Monday, July 26, 2010

Validation in Forrester’s Social Media Report…Well...Kind Of

I have given hundreds of new business presentations in the 15 years since founding Strategic Communications Group (Strategic). Some have gone great…a few have bombed, yet, all in all, I’d say in most instances my delivery was on target.

When I was purveyor of public relations services I had a couple of canned phrases I’d call on to illustrate the value of the awareness and credibility conferred by coverage from the media and analyst communities.

“People do business with companies they know and trust,” I’d say. “Public relations builds that know and trust.”

A fair statement and one that also applies to other brand oriented communications programs, such as advertising and event sponsorships. Yet, the return on investment from these types of expenditures is fuzzy at best.

Yes…there is value. But the financial return on that value is difficult to quantify.

It’s for this reason that Strategic has made such a dramatic pivot to re-position itself as a social media marketing consultancy implementing sales-oriented programs for technology and healthcare organizations.

By aligning our work with success benchmarks related to revenue drivers – lead generation, cultivation of prospect relationships and deal capture – we have proven it is possible for a company to derive a measurable return from its external communications efforts.

Admittedly, Strategic’s brand of sales-oriented social media is very much at the early adopter phase. I have never once received a request for proposal for a package of services consistent with what we do well. For us, sales and marketing remains an education of what’s possible with social.

So, you can imagine how jazzed I was when Forrester Research began touting its new research report that explores the ROI of social media marketing. Finally, this would be much needed validation to my contention to marketers that social can be so much more than setting up a corporate blog or Twitter feed, or merely listening to the online conversation.

Were my hopes in Forrester’s report smashed on the rocks?

Well…no. Senior analyst Augie Ray does discuss how marketers can “draw a straight line between investments in social media marketing and financial results.”

However, he affords as much of the discussion to the intangible benefits delivered via social networks – retweets, Facebook fans, site visits, positive ratings, etc.

“They can’t be counted on an income statement, but that doesn’t mean they are valueless,” Ray writes. “Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.”

Ugghh! Forrester’s Ray makes an unfortunate return to the “let’s hope we one day benefit from this” value proposition of most traditional channels of communication.

Marketers should demand a sales-related ROI from their social media budget. Awareness, positioning, credibility and thought leadership should be viewed as merely the unintended outcome of participating in online communities.

3 comments:

Suku Sinnappan said...

I echo strategic guy's viewpoint. CEOs and Marketers should start assigning dollar value towards social media endeavors. I 'd luv to see a balance sheet that reads ROI and SROI(social ROI)next to it in bold . SROI will detail all the retweets, fan numbers, discussions and etc. It will paint a picture of a market share which is multidimensional but worth an estimated amount reflected by the 'social' growth. I think Chris Anderson's free model might help here. But not exactly, according to him you sew the 'social seeds' by providing 'free' products or services and later reap the monetary benefits. Here, we more keen to see the estimated value of the 'social seeds' and their growth.

There are so many business processes and practices that are intangible but seen as great for business and help sales. It's not the selling (where the money is obtanied) but the relationship built is what counts and builds a business. This 'tacit' value is not new, and admittedly these are hard to assign dollar value on but it's time you need to.

@dt_at_work

Female Executive said...

Carol Meyers • The power of social media extends beyond revenue generation. It can also be used for market feedback, customer service, and market intelligence. I am hosting a free discussion here in Boston about how social media can be used to spot new market opportunities or threats - Consider how researchers are now using Twitter to track the mood of the country. Anyone who wants to join us next week is welcome.
http://seethetrend.eventbrite.com/
Spotting Market Trends First - Using Social Media to uncover business opportunity

Brett Greene said...

Realizing that the ROI question has been the main one thrown out this year for social media, and we all seem to be of the same mind, here are three things to think about.

1. Most of the time when a C level executive jumps to asking about social media ROI try asking him (or her) how they measure ROI in all of the other areas of their company or on specific non-sales positions their employees hold. You will hear stunned silence.

If the first question you get is about ROI, it means that the questioner has a limited understanding of both social media and how they are running their business. They are unconsciously repeating the default question du jour to ask about social media because it's what everyone else is asking, not because they expect an intelligent answer.

2. That said, it seems that models can be created to estimate how social media improves customer satisfaction, affects repeat sales, improves customer retention, stretches the reach for word of mouth marketing, and extends the lifetime value (and spend) of a customer.

3. Lets be honest about traditional marketing ROI. After decades you still cannot determine ROI on a billboard, magazine ad, magazine article, bus board or TV commercial. You can estimate eyeballs and try to make indirect correlations to how they affect sales, but you can't concretely track how many sales each of those individual methods generate in a specific time period. It's a joke when social media marketing's effectiveness is downplayed because professional ROI tracking is not developed for it yet.

Brett
@BrettGreene