Are businesses failing to find an ROI in social media? Another view.
May 20th
There was a lot of buzz on the Internet last week about a report and infographic from Manta.com stating that 60 percent of small business owners are not realizing a return on their social media marketing efforts.
The results of this survey were reported on
- NBC News
- Entrepreneur.com
- USA Today
- The Austin Business Journal
- Small Business Trends
… and dozens, perhaps hundreds, of blogs.
It took a little digging, but here is an example of why we need to take this kind of information with a grain of salt. The Manta research was not a national survey. It was not a representative survey. It is not a statistical extrapolation of the current state of social media.
This was a survey of 1,200 of Manta’s own customers. And yet it is being reported as a national trend by the mainstream news media?
None of the news channels disclosed that this was a survey of the company’s site members. In fact, most didn’t even link to the survey. They just linked to the original USA Today article.
This survey is a mildly interesting data point, but if I were reporting on this press release from Manta, I would have wanted to know:
- How was the question asked?
- What was the response rate?
- Is that sample size representative and sufficient to forecast a national trend?
I have to give credit to whoever is doing PR for Manta. This is a relatively obscure small business site that is attracting massive press through their surveys and infographics. In a world of paralyzing information density, they figured out a way to cut through the clutter and attain incredible exposure. Here is what I take away from this case study:
- Apparently anybody can dupe the national news media by creating provocative survey results and an attractive infographic.
- If you can just dupe one national news outlet, you’re likely to dupe them all because nobody digs for the truth or even cares about the truth. They want to break a story fast with diminishing resources devoted to checking facts. So, they just copy the other guy.
- Bad news sells better than good news. Ironically, the spin on the original press release from Manta was positive, focusing on the 40 percent of companies who were realizing measurable gains from social media. But the press turned it upside down because negative news attracts more readers than positive news.
So after all this, what is the truth? Are businesses getting any benefit from social media marketing?
In a survey published just two months prior to the Manta research, The McKinsey Global Institute polled 4,200 executives and found that 72 percent of their businesses used some form of social media marketing and 90 percent of those businesses reported receiving business benefits from those efforts. The report has a detailed appendix explaining the robustness of its methodology that is more than 30 pages long.
Who do you believe?
Another way to measure social media success
Dec 27th
via KellBailey
By {grow} Community Member Eric Pratum.
I work in marketing analytics. there is nothing more fun than having a knock-down, drag-out fight over the value of a tweet, a follower, or a like. If you have the right tracking set up, I can tell you, but whether or not I can tell you isn’t that important to most businesses. The cost of getting an accurate measurement is.
But I think there are many, many creative uses of social media — and even more creative ways to measure it — that many people miss. Let’s look at that today.
Another way to measure social media
I’d like to offer a different way to look at the value created by deploying social media for an organization. What if it’s more valuable for some businesses to look at the money they save versus the money they make as a result of social media use?
Let’s imagine you run a popular coffee shop. There’s always a line, so your problem isn’t whether or not people are interested in purchasing from you. It’s throughput – how many people you can get through the cash register every hour. Your average sale takes 45 seconds and is worth $5, but you notice that 10% of your customers all have the same basic questions, and asking and answering those questions adds 15 seconds to every sale and does not increase the sale price.
Calculating social media ROI
When no questions are asked, you make 80 sales per hour and take in $400 per cash register. If just 10% of your customers ask a question when they order, you make 75 sales per hour and take in $375. That’s a 6% decrease in sales. The opportunity cost of answering those questions is $25, or the cost of 1 or 2 hourly employees — per hour, per cash register.
What if you could use social media to answer nine out of 10 of the questions asked at the cash register so that customers are prepared and don’t take up that extra 15 seconds?
I’ve actually had clients in this situation. “What’s today’s special?” Tweeted it, Facebooked it, put it up on the big chalk board at the door and above the register. “How many shots are in a grande?” We worked that into updates at least once every week. “Do you have soy?” Yes, indeedy, and our tweeted, instagrammed, and Facebooked photos make that clear. For the cost of one employee hour every day spent on social media, we increased sales per cash register almost $50 per hour.
When you’re open 12 hours per day, 7 days per week, 360 days per year, that’s additional income of $216,000 per cash register per year.
Another type of social media savings
Let’s imagine you have a call center for your kitchen appliance business. If you knew that 10% of your callers looked for an answer online before calling in, would it be worth updating your FAQ, going to forums/blogs/Twitter search/blog posts/etc, and try to answer their questions? You could cut your call center staff and put those savings toward product development, marketing, sales, profits, or who knows what else or you could just cut your wait times and make your callers that much happier.
I had a client that did this and saved hundreds of thousands of dollars every month.
Calculating the value of your social media activity
Now, should you spend your time calculating the value of a like? It’s up to you. Either way, social media has made a lot of people money in many measurable ways, and if you’re not measuring at least some of your social media in terms of dollars spent, saved, or acquired, you’re missing out on a major opportunity.
What say you? Do you measure your social media ROI?
Eric Pratum runs Inbound and Agile, a marketing research and analytics consultancy/
Social Media, Conflicting Data, and the Search for Truth
Jul 24th
A few months ago, I hired an SEO company to do some work on behalf one of my clients. After just two months, there was an indeed a tick up in traffic to the site and the SEO company was using this data point to claim victory and justify a second phase of the program that would run my customer upwards of $10,000 a month.
I asked the SEO company, “How do you know that this was truly a result of your effort and not seasonality or normal variation in web traffic?”
“Well, you have to understand,” they said, “we have been doing this a long time and we have a feel for these things.”
“Did you use an appropriate statistical test to sift out variability? Did you compare this to historical data to see if there is a 95% probability that this result came from your work and not something else?”
They just looked at me with blank stares.
The lack of real data in this business is shocking.
This scenario is not uncommon. I am amazed at the shoddy state of research on the social web and what people are trying to pass off as “science.” Not a day goes by that I don’t see conflicting information about the value of Facebook “Likes,” the correlation between online conversations and buying behavior, whether blogging is going up or going down, and whether small businesses are adopting social media marketing or rejecting it, to name but a few.
Even the most “trusted” sources are taking shortcuts with the data to rush consulting services to market. One recent “research report” drew a conclusion from a 15% positive response rate from their sample population. If you looked at the numbers, that meant they were basing their new claim on the opinion of TWO PEOPLE! And yet this new insight was tweeted and reported and posted as fact thousands of times.
This is irresponsible. We are building our social media plans on a foundation of quicksand.
No place to turn
I realize that in our time-crunched, info-overloaded state, perpetually-stressed state of being, we need shortcuts and trusted sources and we don’t have the time to even question whether something we are reading is accurate or not.
But if you are trying to run a business, you cannot take shortcuts by taking a guess on data. Data is the heart of marketing, the soul of strategy.
It was time to stand up and do something about it. I’m part of a new project called The Social Habit and I’ve teamed up with three other folks who are also fed up with the state of data crap on the web: Tom Webster, Jason Falls and Jay Baer.
Here is what we are going to do: Change the game of social media research. We are bringing you real, actionable data backed by Edison Research, the company trusted by NBC, ABC, CBS, CNN, FOX and the Associated Press to be the sole providers for U.S. Election Exit Polling, and the authors of some of the most widely cited media research in the world.
In other words, they kick data ass.
Although The Social Habit has already put out its first free social media research, we are officially kicking off our website and new service offerings today.
This is a solution for us all
Whether you are a small business with no budget, an agency looking for a keen competitive edge, or a company sorting out the true value of its social media efforts, The Social Habit has something for you:
Free stuff. That’s right. free research! We will publish regular reports free for all to use, share, and enjoy. We are taking aim at the data hucksters and infusing data-backed conclusions and reasoned interpretation into the field of social media science.
Affordable research packages. By leveraging an experienced, highly-trained staff of Edison field researchers, we can conduct the type of quality research for you that used to be within the reach of only the largest companies and agencies. This valuable research can serve as a base for decision support for any organization seeking to optimize their social media efforts.
Custom questions. A truly extraordinary opportunity to tap into one of the world’s best research teams to solve problems, capture valuable brand insight, and discover powerful consumer attitudes and behaviors that translate into competitive advantage. This exclusive research will also provide brands and agencies with enormously valuable insights on where social media is going, and what they need to do to capitalize on both present and future trends. Examples of research topics would include:
-
Usage of various platforms and how users interact with your brand.
-
Interactions between brands and social influencers
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eCommerce and social shopping
-
Mobile trends and usage patterns
- Correlations between specific social media behaviors and awareness, trial, purchase intent and brand advocacy
- Inputs for practical ROI calculations
You can be involved!
Now here’s the fun part. You can be part of our next research report. If you had one question to ask about social media that you could have answered in a national research program, what would it be? All you have to do is click here to become part of Social Habit Research
It’s going to be fun to watch this grow and evolve, but most of all, it will be refreshing to have a conversation about social media based on FACTS. I hope you’ll let me know if The Social Habit can help your business find the truth about your social media marketing efforts and your customers.
Illustration courtesy BigStock Photo
It’s not just ROI. It’s RELEVANCE!
Jul 12th
The other day I was driving home from a family vacation using an iPhone app called “Navigon.” This is an excellent GPS and mapping application that gets me where I want to go without the expense and hassle of having schlepping another device.
So I was wondering … why am I not using a mapping application from Rand McNally, the dominant market leader in all things maps for decades? For most of my life a well-worn copy of a Rand McNally atlas of United States maps was a fixture in my car. Can you even name another company that made U.S. road maps? Certainly, Rand was the gold standard for getting you to where you wanted to go.
The company has a minor entry in the GPS device market and are usually grouped under the “other” category in the analyst reports. A search for Rand McNally in the iTunes app store delivers one sad little entry that allows you to “vote for the best small towns of 2011 — right from your mobile device!” Wow.
Sad. Sad. Sad.
I can imagine the conversation among the Rand McNally executives five years ago … “Digital? Are you CRAZY??? Do you know what the ROI is on our paper maps? Why in the world would we ever cut into that profit margin? Nobody seems to be able to demonstrate an ROI on digital maps!”
It’s probably the same conversation that echoed through the halls of Kodak … “But we make so much money on film! What is the ROI for sharing digital photos on the Internet? It’s folly!”
I wonder what the ROI of bankrupt is?
And yet, if you have ever given a speech, a webinar, or a class on social media marketing, I can almost guarantee you have received this question: “But how do we measure the ROI of this stuff?”
Look, I’m a true-blue ROI guy. Frankly, money is one of my favorite things. I’m a measurement fanatic and a data geek. But pull up a chair and let me give you a dose of reality here. If you don’t have a digital strategy, your business is going to die.
And by digital, I don’t mean “a website.” In the last two years, 68 percent of the Fortune 100 companies had a year-over-year decline in their website page views. Why? Because people are not looking for you on websites any more (unless you work for Amazon, eBay or Etsy of course). For most companies, having a website is simply not enough these days.
Every business exists to create shareholder value. But please don’t overlook the possibility of not even existing in two years because you are milking an Excel spreadsheet for all its worth. There are lots of bright people out there that want your company to die. Be them, or hire them. Just don’t hold on to old business models until the banks are nailing your door shut.
It’s not just ROI. It can’t be just ROI. It’s relevancy. Don’t be Rand.
OK?
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