ROI and measurement

There were some outstanding blog posts last week that explored the idea of the SPEED of social media communication changing traditional business models. This was social dialogue at its best.

Jay Baer started the conversation with a series of posts that included Why Social Media has Ruined Your Advantage.  He postulates that the social channel is unique in that businesses are using the same playbook that consumers are using in their daily lives. This rapidly breaks down barriers and eliminates the shroud of mystery that businesses have used as an advantage for centuries.

In my own writing, I’ve characterized this barrier as an “ether” in the marketplace that has kept customers asleep.  Many banks are profitable from fees and charges that customers overlook or don’t understand. AOL still receives income from dial-up subscriptions people forgot they have on their credit cards, or don’t understand they don’t need any more. The transparency of the web will dissipate this ether over time.

Tom Webster continued the conversation in his post Be Careful What You Wish For.  He wonders if the social web challenges tried and true business models and raises an unrealistic expectation of customer service.

These posts helped coalesce some of my thinking on a topic I have been pondering – Everybody is rushing to join the social media conversation.  But at what cost?

The cost of dissatisfaction

Years ago, I led an effort to re-engineer a customer service model for my company.  I used an academic study from the University of Michigan as my guide (can’t find it now) that stated there is a diminishing return to satisfying ALL customers.  More or less, once you get over 98% customer satisfaction, the cost of satisfying that final 2 percent is not economical. So, achieving 100 percent customer satisfaction is impractical for many businesses.

I see this playing out on the web every day.  There is a core group of haters who will bellyache no matter what you do or say to appease them.  When we had the “ether,” we could afford to ignore them. But now their comments are public on company Facebook pages and other social platforms.   A few vocal haters can be thunderous, hijack your social media efforts, and raise service costs exponentially. The ether has dissipated, and the 2 percent are now in control.

With so many conversations streaming at us, do we even have the ability to discern which complaints are legitimate any more? Are we conditioning consumers to game the system through complaints because of the easy rewards they can garner from companies who auto-respond with coupons and freebies? What is the cost of THAT over time?

Does every conversation sell stuff?

I’d like to introduce a radical concept. Businesses have to sell stuff.

It’s easy to lose sight of this when we worship companies like Zappos, which states that their goal is to “deliver happiness.” They also have deliver a profit, or all that happiness will go away.  In Tony Hsieh’s wonderful book, Delivering Happiness he admitted that the idea of building a business based on a culture of extreme service came while drinking at a bar one day, lamenting that his company was failing.  It was a desperate experiment that worked, not some well-planned strategic vision.

Yes, he delivers happiness. but he also delivers money.  In this era where ”the Conversation” is king, too many people get caught up in the fear of being left behind and lose sight that we need to show a measurable return on these social media efforts, too.

I had the great pleasure of getting to know Rick Wion of McDonalds this year. There is no smarter marketing talent out there and no company more committed to connecting with its customers in the social media trenches.  McDonalds has a staff of people Facebooking and tweeting all the time.  But some of their tweeters have become so popular that lonely people look for them to come online and tweet with them to pass the time. This is very nice, but how does this sell hamburgers?  At what point do you say, “enough is enough?” What is the cost of our conversation? Lots of companies are facing these issues right now.

Social media angst

I’ve met many great marketers at large American companies and have had the chance to get an inside peak at their social media angst. Here’s a dirty little secret. Deep down, I think most companies wished the social web would just go away.

The Days of Ether, when we didn’t have to “listen” so much, had its benefits.  We could ignore that 2 percent.  We didn’t need $10,000/month listening platforms, social media war rooms, and a budget for teams of tweeters. Consumer Confusion was profitable.

Now if you’ve read this blog for any period of time, you know I am huge advocate of the social web and its potential to transform businesses.  And the fact that it dis-intermediates the business sloppiness that was allowed to exist in the ether is a good thing in the long term. So I’m not saying that that it is not a historic and important channel. Quite the opposite. I’m just saying that it comes with a lot of unanticipated pain.

That ether — and its response time lapse — gave us time to think and analyze. It provided a buffer to get us through the messy process of re-tooling a strategy … or even a company. Diminishing the ether through increased transparency and light-speed information flow is one of the greatest and least-understood impacts of the social web.  And, as both Jay and Tom have written so brilliantly, it is a one-way ticket.

The cost of conversation.  It’s a discussion we need to be having everywhere, don’t you think?

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