Monday, June 7, 2010

Measuring the Cost of Social Media.

As we start to integrate Social Media into our business we need to consider ways to calculate and measure the return on investment it represents.

This on the surface is a reasonable request, there is an obvious resourcing cost to business, which initially will be our time - but where do we start to measure? We know that effective social media campaigns are long term, are about engagement and ultimately about relationship development; but can that ever equate to dollars and cents?

“To determine return on investment (ROI) for social we must put metrics around human interaction and communication – Is this even possible? “

To compare this with another technological innovation that is now integral to almost every business, the telephone, could we possibly measure its ROI? Most of us just factor it in as a necessary overhead and leave it at that, and we certainly wouldn’t consider being without it.

For any social media engagement to be undertaken successfully there is a great deal of planning and strategy to be undertaken first. Sure, a try it and see approach would be possible, and in some cases successful, but there are real risks that you may damage rather than benefit your brand or image. Clarity of purpose and a staged action plan delegated to capable people who buy-in and ultimately take ownership of your vision is a logical approach. Without this we will certainly waste valuable time and cause otherwise preventable roadblocks and frustrations moving forward.

If your goal is to achieve more online mentions of your brand or company then you must know where you stand right now, this is called benchmarking. It would also help considerably if you knew why you wanted to achieve this. You must find tools that can measure the impact of your campaigns (in this case a word search tool) and know how much resource is used to achieve this outcome in any given period. You should also apply a similar measurement to a complimentary or competing firm to see how they are doing over the same timeline.  It would also satisfy your financial controllers (those that will ultimately allow or deny your social media marketing budget) if there is a pathway to you sales funnel so this PR is converted to a tangible revenue stream.

As a standard formula, ROI is pretty basic, ROI = (X – Y) / Y, where X is your final value and Y is your starting value. In other words, if you invest $10 and get back $50, your ROI is (50 – 10) / 10 = 4 times your initial investment. In this financial sense, ROI is measured purely in the context of dollars and cents, however, the principles can be applied to other forms of investment (i.e. Time).

So to begin you must have the end in mind. Planning and having solid goals and concrete baselines is crucial to calculating this return on investment. Add to this the comparative measurement of your competitors’ performance as a benchmark and you have the basis of some valuable metrics. 

Wednesday, June 2, 2010

Are you a thought leader or just another dedicated follower of fashion?

“Thought Leader” is the new cool set in the online business fraternity pushing aside the passé entrepreneur for a trendier tagline. I cringe a little every time someone introduces themselves as an entrepreneur - what is it you’re trying to say? You’re a risk taker carrying the can for yet another start-up venture? Entrepreneurialism is a quality not a title, you can’t be taught it, you either are one or you aren’t, it’s that simple.

So when you suggest you’re a “Thought Leader” what is it you bring to the table? Much the same as the entrepreneur I would presume but with things only at the idea stage? Google “Thought Leader” and there are plenty of people giving advice on how you can be one. This is paradoxical given you should, by definition, have an ability to think without the direct influence of others to qualify for this status.

When trying to put a name to thought leaders of our time its people like Gandhi, Martin Luther King Jr, John F Kennedy and John Lennon who spring to mind. I’m sure each had their fair share of advisors and mentors who filled in the grey areas of their speeches and lyrics; yet it’s the vision and conviction of the individual that gave a voice to once intangible concepts that in time influenced the way entire cultures thought and acted. It’s also tragic that all had a common fate due to this self belief.

In today’s instant information age we have lots of people telling us what we should to be doing. In an age of fans, followers and virtual friends the dedicated followers of fashion rush without hesitation to repeat the words of the chosen few, as long as it can fit the 140 character limitation bestowed upon us by Twitter.

It should make even the most relaxed amongst us a little nervous to know that the combined Twitter followers of Ashton Kutcher and Britney Spears now exceed ten million people. That means there are 141 countries in the world who have smaller populations and only 82 that exceed it. “Oops, he did it again” gushed Britney, “Ashton just punk’d Europe”.

Social Media gives us the opportunity to connect with audiences like never before. Sure we need to nurture our tribe (Thanks
Mr Godin) but we also need to build trust (thanks Mr Brogan). Conduct online conversation with the same values and etiquette as you would in the real world and remember to establish meaningful and ultimately profitable influence takes time (Thanks Mr Reality). Listen to what people say, do what you can when you can, and do the best you can with the time and resources you have available.

Don’t let the medium own you, it’s a tool and nothing more. Use it how you want to and forget what “they say” you should be doing. Fashion comes and it goes; if you want to be seen as a thought leader, be yourself. Your real friends and valued customers will respect and thank you for it eventually.