In one-on-ones with clients, I’ve been answering a lot of questions recently around the topic of Return on Investment or ROI and there's been a lot of talk
here and
here to name a couple. That topic seems to quickly go down paths that lead to no wheresville.
As a result, I'm posting my suggestions of how to frame this topic from the start. As recently as
Mark’s post around ROI, we’ve proven at Neighborhood America that it’s possible to attain ROI from social media investments. In fact, social media presents incredibly efficient ways to better utilize your existing networks (customer, partner, employee). The whole conversation seems silly actually. If you could not measure social media or corporations could not add value from available solutions, why on earth would they waste their time?
For the record, right about 80% of Neighborhood America’s customers rejoice in the rewards from our services. What about the other 20% you ask? Well, no one is perfect including us and it’s how we are able to understand how to be successful. I’ll continue to discuss key learning’s over separate posts however for this one. I’ll attempt to stay on topic.
So what’s the secret? Well, none really. There’s no “secrets”, “secret sauce” or “magic beans”. There’s no silver bullet for ROI, rather consistency in methodology, execution, experience and above all else, FOCUS. So let’s go through it.
First, we have to establish one thing: the definition that I use for ROI when talking with companies. It’s pretty simple, there are only two components. The actions must either:
1. increase revenues or
2. decrease costs.
See…simple, yet this seems to allude a lot of “experts” as they develop algorithms for ROI with derivative clauses that would give Lehman Brothers a run for their money. When measuring value, things like how many posts, how many comments, page views, impressions are all irrelevant for an ROI discussion. The fact that you may have 4,000 comments is nice and all, but if you don’t show an increase in sales because of it, then I have only one word for you…SO WHAT!
Next, ROI is not an after-market part. You can’t bolt it on when you are finished. ROI is a very intentional result. If you don’t intend to deliver it, then it’s not going to magically appear afterwards. If you did not set out to convert more sales or reduce costs at the beginning, then you are simply too late. You can’t manufacture it and you cannot fake it with immaterial metrics. Results speak for themselves.
No question that the social media landscape is riddled with failures or initiatives that fell well short of their intended objective. Why is this? IMHO the social media industry has put too much focus around technology. What you get is an emerging industry peddling features and functions over business solutions. Understandable but not sustainable.
What comes from this are corporations “dipping their toe” in the social media waters with a cute gadget hoping customers will use it. Technology is important but it has to complement a business initiative not shoe-horn it. Example: If your customers are not on their computers when you want to reach them, it doesn’t matter how “cute” your online social network is! You need to incorporate Mobile to connect with them.
So how do you get there? Start by understanding your business and be able to map back to it. If you don’t know how your company makes money or where efficiencies can save dollars, then stop. Don’t go any further.
Next develop a strategy that is complementary with the rest of your company. Marketing, PR, Product, Service and other core departments need to be on board and incorporate their efforts to engage constituents as consistent touch points.
To summarize my suggestions on where to start:
*** Understand how your company can benefit from creating revenue opportunities or better managing costs
*** Develop a plan that is measureable before you start looking at social tools
*** Put forth the resources required to execute and focus on results. It’s easier to justify spending a quarter to make a dollar.
To be fare, I have an exercise that I walk through with clients that helps "discover" where the value lies. If you are interested in going through it, let me know. I’ll re-iterate an earlier thought that social media, done correctly, is a great way to shore up efficiencies in your under-utilized networks. Companies using social media “just to use it” are simply tripping over dollars looking for nickels.
