simple graphs:

1. Immediate impact on Twitter:

(Feel free to compare this graph with those of every Super Bowl advertiser.)

Oreo tweets

2. Impact of Twitter on conversations about the Super Bowl:

Superbowl Tickr

See that enormous horizontal blue line up there? That’s the volume of Twitter mentions against Facebook, Instagram, blogs and news for the same time frame. [source]

Long term, platforms like Facebook, Youtube, and Instagram are probably stronger bets for stickiness and reach, but in terms of real-time impact (especially during events), Twitter matters. It matters a lot.

PS: You’ll want to read this too. (Real-time marketing) by David Armano.

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If you’re interested in how to make something like that happen, then convert that attention into real sales, 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 that explain how to do what Oreo just did – and then some. (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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Edelman_marquee-01

If you aren’t familiar with Edelman’s Trust Barometer project, you should be. I can’t think of any other organization out there that has been able to peel back the layers of trust in the business world as effectively.  (If you know of other work I should be looking at, please leave a link in the comments.) Anyway, I want to share some of their findings here because understanding them will help everyone build and grow better companies. This isn’t just a PR topic. It affects everything: Brand management, communications, operations, retail, customer service… everything.

First, the checklist. Below is a graphic that shows 16-trust building attributes every organization needs to be aware of (and gauge). It looks like this year, Edelman added categories (what they call trust performance clusters): Engagement, Integrity, Products & Services, Purpose, and Operations. I can’t poke a hole into this. It’s solid.

Edelman Performance-Clusters

Since I am as much a fan of best practices, brand strategy and change management as I am a fan of data, insights and infographics, you can imagine how stuff like this makes me feel like a kid in a candy store.

Here’s another piece of the Trust Barometer project: shifts in trust around the world year over year (YoY). To be clear, the graph does not illustrate consumer trust in the countries listed, but rather how consumers in each of these countries tend to trust companies, media, government institutions and NGOs. (If you think of it as a sort of cynicism graph, the US, the UK, Germany and France are a lot less cynical about all four sectors today than they were a year ago. We’re not out of the woods yet, but it’s a good sign.)

Edelman Slide6

Edelman’s Trust Barometer report for 2013 is summarized really well in this video. (If the link below doesn’t play, click here.) It’s less than 3 minutes long and packed with a ton of really fascinating info, so keep your finger near the pause button. And no, I wasn’t paid by Edelman to push their report or say nice things about them. I ran into this yesterday on the Facebook. I was impressed by it and thought it was well worth sharing with you guys.

What’s particularly fascinating to me:

1) Tech companies seem to inspire the most trust and banking/financial institutions the least amount of trust.

2) Leadership and corporate culture are cited as the primary causes of corporate wrongdoing. (And rightly so.)

3) Globally, CEOs have less than a 50% approval rating. Only 18% of people expect business leaders to tell the truth, and 13% of political leaders to tell the truth. That is execrable.

What it means: a) we have a global leadership problem, and b) people are no longer blind to it. If that shouldn’t trigger a wake-up call, I don’t know what will.

Interestingly, people tend to still trust institutions far more than the leadership of said institutions. In the US, for instance, 50% of people trust business institutions, but only 15% trust their leadership. That’s a  35 point gap. When it comes to government, those numbers fall to 38% and 10% respectively, for a gap of 28 points.

Our trust in people – particularly in those who should be our leaders – is eroding. Fast. This is a major problem and it needs to be addressed. And no, cool Superbowl ads and cosmetic rebrandings won’t fix this. It’s a deeper problem and it is going to take serious, grown-up, deliberate work to fix it.

The only thing I wasn’t super impressed with was the “diamond of influence” and the media clover leaf thingamajigs at the end of the video. It isn’t that they are wrong (they aren’t) as much as they attempt to fix a leadership problem by addressing an operational problem. To use a medical analogy, it’s a little like trying to cure someone’s brain tumor by enrolling them in a social graces class. The solution just doesn’t match the problem.

Here’s a thought: Before you can address changes in operational models, you have to address the gaps in leadership that are the root causes of said operational problems. For instance, if you focus first on working with the organization’s leadership on baking the 16 attributes of trust into their vision for the company and then operationalizing them, maybe you have something that might work. Then and only then do you bring in the diamond and the clover leaf – to address the how of your why and what.

Always match the right solutions to the right problem. Otherwise, your business solution runs the risk of being little more than the corporate version of a cargo cult: a lot of mimicking and parroting, but absolutely no hope of generating real results. If you have a leadership problem, address that. Don’t beat around the bush. Don’t skirt the issue. Address it and fix it. Start with an audit of your organization, using the 16 trust attributes as potential areas of improvement.

Food for thought. Discuss.

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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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 FGS

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.

2828883082_b6f836c3b3_o

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

ZuckAlso 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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Yesterday, the above infographic popped up on my radar (thanks, V. Harris). At first, I thought “here we go again: another crap social media ROI infographic.” But then I took a closer look and I got it. It’s actually not bad. Well… up to a point.

Part 1 – Showing that basic business literacy is still lacking in the digital marketing space:

Verdict: Good.

Here’s what this part of the infographic tells us:

1. Marketers still mistake metrics like net followers/fans, web traffic, and social mentions (all essentially reach metrics) for ROI. Less than 30% of them consider sales to be an element of ROI. Still.

2. 73% of CEOs think marketers don’t understand basic business terminology and objectives.

3. Is it any surprise that CEOs think that marketers are essentially dumbasses and that social business is bullshit?

If that part of the infographic doesn’t perfectly illustrate the urgent need for an infusion of actual competence on every level of the social business management scale, I don’t know what does. This situation is absurd.

The silver lining: Over 70% of marketers still haven’t read my book, so we still have a lot of potential sales there.

Okay, all kidding aside, the fact that over 70% of marketers still qualify followers and fans as a measure of ROI is… shocking. Seriously. Web traffic? Social mentions? Here’s a fix: Send these people back to school. It’s almost 2013. We should be over this by now. Anyone who still thinks that way needs an intervention. It might have been acceptable in 2008, but not anymore.

Part 2 – Showing some financial outcomes that can be tied back to social media activity (and budgets):

Verdict: Good.

Here, we see examples of social media activity having a direct impact on sales. The cool thing about it is that if you go back and look at how much that social media activity cost (man hours, technology, etc.), you can assign a specific cost to it. If you have the gain figures and the cost figures, you can calculate ROI.

Thumbs-up. More of that, please.

Part 3 – “Last Touch Conversions” and the problem with last-click attribution models:

Verdict: Last click attribution is too limited a model to illustrate the full impact of social media activity on sales.

Here’s where the infographic runs into a wall. We’ve talked about this: It isn’t so much that last click attribution is wrong in assuming a cause and effect relationship between clicking on a link and making a purchase. Clearly, there’s a strong connection there. There’s intent, if anything, and that’s important, so we need to track that and put numbers to it. But focusing too much (or at all) on last click attribution is a lot like looking at consumer behaviors through a simple, robotic, kind of binary lens that only accounts for a very small fraction of the customer journey. It completely ignores the dozen (if not hundreds) of other triggers that led a consumer to eventually click on that link and decide to make a purchase.

Last click attribution doesn’t take into account the full scope of discovery (that is to say, how a consumer found out about the brand and/or product). It doesn’t take into account the impact of advertising, marketing, PR, media exposure and word-of-mouth recommendations. It doesn’t take into account the months, weeks, days or hours of research done by the consumer before clicking on that link. In other words, the entire decision process that takes place before a purchase (discovery, research, preference and validation) is excluded from the last click attribution model. Months of social interactions: gone. Customer service experiences: gone. We’re down to attributing a transaction to the very last thing a consumer did before pulling out a credit card. That’s a lot like a military unit attributing a victory in battle to the last bullet fired. Focusing only on the final few minutes of a long and complex customer journey is terribly-short-sighted, and that sort of methodology (and mentality) drags us into a ditch of assumptions as to cause and effect that generally leads to poor consumer insights and ultimately investments in the wrong types of activities.

Last click attribution is easy, sure, but since when does easy trump smart or relevant? The truth is that it’s a lazy mode of thinking. That’s right, I said it: It’s lazy.

A couple of weeks ago, we looked at how Ohtootay helps companies move beyond last click attribution (and last touch conversions) to map how consumers actually behave – that is to say how they shop. It’s a good start. We need more of that kind of thinking and more of that kind of insightful application of technology. The objective for businesses and marketing teams has always been this: to understand consumer behaviors and how to affect them in a way that leads them to notice, want, buy and ultimately recommend products. Last click attribution doesn’t do that. It’s a snapshot of the final step in a long transaction funnel. That’s all. You want to measure ROI? You want to know what’s working? You want to fine-tune the way your traditional marketing, social channel activity, customer service, product design, packaging, retail experience and competitive landscape work together (or don’t)? Great. Then you’re going to have to work a little harder to figure out how all the pieces fit, and how to make them fit even better.

Personally, I think that’s half the fun of the marketing profession: figuring out what works and what doesn’t – and why, solving those kinds of problems, fine-tuning and then fine-tuning some more… That’s what marketing is about: making it work. Understanding how to move all of those needles so your company or product team gets what they want, and your customers do too. Do it right and everyone walks away happy. That’s the goal. Happy customers, happy product managers, happy investors, job creation on the back end… That’s the big picture, one piece of the daisy chain at a time.

So a word of caution: If you’re not into asking questions, doing research, or caring enough to bust your ass to do real work, hard work – sometimes tedious work – to kick ass, maybe you shouldn’t be in the marketing business. There’s a reason why 73% of CEOs think that marketers lack business credibility. It’s because of laziness and apathy. Every marketing pro who still hasn’t learned how to explain the relationship between ROI and social media contributes to that credibility problem. Every marketing pro who still uses last click attribution as their go-to metric to gauge the effectiveness of a social channel contributes to that credibility problem. Every marketing pro who isn’t working in concert (hell, in tandem) with a product group and a sales department contributes to that problem.

Give that some thought. And if that isn’t enough to give you pause, maybe this will: If you work in marketing, 73% of CEOs right now can’t figure out why they’re paying you. And you know what? They’re looking for someone better.

Fix that.

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

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

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

Also, some news:

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

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

The blog

The Facebook page

The Twitter account (@TickrUS)

The website

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

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

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

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

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

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Here’s the question that most companies still don’t ask themselves at the start of a project: what problem am I trying to solve?

Start with that, and you’re 80% of the way there. Blow it off, and you can be sure that you and your organization will waste a shit-ton of time and resources on something that won’t yield any concrete results.

For instance: discussions at planning & management meetings increasingly point towards three “projects” that seem increasingly inevitable – Your CMO wants to revamp the logo. Your CEO wants to get into social media. Your SVP Digital wants to redo the website.

Now what? Well, now begins the process of getting the projects approved. What questions will be asked? Well…

Why are we doing this?

How much will it cost?

Who will be in charge?

Who will do the work?

And that’s about it. That’s as far as it goes.

Why are we doing this? Because it’s been a while. Because it’s time. Because we need change. Because our competitors are doing it. Because it will improve our image.

How much will it cost? Somewhere between $x and $y.

Who will be in charge? Fill in the blanks.

Who will do the work? Fill in the blanks.

Except here’s the problem: companies have limited resources. When you think of resources in terms of money, talent, technology and man hours (and you should), you quickly come to realize that focusing a significant percentage of those resources on Project A rather than Projects B, C, and D means that you’ve just introduced an opportunity cost into your planning. In other words, choosing to monopolize these resources on Project A could limit your ability to really kick ass with Projects B, C and D.

If Project A is necessary or really smart, that’s probably a good thing. You’ve prioritized possible outcomes and you’ve decided that Project A has a high potential for ROI or impact on x, or whatever it is you’re after.

But of Project A isn’t necessary, what you’ve done is you’ve just taken essential resources away from essential projects… to feed a wasteful endeavor that won’t yield a whole lot of benefits to your company.

You know what question helps determine whether or not a project is worthwhile? This one: what problem am I trying to solve?

A practical overview: new logo.

We need a new logo. 

Yeah? Why? What problem are we trying to solve?

If you can show that your old logo is hindering your sales, you might be on to something. Do your customers complain about it? Do your competitors’ customers make fun of it? Okay. Time to consider an upgrade. In your considerations, ask yourself this: will the new logo solve a real problem for consumers? Will it solve a real problem for us?

If the answer is yes, and you can identify these problems clearly, move forward.

What problems will the new logo aim to solve?

If the answer is no, or you can’t quantify the “problem,” consider what else you might be able to focus on this quarter or this year that will solve a real problem. (Like customer service, R&D, packaging, messaging, shopping experience, etc.)

A practical overview: new website.

We need a new website. 

Yeah? Why? What problem are we trying to solve?

If the answer falls along the lines of “It looks like it was designed in 1995, the UX is horrible, it uses flash, it’s horrendous on mobile devices, our customers complain about it all the time,” then you’re good to go. Dig deeper and move forward. What is it that your customers complain about? What can we improve in terms of user experience? What do we wish the site could do that it can’t in its present form (and why)? What kinds of functionality would we like to build into it (and why)?

What problems will a new website aim to solve?

If the answer falls along the lines of “It’s been two years since we redesigned it, and I want to rebuild it in Drupal,” then that meeting is adjourned. (No offense to Drupal. I just needed to throw something in there real quick.)

A practical overview: new social media strategy/program.

We need a social media strategy. 

Yeah? Why? What problem are we trying to solve?

If the answer falls along the lines of “we physically can’t continue to do business without it anymore,” then you’re on to something. Dig deeper. Your next conversation should include items like these:

47% of our customers prefer to engage CSRs through Twitter and Facebook than by calling a toll-free number now. We can also serve 5x more customers per hour via these channels than we can via traditional call centers, so we’ll even save money that way.

We’re losing traction in category and keyword searches because we have no fresh content for the Googlenets and the Bingwebs to index. If we had a blog and some social media properties, we could potentially double our web traffic and digital exposure.

We can’t really get into mobile commerce without it. It’s already costing us $23,000,000 per quarter, and we’re even losing customers and market share as a result. if we keep operating like this, we’ll be out of business in 5-7 years.

We’re spending $12,000,000 on outsourced digital marketing research every year that we could do ourselves if we just assigned two people to monitor the web using social media monitoring platforms.

Our PR department can’t anticipate, monitor, respond or manage PR crises without it. The cost to the company each year in lost revenue is $x, and our brand image is suffering more and more each year as a result.

40% of our net new customers leave us after 12 months. We think we can use social media to engage them, find out why they’re think of  leaving, and give them a reason to stay. Potential impact on the business: an additional $xM per year.

Social media can help drive word-of-mouth recommendations. We want to use social media as an in-network lead generation engine. The impact we expect: a) more leads. b) more qualified leads. c) a higher conversion rate (prospect to customer).

It will help us recruit better talent. Period.

It will amplify our advertising’s reach and make it stickier. Look at the numbers that Coca Cola, Pepsi, Ford and Old Spice have been getting against companies that only use traditional (paid) media.

If done properly, engagement = loyalty. Right now, only 23% of our customers consider themselves loyal. We want to bring that up to 60% over the next four years. Some of it will be offline, but we need an online piece as well.

69% less expenditures on each new product launch.

Etc.

All of these suggestions solve one or more of the following problems:

1. Not enough leads? Doing this will attract net new potential customers.

2. Not enough new customers? Doing this will convert net new prospects into net new customers.

3. Short term customer attrition? Doing this will develop net new customers into returning customers.

4. Long term customer attrition? Doing this will develop returning customers into loyal customers.

5. Budget cuts getting in the way? Doing this will cut costs while delivering equal or better outcomes.

6. Frozen budgets getting in the way? Doing this will keep costs level while delivering better outcomes.

7. Wasting money on outdated services you feel locked into? Doing this will help you free your operation from unnecessary burdens.

8. The chasm between you and your customers has been widening? Doing this will shrink it.

9. Feeling less relevant than you were 10 years ago? Doing this will help you find your way again.

10. Shrinking profitability is an increasing concern? See 1-9 (above), particularly 5 and 6.

11. Not reaching enough potential customers? Doing this fixes that. See 1 (above).

But if the answer to “what problem are we trying to solve with a social media program” is never asked (or worse, answered incorrectly,) then you will basically end up with an endless churning out of cheaply produced, keyword-optimized “content” that will vaguely boost web traffic and online mentions without ever yielding particularly helpful results. Say hello to crap metrics like “likes, Return on Influence, and all of the rest of the bullshit that still plagues the digital world and social business these days.

Because… we need to be on Facebook so we can engage with people and have conversations.

Because… we have to have a social media strategy.

Because… “content is king.”

Because… our competitors are doing it.

Because… our agency told us we should be in social media.

Because… something about owned, paid and earned media.

Because… we need followers and likes.

Because… we don’t know, but we’ll eventually figure it out.

Okay. Good luck with that.

The reason why snake oil, incompetence and irrelevant metrics are still so prevalent in the social business space is because they fill the gap created by the absence of proper questions and answers at the start. Starting with: what problem am I trying to solve?

Which is to say: what is the purpose of doing this in the first place?

New product feature? What problem am I trying to solve?

New packaging? What problem am I trying to solve?

New logo? What problem am I trying to solve?

New branding strategy? What problem am I trying to solve?

New campaign? What problem am I trying to solve?

New Facebook page? What problem am I trying to solve?

New blog? What problem am I trying to solve?

New hire? What problem am I trying to solve?

Don’t just go through the motions of doing something or going somewhere just because the rest of the herd is shuffling that way. I know it might make you the annoying guy in the room to be the one who asks the question (so… do so judiciously), but the question MUST be asked by someone. And more importantly, it must be answered. Otherwise, you’ll be wasting resources and a chunk of your potential for real success.

Cheers,

Olivier

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

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

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

Read Full Post »

Moneyball - Courtesy of Sony Pictures.

I finally watched Moneyball over the weekend. I’m not a big baseball fan but it held my interest, partly because it was based on a true story and partly because the movie really wasn’t about baseball at all. It was about old thinking vs. new thinking, about industry politics vs. the heresy of innovation, about dinosaurs desperate to hang on to a failing model that sustains their livelihood even when that model is clearly broken, ineffective and no longer relevant.

The scenes in which Oakland As’ general manager Billy Beane (Brad Pitt) locks horns with his cadre of coaches and scouts over how to do more with less, about how to break the cycle of mediocrity plaguing their organization, about how to get results again is brilliant, not because of the writing or the acting but because it is spot on target. How do I know this? Because I have been in that meeting hundreds of times. Well, not that particular meeting, but in others exactly like it. And every week that goes by, I find myself sitting in that meeting again and again and again.

In the US, in Europe, in Asia, the same meeting goes on almost daily. The conference table is always basically the same, the fluorescent lighting too. The players, they’re the same as well, everywhere I go. Only the vocabulary changes, the industry lingo, but the meeting, it’s the same and it goes pretty much like this:


Billy Beane
: Guys, you’re just talking. Talking, “la-la-la-la”, like this is business as usual. It’s not.
Grady Fuson: We’re trying to solve the problem here, Billy.
Billy Beane: Not like this you’re not. You’re not even looking at the problem.
Grady Fuson: We’re very aware of the problem. I mean…
Billy Beane: Okay, good. What’s the problem?
Grady Fuson: Look, Billy, we all understand what the problem is. We have to…
Billy Beane: Okay, good. What’s the problem?
Grady Fuson: The problem is we have to replace three key players in our lineup.
Billy Beane: Nope. What’s the problem?
Pittaro: Same as it’s ever been. We’ve gotta replace these guys with what we have existing.
Billy Beane: Nope. What’s the problem, Barry?
Scout Barry: We need 38 home runs, 120 RBIs and 47 doubles to replace.
Billy Beane: Ehh! [imitates buzzer]

What we see in this scene is a roomful of insiders with a century and a half of industry experience between them, and yet they haven’t figured out that their model is outdated, that their “experience,” is no longer enough to keep moving forward. They carry on day after day, season after season, doing the same thing over and over again, half-expecting a different result, but then again, maybe not. Worst of all, most of them have no idea what the problems plaguing their organizations actually are. A lot of it is just operational myopia. Some of it is also ego: they couldn’t possibly be wrong. All that experience and intuition, the entire industry’s decades-old model… how could things have changed that much, right?

And yet they are wrong, the model isn’t working anymore, and instead of listening to the guy in the room who sees it and knows how to fix it, they treat him like a punk. When he wants to do something about it, they push back. Hard. In Moneyball, he’s their boss. Imagine when he is just a Director or a VP, or even just an account manager. Imagine how quickly he gets overruled then. I’ve seen amazing people get shut down and pushed out of organizations over this sort of thing. I could give you names and dates. I could make you ill with true stories of stupidity and petty politics, of wasted opportunities and complete operational failures that turned what could have been huge wins for companies that needed them (and customers who demanded them) into case studies in wasted potential. And as tragic as  these stories would be, they are no different from the opportunities that will be wasted this week, and the next, and the one after that, always for the same reasons, always because of the exact same thinking and business management dynamics.

I see that scene, that meeting, that discussion being played out almost everywhere I go, especially when it comes to social media and social business: guys sitting around a table, treating social like it is just an extension of the same old traditional digital marketing game they all understand and desperately want to stick to. And so they make strategy decisions based on models that don’t apply at all to the social space, they insist on using measurement schemes that aren’t the least bit relevant to it or the business as a whole, and worst of all, they make hiring decisions that absolutely make no sense at all for the new requirements of social communications. Why? Because even though the game has changed, no one in the room wants to accept that it has. No one in the room wants to adapt. No one in the room wants to look reality in the eye and do what needs to be done to actually win. Talk about it, sure. Use cool new words like earned media and engagement, definitely. But actually change anything and adapt to a new model? Nope. Not happening. The change management piece that comes with social business integration, the piece that is absolutely vital to it actually working, that piece is still DOA.

Here’s another conversation that also goes on “offline” at every company (agency or brand) around the world right now in regards to hiring decisions that touch on social media management. Here it is again, through the filter of Moneyball:

Peter Brand: There is an epidemic failure within the game to understand what is really happening. And this leads people who run Major League Baseball teams to misjudge their players and mismanage their teams. I apologize.
Billy Beane: Go on.
Peter Brand: Okay. People who run ball clubs, they think in terms of buying players. Your goal shouldn’t be to buy players, your goal should be to buy wins. And in order to buy wins, you need to buy runs. You’re trying to replace Johnny Damon. The Boston Red Sox see Johnny Damon and they see a star who’s worth seven and half million dollars a year. When I see Johnny Damon, what I see is… is… an imperfect understanding of where runs come from. The guy’s got a great glove. He’s a decent leadoff hitter. He can steal bases. But is he worth the seven and half million dollars a year that the Boston Red Sox are paying him? No. No. Baseball thinking is medieval. They are asking all the wrong questions. And if I say it to anybody, I’m-I’m ostracized. I’m-I’m-I’m a leper. So that’s why I’m-I’m cagey about this with you. That’s why I… I respect you, Mr. Beane, and if you want full disclosure, I think it’s a good thing that you got Damon off your payroll. I think it opens up all kinds of interesting possibilities.

Every company has a Peter Brand either on staff or sitting in a stack of CVs. Not necessarily in the sense that they are geniuses with statistics  but in the sense that they see the forest from the trees, that they see what needs to be done, but every time they open their mouths, they get shot down. Worse, if they open their mouths too much, they’re gone. And if their CV doesn’t have the bullet points and keywords that hiring managers were trained twenty years ago to find relevant, they don’t even get considered for the position.

If I see one more social media leadership position go by default to candidates with “big agency digital experience” or “big brand digital experience,” I am going to throw my pencil at somebody’s head. There is the medieval thinking in action, right there. There’s the primary reason why almost every social media program on the planet is failing to produce results, why three fourths of companies still can’t figure out how to calculate the ROI of their social media programs, why most brands see less than 1% of engagement from their followers and fans after the first touch, why “content is king” is failing, and why increasingly, “social media” strategy and budgets are shifting to ad buys on social networks. That’s right: For all the talk about earned media and engagement and conversations, social media account roles are starting to go to media buyers now. (Here’s some insight into it.) Everyone loves to talk the talk. Almost no company is willing to actually walk the walk. That sound you’re hearing is the banging of traditional marketing hammers pounding nails into social business’ coffin.

You want to know why most big brand social media programs aren’t gaining real traction? Why they don’t work without a constant influx of ad spending? Why nobody sticks around when the “free iPads for likes” promotions are gone? Start there: no one in the room gets it. No one in the room wants to get it. And when someone in the room does get it, he or she doesn’t keep their job for very long. You think most companies are going to hire, promote and support change agents all on their own?

So the real question is this: Do you want to actually score some real wins or do you just want to spend big marketing budgets and play at being a digital big shot?

It’s a real question. In fact, it’s the most important question you might ask yourself all year. Because the answer to that question will determine whether or not you still have a job in two years. No wait… I misspoke. The answer to that question will determine whether or not you have the job you want in two years, and yes, there’s a difference. A big one.

When you find yourself looking for your next gig (and you will eventually,) do you want to just be the guy who was SVP digital at (insert big brand/agency here) or do you want to be the guy who took (insert big brand/agency here)’s theoretical social media and social business programs, and turned them into the new industry standards, into the business model that everyone will be copying and basing theirs on for the next decade? It’s a real question. Which guy do you want to be? The dinosaur or the pioneer? If the answer is the latter, then are you going to have the huevos to go against the grain? To take chances on whom you hire, what kinds of programs you launch, where and how you invest your budgets? Are you willing to stick your neck out and do it right? Or is it more likely that you’ll just play it safe, hoping that the system will just carry you for another decade or two, that the CEO or CMO you will interview with next won’t notice that your job was basically to spend ad dollars and shuffle digital board pieces for the CEO’s monthly show-and-tell meeting?

Who do you want to be? What do you want to build? Do you want to just wear the jersey or do you want to win? Hold that thought. Here’s another key piece of dialogue from the movie, after Billy Beane’s gamble has paid off, after he has started turning some wheels in a big way. He responds to an invitation from John Henry, owner of the Boston Red Sox, who tells him this:

John Henry: I know you’ve taken it in the teeth out there, but the first guy through the wall. It always gets bloody, always. It’s the threat of not just the way of doing business, but in their minds it’s threatening the game. But really what it’s threatening is their livelihoods, it’s threatening their jobs, it’s threatening the way that they do things. And every time that happens, whether it’s the government or a way of doing business or whatever it is, the people are holding the reins, have their hands on the switch. They go bat shit crazy. I mean, anybody who’s not building a team right and rebuilding it using your model, they’re dinosaurs. They’ll be sitting on their ass on the sofa in October, watching the Boston Red Sox win the World Series.

And a couple of years later, they did.

So let’s talk about our world again for a minute. Let’s talk about what’s coming, about tipping points, about momentum: Ford not only hired the right guy (Scott Monty) a few years back but gave him the authority to build a solid program there. The result: some serious wins on just about every front, from customer perceptions to purchase intent to customer loyalty and recommendations. Even car design was impacted in 2010 by the importance of social communications in the Ford organization. Edelman Digital seems to be doing something similar (I keep running into some pretty solid folks there, notably Michael Brito and David Armano). Want to see something cool? This is one of the things they’re working on. Starbucks caught an early train with that too. So did Dell. What sucks is that in 2012, virtually no one else has even tried to keep up with them. For all the money being spent and all the “case studies” being pushed around the conference circuit, most companies are still fighting it, still refusing to accept that the game has changed – worse, trying to keep playing with old methods, with old thinking, with old, outdated skills and CV bullet points. But there will come a day when someone will be given the authority to build out this new model, when it will blow everyone out of the water, and when the blindfolds will have to come off. That day is coming. What side of change do you want to be on then?

Old thinking will not score wins here. Old tactics, old hiring, old measurement, they’re all wrong for these new marketing, communications and business models. They just don’t work anymore. If you don’t believe me, that’s fine. Keep watching your margins erode. Keep watching your digital dollars go to waste. Keep laying people off and outsourcing every last business function you can’t afford to keep in-house anymore. Keep pretending the world is the same today as it was five years ago, and that what you were doing five years ago will still be relevant five years from now. Whatever makes you feel better. Keep doing the same old thing that used to work, back before people carried smart phones and iPads. Keep thinking that the guy you just hired because he spent ten years managing digital for a fast-food brand knows fuck-all about building capacity and traction for a social media program, let alone produce concrete business results for you. Keep coloring the same old boxes with the same old crayons and see how far you’ll get.

_ Okay good. What’s the problem?

We need to fill a VP Digital role.

_ Nope. What’s the problem?

All right… Whatever. We need to fill a VP social media strategy role.

_ Nope. What’s the problem?

We need to hire someone with proven global digital management experience, Billy. Someone with Disney or Nike on their CV. Someone with serious digital campaign experience.

_ Nope. What’s the problem, Barry?

The problem is, we’re not growing our Facebook community fast enough, and our content isn’t seeing the numbers we want. We need a…

_ Nope. [Imitates buzzer]

Get unstuck. Watch Moneyball and let the light bulb go off in your head. Then go find your Peter Brand and hire the shit out of him before someone else does. If you’re lucky, you’ll save both your career and your company in the process.

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Here it is. A whole book on how to make social media work from a business standpoint. ROI is covered, along with a lot of process elements that tie back to it. 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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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 likesfollowers, 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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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.

*        *       *

(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.

*         *        *

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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Maybe I should just republish this post every day for the next ten years (or however long it takes for content bloggers, social media “gurus” and marketing authors/speakers to get this).

With a little repetition – and surely with enough time – even the dumbest and most obtuse of them will eventually get it.

Maybe.

As annoying and curious as it was, back in 2009, when so many so-called “experts” and “gurus” couldn’t figure out how to explain, much less determine the ROI of anything relating to social media, it is inexcusable today, less than a month from 2012. We’ve talked about this topic how many times? I and others have presented on the topic in how many countries? On how many continents? For how many years now? How many times has this simple business 101 topic been explained and explained and explained? Even if somehow, some social media “experts” have managed to miss the presentations, the conversations, the podcasts, the interviews, the decks on slideshare and the blog posts, there’s a book now that spends 300 pages on the topic. At the very least, they should have heard a rumor that the “question” had been answered. Right? Bueller? Bueller? Anyone?

What else can we do? Take out full page ads in the New York Times? Take over Mashable for a month? Buy a banner ad on Klout’s home page? What will it take for the asshats pretending to be experts to stop talking about ROI as if it were some arcane mythical metric?

Seriously, you have to be either completely disconnected from the channels you claim to be an expert participant in, or purposely avoiding this stuff to still get it wrong. Is social media ROI to be the the clitoris of the “guru” world then? Will some so-called “experts” really live out their lives without ever finding it? If so, isn’t that a sign that perhaps they need to go try their hands at being experts in another field?

It makes you wonder about these people’s qualifications, doesn’t it? What makes them experts again? A few hundred blog posts and some keynote presentations? A “personal brand?” A lot of followers? Is that all it takes now?

Here’s a simple litmus test for you: Experts know their shit. A self-professed expert who doesn’t know his shit is just a windbag. If you don’t want to be categorized as the latter, immerse yourself in the field you aim to be an expert in. Commit to it for years and years and years. Writing a few blog posts about something doesn’t make you an expert in it, no matter how hard you want to believe it does.

Utterly ignorant nonsense: The battle-cry of new religion of digital windbags?

First, this gem from @CopyBlogger‘s CFO, Mr. Sean Jackson. (A few of my favorite quotes from that post):

“Marketing ROI has become so important that no one questions its validity, but the truth is, marketing will never produce an ROI. […]  The problem for marketing professionals is that marketing activity is not an investment. An investment is an asset that you purchase and place on your Balance Sheet. Like an office building or a computer system. It’s something you could sell later if you didn’t need it any more. Marketing is an expense, and goes on the Profit & Loss statement.”

WHAT?! Are you kidding me?!

And yet in the same interview, Mr. Jackson continues with this:

“Sales generate revenue. Marketing generates profits.”

WHAT?! Sure, it sounds pretty, but how does that work, exactly? How do you calculate profits if… Oh, never mind…

“Marketing, including social media marketing, is about efficiency. Marketing is a process of decreasing the time, money, and resources required to communicate with customers and make it easy for them to buy products and services. The more efficient your marketing is, the more profit you make. That’s what you want to optimize for. By defining marketing as a function of profits, you create a new perception within your organization about the value of marketing.”

Since Sean is a CFO, I have to assume that he knows how to calculate profit on a balance sheet. … The very balance sheet as the one on which Marketing is nothing but “an expense”?

Look, if marketing can’t produce ROI, then it can’t generate a profit. A profit is a function of ROI. Profit is the very manifestation of the expectation of ROI: You invest in something, use it, and hope it generates enough revenue to cover your investment and other operational costs, and… wait for it… turn a profit.

This is Business 101 stuff. Seriously, it is. Little kids running lemonade stands know this.

If you are going to claim that marketing is about profits, then you have to concede that marketing plays a part in cutting costs or generating revenue. Once you realize that, ROI becomes obviously relevant to marketing spend. Marketing does generate ROI, and it doesn’t take a genius to figure that out. And yet, shit like this gets published. (Yes, shit.)

Example #2: David Meerman Scott’s piece entitled “Social Media ROI Hypocrisy.”

The post’s elegant tag-line:

“New research – published here for the first time – proves that executives who demand that Social Media ROI be calculated are hypocrites.”

Nice. Here’s more:

“It’s ridiculous that executives require marketers to calculate ROI (Return on Investment) on one form of real-time communications: Social media like Twitter, Facebook, or YouTube. Yet they happily pay for other real-time communications devices for employees like Blackberrys, iPhones, and iPads without a proven ROI.”

And my favorite:

“My recommendation to you when faced with executives who demand that you prove social media ROI is to point out the hypocrisy by asking them to show you the ROI of their Blackberry.”

Here’s my recommendation to you: Don’t answer an executive who asks you about ROI with “what’s the ROI of your blackberry?”

Why? Because it’s rude, unprofessional, and it only serves to prove two things: 1. You’re an asshole, and 2. you have no idea what you’re talking about.

Here’s a better way: If an executive bothered to ask you a question that matters to his or her business, answer it. If you can’t, recommend someone who can. It’s the least you can do. The idea being to help the client, not show him how much of a smug smartass you are.

Speaking of questions: Either answer them or go home.

I have heard it suggested that many corporate executives use the ROI “question” as an excuse to object to social media spend. Let’s talk about that for a minute.

Corporate execs have very busy schedules. Believe it or not, they don’t waste their time listening to your sales pitches knowing, before they walk into the room, that they are going to turn you down. Do you really think they sit around all day hoping someone will come in to talk to them about social media just so they can use their favorite “ROI objection” trick on them? They have companies to run. Either  produce a way to help them do that or stop wasting their time.

Here’s a double dose of reality for you: When corporate executives ask you about ROI with respect to social media, they are motivated by 2 things:

1. They want to know how social media spend will benefit them so they can justify the expense. Understanding the potential value of an investment is pretty basic business practice, and a sound one. What did you expect? A blank check and a 5-year consulting contract just because you spoke at Blogworld and your Klout score is awesome? What world do you live in?

2. They want to know if you know your shit or if you are just another windbag blogger “guru” with no business management acumen. They get pitched by two dozen bullshit social media experts per week. This is their test. Either pass it or fuck off.

Four final thoughts:

1. When business executives take the time to meet with you, reward their time investment by not being an asshole. (i.e. Not asking them about the ROI of their blackberry is a good start.) Answer their questions. That’s why you’re there in the first place.

2. If you don’t know how to answer an executive’s ROI questions, guess what: You aren’t qualified to advise them on the matter. Sorry. Admit it and carry on.

3. Whether or not you believe that ROI is a relevant topic of discussion when it comes to integrating social dynamics and platforms into a business doesn’t matter. You are mistaking a philosophical discussion with a practical one. Explain the principles first. Answer their questions. Help them get through that first phase (justification). Once the ROI question has been laid out and everyone gets it, THEN discuss with them the positive intangibles of building a more social company (see #6 below). They are testing your knowledge, not your religion. Stop evangelizing and start getting down to brass tacks.

4. If the same executives aren’t measuring the ROI of other things (like advertising campaigns, product development, websites, or even marketing in general,) show them how. It’s a hell of a lot more valuable than calling them hypocrites for not having done it until now. Be a positive agent of change, not just another smug asshole trying to weasel his way onto their payroll.

Doing something a lot teaches you how things work and don’t work. So do more. Talk less. You want to advise companies on how ROI fits into the social media world? Learn how to connect spend to outcomes (results). Once you grasp that the way a baker grasps the baking of bread, then you’ll be qualified to advise companies and other professionals on the matter. Not before. This isn’t theory. It isn’t about opinions. It’s practical everyday business knowledge. You either have it or you don’t.

Moving on…

The rest of this post won’t make you an expert, but it will at least give you the basics.

If you are still having trouble explaining or understanding the intricacies of 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. To get the right answer, ask 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. isn’t always relevant.

Repeat after me: Not all social media activity needs to drive ROI.

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 likesfollowers, 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.

Having said that, you still need to understand these mechanisms in order to make good business decisions, so learn them.

*          *          *

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.

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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

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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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click image to watch video

Too bad I can’t record every conversation I have about performance measurement and analysis, especially as they relate to social media and social business, and post them here. Granted, we’ve had some pretty solid ones on the #measuremob podcast (see archive here), but this time around, the discussion is a) accompanied by some video (which is nice) and b) not between people who fundamentally agree with each other.

In episode 83 of the Beer Diplomacy podcast, I discuss the differences between web metrics and business metrics with Marshall Sponder, author of Social Media Analytics (Mc Graw Hill).

What you will get out of this discussion:

– The limitations of looking solely to web/social metrics to determine the effectiveness of social media campaigns and programs.

– Why web/social metrics are merely intermediate data that help connect the dots between digital activity and measurable business outcomes.

– What measurable business outcomes are, vs. web/social metrics.

– How to think about business measurement when it comes to the effectiveness of social media.

– R.O.I. is not calculated in “likes” and “follows”.  It is calculated in hard dollars (or pounds or euros or yens – the same currency used in the investment part of the return-on-investment equation, in other words).

– The measurement biopsy: A simple method that any business – no matter how small or technologically-challenged – can use to test the R.O.I. of each and every marketing channel it invests in, social, digital, analog, and otherwise. This can be done as a one-time test or to monitor the effectiveness of activities and channels over time.

If clicking on the image above doesn’t take you to the video, go ahead and click here.

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And as always, if you want to learn more about how to…

 – properly build a social media program for your company

– develop a social business practice for your organization

– integrate social media across all relevant departments

– establish a social business structure for your department

– manage and integrate social media activity within an organization

– coordinate social activities with outside agencies and marketing partners

– connect social communications activity to business outcomes

– properly report your metrics and analysis to the CEO, CFO and other executives

– avoid traps and hurdles common to social media / social business in the first 2-3 years of integration

… then make sure you grab a copy of Social Media ROI: Managing and Measuring Social Media Activities in Your Organization (Que/Pearson) – the definitive social business guidebook for managers and executives.

Click here for the smroi.net site (where you can download a chapter for free and choose where you want to buy it).

Click here to buy the book straight from Amazon.com

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With 200,000,000 registered twitter accounts and almost 450,000 new accounts being created daily, some of you are bound to run into a sociopath, a bully a troll, even a complete cyberstalking psychopath on Twitter sooner or later.  Having just had to deal with my own little unpleasant experience with a small group of possibly psychotic individuals targeting friends on the twitternets, I thought I should share with you a little video that my friends at Tweetreports (@tweetreports on Twitter) cooked up for us just for this post.

For tips on how to deal with or report harassment or cyberstalking on Twitter, check out Twitter’s Abusive Users page (click here). The page is filled with information, tips, links and resources that should help you no matter what your situation may be, so no need to republish it here.

The video I have for you today shows you step-by-step how to capture incidences of online harassment, bullying and cyber-stalking for later use – as evidence in a court case, for example. Though Tweetreports is typically used for brand and keyword monitoring, SEO research, tagged bookmarking and other business-focused activities on Twitter, it lends itself quite well to this use as well. Here’s how it works:

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

If you know someone who is dealing with cyberstalkers, online bullying, digital harassment or any other type of abuse being channeled through Twitter, please share this post with them. And if you aren’t dealing with anything like that right now, bookmark this for future use. You never can tell when it might suddenly come in handy for you or someone you know.

Other handy resources just in case:

NCSL’s 2011 overview of state statutes regarding cyberstalking, cyberharassment and cyberbullying.

NCSL’s online child protection page.

IJCC’s Analysis of Online Harassment and Intimidation report.

The National Center for Victims of Crime website.

If you don’t live in the United States, a quick search should identify similar resources for the country in which you live.

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Speaking of kids… Cyberbullying infographic (below) courtesy of ZoneAlarm.com.

Also follow this story on how cyber-bullying may have led to 14 year old Jamey Rodenmeyer’s suicide. Let’s make sure this sort of thing doesn’t happen again.

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Bonus Twitter stats infographic (below) courtesy of the Touch Agency. Follow them on Twitter: @touchagency.

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If you haven’t done so already, check out a free chapter of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization on the smroi.net website. The book, which outlines for businesses and organizations how to design, implement, manage and measure social media programs that are inherently connected to relevant business objectives, is available at booksellers everywhere.

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I didn’t realize it until this week, but there still seems to be some confusion about Social CRM in certain business circles. Let’s fix that right now.

(Before you get too excited, Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization won’t be followed by Social CRM: The Complete Guide to the Obvious. We can take care of this right here and without the need for another 299 pages of examples and how-tos.)

This is how the discussion started: Neville Hobson (@jangles on Twitter) asked Edelman Digital’s Chuck Hemann (@chuckhemann) and I what we thought of Esteban Kolsky’s (@ekolsky) definition of Social CRM yesterday. The definition, as it appears below, comes from this piece on Neville’s blog, dated 9 May 2011, following Luke Brynley-Jones‘ Social CRM 2011 event in London:

[…] The closest best definition on the day came from  Esteban Kolsky in his presentation on “Three Reasons You Will Do Social CRM”:

[Social] CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interaction in a business environment.

It’s a start. A good start, even, but while I don’t disagree with the definition completely (and here I must apologize to Esteban for what follows), it misses the mark twice:

First, CRM is neither a philosophy nor a business strategy, but a business function. CRM stands for Customer Relationship Management. (Emphasis on management: A function.) So before we do anything else, the definition should be changed to this:

[Social] CRM is a business function supported by a system and a technology, designed to improve human interaction in a business environment.

Second, the definition is far too vague about what the system and technology actually do. And because it is vague and doesn’t actually provide a clear explanation of what the technology does, it fails as a definition. We have to go a little further if we want to make it work.

Let’s begin with the last part and maybe we can find a way to whip it into something more helpful: “Designed to improve human interaction in a business environment.” What does that mean? The telephone is designed to improve human interactions in a business environment. So are email and memos. Faxes, IMs, SMS, blogs, video-conferencing and high tech conference rooms and work spaces all perform the same function. What differentiates SCRM from any other collaboration tool? is it even a collaboration tool?

You see how already, something crucial is missing.

If we want to look at the definition of SCRM in the context of company-customer relations, then we must include that element in the definition. Let’s see what that looks like:

[Social] CRM is a business function supported by a system and a technology, designed to improve human interaction between companies and consumers in a business environment.

Okay, that’s a little better. But we still aren’t there. We’ve established that CRM is a business function. We don’t need the final four words of the definition. In fact, they are incorrect as the expansion of CRM into the social space blurs the line between business environments and non-business environments. Our definition now becomes:

[Social] CRM is a business function supported by a system and a technology, designed to improve human interaction between companies and consumers.

Now we are getting somewhere. The definition is far less vague than it was before. We are starting to see what the aim of CRM is… but it still isn’t entirely clear, is it. What kinds of human interactions are we talking about? Is SCRM a customer service tool? A technical support tool? A marketing tool? What sets it apart from communications tools, which also improve human interactions between companies and customers?

We need to dig deeper.

Let’s start with the obvious: What is the difference between CRM and SCRM?

CRM collects data on consumers so that customer service reps and salespeople can look up their purchase history, billing history, complaint history, and any other information pertaining to their interactions with your company. It allows you to serve them better when they call with a question or problem, and it also allows you to better target them when the marketing department cranks up the budget furnaces. That’s what CRM does. It focuses on what consumers do with your company and allows you to use that information.

Social CRM (SCRM) aims to bring a whole new data set to traditional CRM by linking customers’ social data to their transaction data. What does that mean? Well, it means is that in addition to what traditional CRM tells you about these customers, SCRM also adds what they do outside of their relationship with your company: Where they go, what they like, what they share, what they search for, what they talk about, etc. by collecting that data from social networking platforms like Twitter, Facebook, blogs, YouTube, Foursquare and many more.

Fig.1: CRM view

Fig.2: SCRM view

Social CRM takes traditionalCRM and injects it with what can be best described as lifestyle data, human data, broader cultural and behavioral data. You are no longer limited to observing your customers in a controlled environment. You can now observe them in their natural habitat and understand him better.

It also gives you insights into whether or not specific customers talk positively or negatively about you, or not at all. It allows you to map their connections and affiliations. It allows you to understand their beliefs and behaviors better. It gives context to what they do in the tiny narrow bandwidth in which you interact with them as a business. It pulls back the curtain on what makes customers tick.

What SCRM promises to do is combine customers’ transaction data (what you already had access to through your traditional CRM system) with their social/lifestyle data (which they publish to the social web). Imagine the depth of insights this will yield.

So let’s come back to our definition problem. We left things at:

[Social] CRM is a business function supported by a system and a technology, designed to improve human interaction between companies and consumers.

We need to add what we just talked about:

[Social] CRM is a business function supported by a system and a technology, designed to improve human interaction between companies and consumers by connecting customers transaction data with the lifestyle data they share online.

The “improve human interactions” piece seems redundant now. The “technology” piece might also be too complex now to rely on just one. Let’s try that again:

[Social] CRM is a business function supported by a system and technologies whose aims are to improve a company’s ability to derive insights into customer needs and behaviors by connecting their transaction data with the lifestyle data they share online.

Note that the term “transaction” here meaning more than purchases. It encompasses all interactions with the company. An email is a transaction. An order is a transaction. A customer service call is a transaction.

Depending on how well you understand the world of CRM, here is a variation of the definition:

[Social] CRM is a business function supported by a system and technologies whose aims are to improve a company’s ability to derive insights into customer needs and behaviors by adding to their transaction data the lifestyle data they share online.

Are these last two ideal definitions of SCRM? I don’t know. You tell me. All I can hope is that these two versions of the definition – still works in progress – move the ball forward a little bit, at least for now.

My other hope is that by 2013, the term SCRM becomes obsolete, and CRM has simply evolved into the richer ecosystem of data, insights and consumer interactions provided by the social web. In my mind, the sooner we stop qualifying everything in terms of “social” or not social (as if the two were still somehow separate from one another), the better things will work. For now though, the painful transition continues. Viva la revolución!

A huge thanks to Esteban Kolsky for getting things started, and for letting me rudely snatch the baton from his hand (you’re a good sport, Esteban) and to Neville Hobson and Chuck Hemann for getting the conversation started earlier this week on the Twitternets. Their wonderful blogs, respectively, are here, here, and here.

Additional reading – This short and brilliant bit from Eric Swain: http://www.social-collective.com/2010/08/10/guest-post-social-media-is-dead-long-live-social-crm/

The comment section is now yours.

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 If you haven’t already, pick up your copy of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que/Pearson) at quality bookstores worldwide, or download the e-version to your favorite device. Don’t let the title fool you, it is a lot more about building social media programs for companies than it is about measuring ROI. Check out the reviews on Amazon.com.

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Read Part 1: Assholes are bad for business.

I know what you are going to say: “Olivier, what’s up with the poopy-words all of a sudden? The other week, it was “assholes”. This week, it’s this. Didn’t your mom raise you to be a polite young man?” Answer: She tried. But sometimes, the polite version of a word just doesn’t do the job. Case in point: I could say “care.” Care about your customers. Care about designing the best products. Care about giving it your all every day. Care about taking your business into the stratosphere.

Care.

Except no. This isn’t about caring. This is about giving a shit, and yes, there is a difference.

When the word “care” no longer actually means caring.

“Caring” about something can mean a lot of different things. I can care about matching my shoes to my belt. I can care about the way my rainbow sprinkles touch the peanut butter ice cream but not the ball of Nutella ice cream underneath. I can care about maybe watching Curb Your Enthusiasm tonight, or waiting until tomorrow or next week. I can care about trying to sound pleasant on the phone, or maybe not so much. I can care about something if the conditions are right, and care less about it if circumstances change. Caring lives along a broad scale, as demonstrated by this awesome home-made graph:

But when you give a shit, that isn’t any kind of passive caring. Giving a shit means caring to the max. It means committing heart and soul to caring about something. Giving a shit is to caring what running a full-on sprint is to jogging. It is the storm to the light drizzle, the bazooka to the cork gun and the bear hug to the friendly nod. Giving a shit means you won’t sleep tonight if you screwed it up. It means you are going to take it all the way to the line. It means you are going to excel rather than settle for average… or mediocre. Giving a shit means you are driven by something more than a paycheck. It means you are driven by passion. And that, boys and girls, is some mighty strong secret sauce. Nothing can crush that. Nothing can get in its way.

When I walk into a store and talk to one of the salespeople there, I don’t want them to “care.” I want them to give a shit. The chef in the kitchen, I don’t just want him to “care”. The customer service guy on the phone, “care” is just the price of entry. You want to make your company kick ass? You have to take it a step further. That politician I just voted for? Guess what: He needs to do more than just “care.” The surgeon operating on my kids, yeah, her too, what I want her to do is actually give a shit.

When you give a shit, excuses don’t work anymore. Falling short (failing) becomes less of an option, if at all. Giving a shit means you’re invested, and that is when I know you are bringing your A-game. You aren’t just there for a paycheck, the dental plan or the free tickets to Wally World every summer. You are there because you want to be. Because you give a shit.

Look, everyone acts like they care when you interview them. “Oh yes, Mr. Jones, I really want to work here!” Right. In six months, that new hire will be spending half his day complaining to their office-mates about you, about pesky customers and their temperamental complaints, about having to work late, and about how poorly he gets paid. When you walk by his desk, you won’t even catch a glimpse of the Facebook tab or the game of computer solitaire you just interrupted. That’s what “care” will get you. And you know what? You’ll be to blame. Here’s why: Because your company culture made them that way.

When I call a company’s phone number and get an automated message telling me “… we care about your call,” what that company has just told me it doesn’t give a shit. And since companies don’t think – people do, namely executives making decisions (like having a computer answer my call instead of a human being), I know that this wasn’t an oversight. Someone made a deliberate decision to communicate to me and everyone else who calls them that the people in charge of building the company’s internal culture don’t give a shit. Way to get things off on the right foot.

The importance of creating “I give a shit” cultures.

None of this is rocket science. If you hire people who aren’t passionate about what you do, about what your company is about, or even people who don’t particularly care about their profession save getting a big fat check at the end of the week, you are going to create a culture of mediocrity. If instead you hire people who love your company, who were fans long before the job ever opened up, you will get a completely different result. Likewise, if you hire someone who is passionate about what they do, they will probably not disappoint.

A few years ago, one of my then employees admitted to me (when her bonus didn’t seem as guaranteed as she would have liked it to be) that she was considering transferring to HR. Puzzled by that admission, I asked her to elaborate. She told me “they just make straight salary over there.” I studied her for a moment, and asked her “Don’t you want to do this? If HR is something you’re interested in, why are you here?” She sighed and told me “I don’t really care what I do. I just want a steady paycheck.”

This is someone whom, if asked, would have told the CEO that she cared about her job, that she was passionate about it, that she loved it. That’s the average value of “care.”

Nb: I made sure my team hit its targets that month and the one after that, and she did, in fact, hit her bonus.

People like this are everywhere. It isn’t that they are necessarily lazy. Some are, but some are just apathetic. Doing what they do is a job. A paycheck. Nothing more. They spend their day watching the clock. They are out the door as soon as their work day is over and not a minute more. This is not the kind of employee you want. I don’t care if you are managing a hospital, a restaurant or a global brand, people like this are poison. They are engines of mediocrity, lackluster service, and lousy customer experiences. And god forbid they should become managers, or worse yet, SVPs or C-suite executives.

Imagine a CEO who doesn’t give a shit, for example. Or one who at least gives the impression, through their actions or words, that they perhaps don’t give a shit? What would that look like? What would be the impact of that type of “leadership” on the entire organization? On the brand’s reputation? On decisions being made up and down the corporate ladder inside its four walls? What kinds of ripples would this create?

Ken Lay of Enron

BP's Tony "I'd like my life back" Hayward

Now imagine a CEO who does give a shit. What would that look like? What kind of company culture would that generate? What kind of profitability and customer experience excellence would that drive?

Tony Hsieh of Zappos

Sir Richard Branson, of all things Virgin

Company cultures don’t grow from a random churn of interactions. They are engineered and designed from the inside out, deliberately, by people who give a shit. Or by people who don’t. The difference in outcomes between the two is typically fairly spectacular. We have all seen amazing companies falter under the direction of this CEO or that, solely based on their degree of giving a shit.

Why am I emphasizing that company cultures are engineered? Three reasons:

1. People who give a shit tend to hire people who also give a shit, and so on. Companies like this tend to hire carefully because they understand the importance of only hiring what you might call kindred spirits. Fans. Like-minds. They aren’t hiring as much as letting the right people into their little tribe of believers. When your entire company gives a shit, customers notice and become loyal. Why? Because they like that you give a shit, and they respect that. Besides, since you give a shit, you treat them well, which is more than anyone can say about companies that don’t give a shit about either their employees or their customers.

2. When customers like you (see 1. above), they tend to do a number of things: a) They love doing business with you, b) they do business with you as long as you keep giving a shit (which could be their own lives), and c) they recommend you to everyone they know, which in turn helps drive your business.

3. One CEO can make or break a company. Just one. Remember what happened to Apple when Steve Jobs left, back in the day? Should I mention some of Home Depot’s ups and downs? Show me a company whose CEO gives a shit, and I will show you a company about to bloom like a flower in sunlight. Show me a company whose CEO doesn’t, and I will show you a company about to race headlong into a very rough patch.

More than anything, customers instinctively know that they will eventually get screwed by someone who doesn’t really give a shit. They also instinctively know they will never get screwed by someone who does. This is important.

Even if giving a shit didn’t generate better design departments, better products, better service, better customer relations and generally healthier businesses, this point alone should catch the attention of CEOs, boards or directors, and investors alike: Consumer perceptions, trust, loyalty, these things matter in the mid-to-long term. Heck, they matter today. This very minute. Every single consumer making a purchasing decision right now is weighing one company against another. One will win. The others will lose. How are you feeling about your chances?

Leadership isn’t all about skills and experience. It’s also about attitude. And giving a shit, boys and girls, is a pretty important component of the sort of attitude we are talking about today.

The reciprocal effect of giving a shit.

Hiring people who give a shit, but not those who don't.

The above diagram illustrates the process of engineering loyalty and positive WOM (word of mouth) by sticking to a no asshole policy (see Part 1) and making sure you hire people who actually give a shit.

Note the jokers in red ink who didn’t really give a shit and are therefore not hired. The fact that they are not invited to spread their apathy and inevitable passive aggressive disdain to their coworkers and customers like a CSTD (Customer Service Transmitted Disease) ensures that your company maintains its edge.

Now let’s look at another kind of organization – one which doesn’t discriminate quite so much:

Hiring people who give a shit, and those who don't.

Note how in this alternate version, a company having allowed such individuals to breach its inner sanctum begin to spread mediocrity across their entire business, and how that trickles down into customer experiences and perceptions.

In short, giving a shit is contagious. From the CEO on down to everyone in the company and outwardly to customers. Positive attitudes and perceptions spread virally through recommendations, discussions and general perception. In the same way, not giving a shit is contagious as well, and it too spreads like a virus across departments, front-line employees, customers, and to their social and professional networks.

This is how reputations are both made and unmade, depending on what kind of culture you decide to engineer.

What are some of the obvious symptoms that a company doesn’t give a shit?

This is important, because these are common red flags. When consumers spot any of these (or several,) they know that perhaps your company doesn’t really care a whole lot about you, your loyalty, or your affection for their products or brands.

1. Customer service is outsourced. (Because nothing says “We care” like handing you off to total strangers working under contract for less than minimum wage.)

2. The recording says “your call is important to us…” which is kind of funny coming from a recording.

3. The company’s employees look at the clock more than they look at you.

4. The CEO, in the middle of a crisis, says things like “I’d like my life back.”

5. Outsourced social media accounts, especially when it comes to customer service functions.

6. When the product fails, technicians will be happy to “look at it,” and repair it for about 70% or more of the value of the product in about 6-12 weeks. This is usually followed by “you could just buy another one” type of “caring” advice.

7. False or misleading advertising.

8. The company spams your inbox, twitter feed, phone, or otherwise valuable channel.

9. The average customer has no idea who the CEO of the company is. Until they see him or her on TV, defending pretty bad decisions.

10. After several interactions with company employees or management, you begin to suspect that everyone who works there might actually be some kind of asshole.

11. Poor product design, characterized by lousy user UI/UX.

12. The manager, in an empty store or restaurant, still manages to blow off his only customers… assuming he is even there.

13. The company sells your personal information to third parties.

14. The CEO’s Twitter account, blog and/or Facebook page – all proof that he “cares,” wants to “engage” customers and feels that social media is “important” – are all managed and fed by a proxy, (or ghost writer) preferably working for an outside firm or agency. (Sorry Mr. Pandit, but you have been advised improperly on this one.)

15. More excuses than solutions, followed by buzzwords and lip service.

16. The CEO spends more time on the golf course than he does listening to customers.

And there you have it.

Three questions.

So the three questions you have to ask yourself are these:

1. What kind of company culture are my customers experiencing whenever they interact with one of my employees, colleagues, bosses, products and services? The kind that gives a shit, or the kind that clearly doesn’t?

2. What kind of company culture should I be building?

3. Once I cast aside the propaganda, tag lines, mission statements and sycophantic reports, what kind of company culture am I really building?

Be honest.  Are you setting the right example? Are you hiring the right people? Are you teaching them to give a shit? Are you rewarding them accordingly?

… Or are you banking on a mission statement to communicate to your employees that they should “care”?

Giving a shit is hard. So is kicking ass. So what?

Yeah, giving a shit is hard. It’s expensive too. It requires all sorts of investments: Financial, cultural, temporal, even emotional. (Perhaps especially the latter.) Giving a shit means that your business isn’t just about balance sheets and incremental basis points of change. It’s about creating something special for and with your customers. It’s about building the foundations of a lovebrand – like Apple, Harley Davidson, Virgin Airlines and BMW. It’s about investing in market leadership, in customer loyalty and evangelism, in your own reputation, and in the strength of your own brand. In short, it means investing in long term success, in stability in tough economic time, and in a demand vs. supply ratio that will always be in your favor. Giving a shit is an investment, yes, and not one that might immediately make sense to financial analysts, but one that pays off every time. It is the genesis of everything that ultimately makes a business successful: Professionalism. The endless pursuit of quality, of great design, of remarkable user/customer experiences.

The moment you lose that, the moment you start giving a shit a little bit less, the moment you start cutting corners, that’s when you start to screw up. When you lose that competitive edge. When you start sinking into the fat middle with everyone else. That’s when you start to lose. Before you know it, you’re stuck picking between BOGO pitches and worrying about price wars with foreign imports. I’ve worked with companies like this. You don’t want to go there, trust me. It’s ugly. It’s stressful. You wake up one morning and realize that even if you tried to give a shit anymore, you couldn’t. There wouldn’t be enough time. It wouldn’t make a difference. It might even get you fired. Everything you’ve worked for all your life is hanging on the edge, and it’s a long, hard road back too the top. Most companies never make it back. I can tell you that it’s a lot easier to never fall than to have to climb back up again, but either way, it’s a daily battle.

In fact, giving a shit is so hard that very few companies do anymore. It isn’t how the game is played any longer. “The customer is always right” is a relic of the past, isn’t it?

Or is it?

Have you listened to what people are saying about your company on Twitter and Facebook lately? Do you know what they are saying about your competitors? In a year or two, do you think companies whose leaders don’t give a shit are going to be able to compete against companies whose leaders do? If you don’t see giving a shit as a competitive advantage yet, as a differentiator, even as a normalizing agent, then at the very least see it as a matter of survival. The age of the “I don’t give a shit” CEO is done. Game over.

Time to make a change or two?

*          *          *

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. 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. :D

Cheers,

Olivier.

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Since I am still in Europe haven’t had time to sit down and write the six or seven blog posts I started drafting on the TGV to Paris last Friday, let me just point you to this solid video of Guy Kawasaki speaking with Brian Solis about the Apple paradox, the key elements behind Virgin America and Zappos’ success, the negative impact of disengaged CEOs, AT&T’s disconnect with the reality of their customers’ experience, the death of the oracles of technology and of course… the three pillars of enchantment.

I will review Enchantment when I get back to the US, by the way, so stay tuned for that.

Okay, so… Can I be honest about this video?  As much as I dig Brian, how brilliant he is, how well he understands digital communications and operational models and stuff that flies over most people’s heads, and how friendly and engaging he is (which is why I love watching his interviews and asked him to write the foreword for Social Media ROI), Guy kind of steals the show.  I never watch 30-minute interviews. EVER. I watched this one.

Check it out. You’ll see what I am talking about:

And while we’re on the subject of books, Enchantment and Social Media ROI make a pretty sweet pairing. Think of it as kind of a right-brain, left-brain combo of win. (The two books complement each other surprisingly well.) But hey, don’t take my word for it. Amazon.com took the liberty of bringing it up all on its own:

See?

To order Social Media ROI, click here. To order Enchantment, click here.

Cheers.

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