Social Media ROI: It is what you allow it to be.
Traditional business thinking likes to relegate business activities to specific areas of a chart of accounts, and in 90% of cases this remains a perfectly acceptable way to organize your business. The problem comes when you try to relegate the wide ranging work of “social media” to a specific function or line item: where does it fit? If you are thinking about it correctly it doesn’t fit anywhere specific, it is inside the organization and out, it is informing your decisions and it is making your decisions and messaging known. So, there are, in my opinion, organizational challenges for many businesses to properly understand where social media is making an impact and what exactly it is doing, and for whom. Even harder is putting a dollar number on the value of it to your organization to find that ever important Return On Investment for your social media dollars. So, where does Social Media fit into your business?
Social is not an Advertisement.
It helps to tackle this problem by taking a step back and asking whether traditional concepts of ROI apply here, a term which inherently relegates social media to a marketing role whether intentionally or not. Social outlets clearly play an important role to marketing to your audience and connecting, but it does so in a way far more akin to a phone call than it does to a Google Ad. They provide a communication channel between you and your audience/client/customer more than they do an advertising platform and for the first time in history we have relationships being built between customers and businesses based on stated need and stated ability, we know what the audience you are talking to is, what they want, and they have said this is the case themselves in personal profiles. This is a mutually beneficial relationship for both parties, and like online dating we are better matched today than we were in an age of blind television and radio advertising.
Simply put, you need to understand your audience’s interests with the available data, do your best to harness that data to speak to them in a targeted, clever way. And not to be trite, but content is king.
But the most important part of the available data is very simple: it is there, so you should use it. Listening. It is the biggest revolution of the social media age. As Max Nisen wisely notes in his piece on social media and decision making, businesses today are beginning to “increasingly getting their ‘social intelligence’ from thought leaders, web analytics, and social platforms.” (Read the full article) This activity, as it surely grows over time, will make profound changes to the way companies engage their customers in basic business decisions about products, services, or other important choices facing their business. It will feed the product development cycle, it will inform and perhaps act in place of traditional QA testing, and it will most assuredly make bad business decisions very, very clear. One is left to wonder, would New Coke ever have happened in an age of Social Media?
Social is a philosophy, it is a practice, and it is foundational. It is decision support.
Sure, these all sound a bit like a far eastern philosophy more than they do a business process, but the fact is that is where we are headed. Smart, and well capitalized, businesses today are already investing heavily in social intelligence ability. They are not only active on social media, and integrating it deeply within one or two business areas like marketing, they are implementing it internally and externally and creating a system of real-time shared intelligence connecting everyone inside and outside of the organization. Making smart, timely, decisions that are simply better informed than they would have been otherwise.
Back to Return On Investment
What is the return on investment of a telephone? What is the return on investment of your internet connection? These are similar to social media in important ways. First, they are crucial communications technology, and second gauging return on investment is a challenge for both. How much is the ability to make a clear phone call worth? How much are all of the tools that you internet connection make available worth to your business? What is the return on investment for having that capacity? Hard to say, but one thing is absolutely sure: You’re not going to run a business without them.
In truth, the short term return on investment may be quite low, especially for larger more established businesses stuck in an old world communications mindset, but as time goes on and creative approaches to product development, and social decision making become normative, it will quickly become clear these are tools worth their servers weight in gold.
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