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Social Media and ROI: Sorry to disappoint you...

Thankfully, I think we are almost at the point of having serious conversations about how social media can be utilized in most organizations, rather than still asking the question "Is Social Media just a fad?". However, there are some massive misconceptions on what social media will do for the organization. As a result, often we aren't even hiring the right skills today to build a competent social media presence. We're also looking to measure social media in a way we measure other marketing initiatives, channels, advertising campaigns and media, but social media is neither a channel, marketing, media or simply an initiative.

Do you need a social media <insert technobabble jargon here>....
Sentiment analysis, optimization, key influencer engagement, advocacy generation, brand monitoring and attributes, social media outreach, trending, buzz, listening post... Sounds extremely complicated. It needn't be. The fact is, the reason all of these social media disciplines are popping up is because social media is taking us in new directions in respect to interactions both within the organization and with our customers. I find, however, that in many camps social media is considered a marketing function. Social Media Marketing is a term adopted by many to suggest that social media should become a part of an integrated marketing communications plan. But that falls short.

Let me ask you this? Would you consider a teller in a bank, or a customer service representative sitting in a call center a marketer? Hmmm, well yes and no. They are involved in selling and/or marketing products, and they represent the brand. But this is a competency in it's own right, and staff in the branch and call center are not managed by the marketing department. So how does someone tasked with responding to real-time Twitter or Facebook inquiries fit into marketing? They don't. Campaigns don't generally fit in social media either unless you can generate a viral campaign that adapts to social media. Having said that I was impressed by the "Buzz Marketing" initiative that IKEA produced at the end of last year.

The fact is, just as when the Internet arrived in 1994 and the "Dot Com Bubble" started building momentum in 1999, we made a bunch of assumptions about how the 'channel' worked, and many of those proved to be wrong. Such as the assumption that you could be pure-play online ala Pets.com and people would use your site just because it was www cool.

The truth is, you absolutely need to be involved in social media, but don't expect that by hiring a few staff to put a Facebook page up and respond to Tweets in real-time will be the end of this discussion. We're only just starting to understand the full impact of social media in business terms.

How it is changing?
I like Alex Schultze's quote about the bursting of the social media bubble in his recent blog post:

 

I'd say YES – the social media bubble is about to burst. People are recognizing already that the endless hours of watching the incoming streams from Twitter and Facebook or all the status updates on LinkedIn are hours wasted. All the paid tweets and people or agencies, who have been hired to tweet are not going to contribute to the bottom line. And the fan pages people build to get "fans, followers, connections" are just hopes that it will do something for the business – but it won't.
Alex Schultze - Xeesm

 

The points are all valid, and yet, just like the dot com boom, when there is a 'normalizing' of core social media activities, that is when we'll really start to use social media constructively and real returns will result.

Firstly, we'll understand how customers discuss or rate our products or services in a social context and what are the inflection points. Secondly, the mobile device will become even more critical as we start to recognize tribal behavior beyond the app, and see social media in the sphere of location and context. Lastly, we'll see organizations starting to understand that the real-time nature of social media is something to be respected and responded too. It will start to shape more responsive organizations. In that way, perhaps the most important understanding about social media is that it is a leading strategy indicator, not a lagging ROI generator.

"Show me the money!"
The ironic thing is that you might already be getting ROI from Social Media, or losing revenue because of not having it and not even know it...

When you engage communities digitally, it does directly result in positive brand sentiment, and it will help you learn about the needs of your customers, effect bottom line revenues, etc. However, can you point to a Facebook page, a quick turn around to a customer service problem on Twitter, and show the actual increases in bottom line revenue or net earnings? Probably not. So the problem is not ROI from social media, but how we measure organizational performance in respect to revenue. The traditional metrics are just not robust or granular enough to give us a perspective on this. Largely because we have such big disconnects between 'revenue generation' and customer journeys. Metrics generally assume that if revenue is generated in one channel, it is because the products rocks, that channel rocks, or because the marketing that lead customers to that channel rocks!

That's too simplistic a view of the world these days...

I enjoyed the following slideshare presentation from Olivier Blanchard which satirizes the question of ROI in Social Media.

Olivier Blanchard Basics Of Social Media Roi

The key thing is that Social Media is definitely impacting a bunch of areas of business today, but it doesn't fit cleanly into our accounting, balance-scorecarded, CPM driven world. The sweet-spot is to learn from social media, build that learning back into the business and adapt from the interactions that it drives. To do this, we need to think beyond ROI, but we most definitely need to be there, listening and engaging customers.

Where&#39;s the ROI in Social Media?
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Comments: (14)

Robert Siciliano
Robert Siciliano - Safr.me - Boston 09 November, 2010, 01:52Be the first to give this comment the thumbs up 0 likes

Great post. And, socialmedia is not a fad, it is not dead, it is only the beginning.The social web is the current and future of communications. Adapt.

This is a must MUST watch. 

http://www.youtube.com/watch?v=lFZ0z5Fm-Ng

If this link doesnt work, search "Social Media Revolution 2" on youtube.

Elizabeth Lumley
Elizabeth Lumley - Girl, Disrupted - Crayford 09 November, 2010, 07:42Be the first to give this comment the thumbs up 0 likes

Maybe we need to get away from this idea that social media even needs a strict ROI? Someone commented on *another* blog that the argument about social media (especially in financial services) was like a bank arguing 15 years ago whether they needed a web site or not. 

That happened. I remember not only when banks debated having a website, but software vendors. I worked for a company two years ago where my boss seemed to be married to his fax machine. 

Today, no one questions setting up a website, or installing telephones (or even keeping that dusty fax machine in the corner). Social media will get there, and it will get there quicker than other communication tools. 

What I think turns people off is idea that social media is an ideology that if they 'just perfected and adhered to' they would open a golden door of new and better business opportunities. Social media is a communications tool, and much like the phone, will become ubiquitous, but it is still a tool. Tools are used by people to make change, not pound change on top of them, and are much less likely to 'demand ROI' 

Brett King
Brett King - Moven - New York 09 November, 2010, 09:45Be the first to give this comment the thumbs up 0 likes

Liz - Absolutely agree.

Robert - Good YouTube clip...

Stephen Wilson
Stephen Wilson - Lockstep Group - Sydney 10 November, 2010, 00:12Be the first to give this comment the thumbs up 0 likes

About that vacuous Youtube ad for the bloke's social media book ...

Is there a more hyperbolic, more idiotic slogan than "If Facebook were a country ..."?

If anyone thought about this for more than the 15 nanoseconds typical of social-media types, they might realise that, save for North Korea, there is more to nationhood than headcount. 

And if anyone thinks Facebook is literally something like a country, then I suggest it's an anodyne dictatorship, one where the sheer fun and intoxicating immediacy of networking takes the place of soma in "Brave New World".  The good citizens of Facebook are so stoned they don't see it for what it is: an evil "informopoly" with singular purpose, to make its Supreme Ruler rich off the back of the peoples' information.

Robert Siciliano
Robert Siciliano - Safr.me - Boston 10 November, 2010, 00:18Be the first to give this comment the thumbs up 0 likes

Stephen you're on you're way to being a fossil. 

Stephen Wilson
Stephen Wilson - Lockstep Group - Sydney 10 November, 2010, 00:28Be the first to give this comment the thumbs up 0 likes

Robert,

Perhaps.  But fossils, countries and social change all take an age to take shape.  The rate of real change is something that the Web 2.0 generation continues to overestimate. 

Elizabeth Lumley
Elizabeth Lumley - Girl, Disrupted - Crayford 10 November, 2010, 10:04Be the first to give this comment the thumbs up 0 likes

Stephen, based on the rates of adoption of services like Linkedin, Facebook, Twitter etc..., it could be argued that you are 'underestimating' the rate of change social media tools will bring. 

Last year, NPR in the US, reported that the majority of their information regarding the shootings at Ft. Hood came from their reporters talking to the US Army on Twitter. If the US Army is on Twitter...banks cannot be that far behind. 

Salil Ravindran
Salil Ravindran - MEDICI Global - Bangalore 10 November, 2010, 14:12Be the first to give this comment the thumbs up 0 likes

I think as Brett has mentioned in Bank2.0, e-channels are not yet a part of the core delivery strategy of the bank. They are still recognised as 'alternate' channels - that is reflected in the stake most e-channel managers have in the organisation hierarchy.

I hope we soon get to see common social media management platforms through which I can not only access but also integrate Facebook, Twitter, Twitpay, Square and Paypal (as of 3 CET today) and use the right kind of collaboration tools such as Google Wave in our daily lives.

Hope to see more of MoBanks coming up.

It is key for banks to understand that social media is not all about marketing, ads and fan following anymore. There is some REAL business happening there.

 

Stephen Wilson
Stephen Wilson - Lockstep Group - Sydney 10 November, 2010, 17:20Be the first to give this comment the thumbs up 0 likes

Elizabeth, my serious point is that whether social media is having a deep and lasting effect is a question that is not answered by guff like 'Ashton Kucher has more followers than the population of Israel'.  So what?  It astonishes me that these kinds of figures are promoted as meaningful.  And it's deeply ironic.  Advertising gurus go on about the power of information technologies to micro-segment their markets and to understand what is really going on, and yet we continue to get pounded by social media gurus with moronic headcount data as rigorous as TV ratings numbers from the 1970s. 

In the "information age", when the consumer is said to be commanding so much power because they know best and their recommendations are worth more than any traditional advertising, I am offended by that Youtube clip.  It's all style over substance, it treats us like fools, and it's clearly trying to lead us onto a bandwagon, like any other ad. 

Unless the clip is actually supposed to be satire?  It is kinda funny isn't it to use old fashioned advertising schtick complete with rubbery figures to promote a social media book.

Brett King
Brett King - Moven - New York 10 November, 2010, 19:32Be the first to give this comment the thumbs up 0 likes

Stephen,

I'm sure you would agree that Social Media is a global phenomenon. Will it collapse and disappear? That's about as likely as the Internet disappearing at this stage given the momentum...

So I think your struggle is of what use is Social Media for you and for your institution, after all you're not on twitter, Facebook, etc and it doesn't seem to effect your performance day-to-day right?

Maybe, but business today is increasingly about efficiencies, reach and market.

Social media is a more efficient mechanism for researching customer sentiment and analyzing brand perception, than focus groups, mystery shopping, customer satisfaction surveys, etc - so why do we insist on still using those mechanisms - mainly because the management who sign-off on P&L have not invested in really understanding the medium. After all they don't use Twitter, Facebook, etc - so what's all the fuss.

This becomes a self-fulfiling prophecy to some extent - you don't use it, can't understand what all the fuss is and assert that it really hasn't changed anything. I'm sure there were those who said the same about these newfangled motorized horses in the early 1900s. Or said Man is just not meant to fly...

Stephen - I'm sorry to have to tell you this, but the world is changing...The only thing that is debatable is the rate of change.

BK

Stephen Wilson
Stephen Wilson - Lockstep Group - Sydney 10 November, 2010, 21:40Be the first to give this comment the thumbs up 0 likes

Folks,

Despite my vitriolic flourish about evil informopolies, I do appreciate that social networking and social media are hugely important.  But my bullshit detector goes off loud and clear when it is said that "if Facebook were a country it would be bigger than ...". As a physicist would say, these comparisons are such crap, they're not even wrong.

If social media is so important, why not treat it with more rigour and less hype?

Robert Siciliano
Robert Siciliano - Safr.me - Boston 10 November, 2010, 22:35Be the first to give this comment the thumbs up 0 likes

Numbers are numbers. Data doesn't lie. And if a comparison in numbers is relevant then so be it. The author padded his statement by saying "if" Facebook were a country..., which I'm pretty sure we know it isn't, then the comparison make relative sense. The comparison comes from the fact that there is a sense of community and countries are made of communities. It's a pretty amazing phenom that today we have anything at all that brings a half billion people together in some way on an ongoing basis. Only media I know of is TV that has come close to doing that (maybe World cup?) and it's a one time event that doesn't give anyone a 'say' or sense of community. So Stephen click this: http://mcaf.ee/492fc

Stephen Wilson
Stephen Wilson - Lockstep Group - Sydney 10 November, 2010, 23:02Be the first to give this comment the thumbs up 0 likes

Robert,

Sorry but numbers are not numbers and data do lie. All the time.  For starters, have a look at these lessons: http://www.econoclass.com/misleadingstats.html.

"The comparison [of Facebook and a country] comes from the fact that there is a sense of community and countries are made of communities. It's a pretty amazing phenom that today we have anything at all that brings a half billion people together in some way on an ongoing basis."

OK, maybe Facebook will come to be something like a country one day, but we've got a long way to go.  I dispute that half a billion people have come 'together' via Facebook in the way that real world communities and nations do.  Let's just take a breath shall we?  It's simply too early to draw conclusions about the behaviours of online crowds, let alone ascribe 'nationhood' to them, when what we do know is they behave without many of the inhibitions, cues and rules that have governed human societies for millennia. 

Again, I don't dismiss social media.  It's an interesting idea that one day these crowds will come to act as communities as significant as real life ones, and this idea deserves more investigation and analysis.  Much more.  All I'm saying is that there is more to this than headcount, and the hype and trivia that passes for "analysis" of the social media phenomenon puts a lot of people off.

If someone wants to explain the significance of the number of Ashton Kucher's followers, I'm all ears.

 

Brett King
Brett King - Moven - New York 11 November, 2010, 06:44Be the first to give this comment the thumbs up 0 likes

Stephen,

A simple illustration of the 'kutcher' effect. Take an average bank in 3 years time, that has 50% of it's customers on social media. That same bank, is still struggling with social media engagement, multi-channel engagement via web and mobile, etc.

Now take a cross-section of customers. Let's say we have 5-10,000 customers who are heavily engaged online in social media with an average of 500-5,000 followers. Let's say those customers start talking about how far behind their bank is in respect to innovation comparative to say BankSimple, ING direct, First Direct, etc.

What you have is a movement against the brand at this point. No amount of spend on brand advertising or traditional bank PR will work to stem the negative flow.

Now let's take an alternative approach. Let's say that we identify these same customers who have high follower impact and when they call into the call centre or come into a branch we give them personalized, VIP service. Suddenly they're tweeting about how fabulous the bank is. Next thing you know we have customers joining the bank because of what they hear about the great responsiveness and service capability of the brand.

This is what the future will be like with social media based on key influencer metrics.

Hope that helps...

BK

Brett King

Brett King

CEO & Founder

Moven

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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