I had the honor of participating in a panel discussing the impact of Social Media today. Our lively discussion prompted me to write this post as a follow up to my last one.
Social media reminds me of the internet bubble of the late 90s and I believe Amara’s law best encapsulates the state of social media today:
we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run
To me, this implies the following:
- The impact of social media in the long-run will be far higher than anyone can even begin to imagine today, just look at where we are 10 years after the internet bubble burst
- We are very early in the journey, and nobody has the answers although many people think they do
Having said that, and while social media is fundamentally different, it still is a means to end and not an end in itself. I see too many people trying to approach social media as something different for which we do not need to think about the ultimate business objectives we are trying to influence before we embark on an initiative.
So how do you measure success and ultimately ROI then? In my view, it starts with understanding what you are trying to accomplish and then driving your strategy and results based on those ultimate objectives. Are you trying to build awareness with an audience not necessarily familiar with your brand and offerings, or are you trying to generate demand running a social campaign? These are two very different things and the way you measure success needs to vary based on these objectives.
While I believe there is no one size fits all approach, the framework upon which to place all of these metrics boils down to these three categories:
- Reach – how big is the audience you have built? Depending on the channel, this can be followers on Twitter, fans on Facebook, or visits to your blog
- Engagement – how engaged is the audience you have? Again depending on the channel, this could be measured based on retweets, likes on your Facebook fan page posts, or comments to your blog posts
- Conversion – this is the holy grail, ultimately how does reach and engagement convert to hard $$ and repeat purchases? How many qualified leads have you generated, how many sales opportunities have you influenced or accelerated, what was the cost of these leads and opportunities, or how did you influence customer satisfaction and hence loyalty?
Of course, the key is to define the subset of metrics that corresponds to the goals you are trying to achieve and link success to those goals. Lastly, as you embark on the social media journey, keep these two reality checks in mind:
- Keep-it-simple: While eventually, everything will have to translate into business results your CFO cares about, it’s ok to draw inferences-don’t get infatuated trying to calculate meaningless metrics. I recently read an article that posited measuring ROI is easy, all you have to do is calculate customer lifetime value- hmm, I wonder how many companies can do that.
- Ensure metrics reflect your maturity level: Give yourselves room to experiment and learn early on, as this is key to the evolution. For example, if you are trying to build a community first, then measure reach and engagement and don’t feel compelled to deliver a certain number of qualified leads to sales – this will set the wrong expectations and reduce the flexibility you need to experiment early on.
What are your thoughts? I would love to continue the dialogue started under #GlobalSCRM.
Nice blog! Reach/Engagement/Conversion are great for social media as they integrate with traditional marketing and avoid a vacuum approach.
Not explicitly mentioned here but implied in reach is that building relationships with key influencers is a funting (farming & hunting) activity to take place in conjunction with building the social media channels. The resulting relationships with influencers and advocates are the key to reaching social media marketing nirvana, reached through WOM and anything viral…
Thanks Natascha, you are spot on, proper engagement with influencers is key to not only build engagement but also extend reach. I love ‘funting’ btw, I have to remember that one.
Ted
Interesting post.. My $0.02 :
(a) Obviously, you are talking about ROI and objectives for businesses that are trying to come up with a Social Media Strategy. Consumers/customers have very different objectives for their use of Social Media, sometimes nothing more significant than wanting to see what their friends are up to
(b) If you look at Social Media as a channel that has been superimposed onto the traditional view of CRM (and I am not getting into the Social Media vs CRM debate that’s raging in some quarters), then you could view the objectives from the 3 functional areas of Marketing, Sales and Service. I believe most of what you have written deals with Marketing. It would be interesting to also think along similar lines for Sales (which is not yet that ‘hot’ in terms of demand) and Service (which is ‘hotter’ than Sales but not as ‘hot’ as Marketing)
(c) It would be very useful to see how one could extend the strategy so that the loop between Social Media and internal transaction systems is closed. I believe one of the key issues today is that most people treat Social Media in a vacuum and sooner or later are going to fall into an ‘integration chasm’
Satya,
Thank you for your feedback, a few further thoughts to your comments:
a) I wholeheartedly agree with you we need to make sure we take the lens of a ‘customer’, or more broadly the audience we are trying to reach. This will for sure be the topic of a future post. At the same time, what I was describing is engaging with people based on their professional interests, and while the lines are blurring, I think these are distinct use cases.
b) You are absolutely correct, I was specifically referring to Marketing, and have now changed the title of the post to reflect that, thanks for catching it. Beyond the other two major categories you mentioned (Sales and Service), I think Social Media is increasingly playing a role at the front end of the value chain and there are a few examples of how companies are trying to ‘crowd-source’ innovation (like Starbucks, Dell and Innocentive) using social media. Please see an earlier post for an overview.
c) This point is absolutely spot on, hence my comment around how we measure success using ‘conversion’ as a key category. While Social Media is different, it still is a channel you have at your disposal that needs to be integrated in your overall marketing strategy, as opposed to something ‘special’ and disconnected.
I agree that social media is pbuilc relations along with sales and marketing. Departments have to work together to build their message and be consistent. Too many people in upper management worry about the what if’s of social versus trying it and learning from possible mistakes. It is a world where you either have to get in the boat or stay on the shore, but you have to decide how you will catch up if you wait. Nice article!
One more comment – I agree with Natascha’s comment about funting relationships with key influencers but companies need to be careful about the converse. Treating a customer as ‘less special’ because he/she is not a key influencer can sometimes have undesirable consequences.
Satya,
Thanks again, I agree, my view is that influencers can help amplify the message and increase your reach, but not necessarily influence the types of relationships you develop with the audience.