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 ROI – You’re looking in the wrong place
Sep 10th
About two years ago, I forecast that the real value of social media would be in applying it across the enterprise for INTERNAL uses that would break down barriers, speed communication, and enable collaboration.
It just makes so much sense. Employees already enjoy using fun applications like social networks and wikis and the power of these tools in the external environment to unleash creativity, collaboration, and productivity is proven. A new report from McKinsey validates this premise and places an actual number value on the potential savings of using similar tools internally.
The real ROI of social media
The report states that the speed and scale of adopting social technologies by consumers is unprecedented, yet companies are far from capturing the impact of these platforms. Almost any human interaction that can be conducted electronically can be made “social,” but only 5 percent of all potential uses now take place through social networks.
The consulting firm identified 10 ways in which social technologies can create savings across the value chain. They estimated that between $900 billion and $1.3 trillion in value can be unlocked in the U.S. alone from these technologies:
- Social networks
- Blogs and micro-blogs
- Ratings and reviews
- Social commerce
- Wikis
- Discussion forums
- Co-created content
- Crowd-sourcing
- Media and file sharing
- Social gaming
Spanning across all these categories is social analytics to enable better-informed decisions.
Two-thirds of the projected value comes from improving communications and collaboration across the enterprise. It gets at this idea of organizing a company around problem-solving instead of silos. For example, in a large company, the expert company employee to solve a problem in the U.S. might actually be based in Australia. Social platforms can make employees aware of these problems and unleash their skills through social technologies. McKinsey estimates implementing internal social systems could raise the productivity of knowledge workers by at least 20 percent. What a revolutionary opportunity!
Social influence may change the way we sell
One of the most fascinating predictions in the report is that the ability to identify the social influence of employees might “disintermediate commercial relationships and upend traditional business models.” In other words, the power to deputize all of your employees for marketing, sales, and service can change the way you sell. I reported on an example of this in a post a few weeks ago about using social scoring measures to assess the “Internet impact” of employees. Quite interesting that McKinsey is already picking up on this as a global organizational trend.
As you can imagine, realizing these financial gains wil require significant transformations in management practices and organizational behaviors — HR will be leading the way toward social media success. As in most cases involving transformational change, the technolgy is the easy part!
What’s keeping companies from moving ahead with these ideas? Fear of risk. There are undoubtedly legitimate risks involved, including potential loss of intellectual property, violations of privacy, abuse, and potential PR problems. Also, social technologies can disrupt traditional business models, creating internal resistance from bureaucracies.
However, competitive pressures will eventually drive companies to overcome these risks. Companies that fail to invest in social technologies will fall behind.
Are internal social media platforms right for you?
The industries most likely to benefit from integrating social technologies have these characteristics:
- A high percentage of knowledge workers.
- Heavy reliance on brand recognition or consumer perception
- A need to maintain a strong reputation to build credibility and consumer trust
- A digital distribution method for products or services
- An experiential (hotels) or inspirational product or service (sports products)
Particularly fit for the social overhaul are consumer goods companies, education, professional services, media, and software companies, which have a high number of knowledge workers and a high reliance on brand recognition.
The report concluded that social technology is not an IT issue and will depend on multiple factors for success, including an ability to create trust in the platforms, a critical mass or participation, and positive community cultures.
But I think the McKinsey report only hits the tip of the iceberg. The value calculations are based on an ability to improve or replace existing communication structures. But I think the most exciting aspects of the potential benefits are not found in the bottom line savings, but the unknown creativity that will be ignited when you turn these tools over to the hands of employees who will use them in ways we cannot even imagine!
I would love to hear about your experiences. Are you beginning to use social platforms internally at your company?
What Social Media Can’t Do…
Aug 29th
By Stanford Smith, Contributing {grow} Columnist
We exchanged business cards, offered the obligatory “love your card” compliments, and sat down at the wobbly coffee shop table.
A week earlier, the business owner sent a friendly email asking for a “pick my brain” session. Reluctantly I agreed to dispense advice in exchange for a $3.00 cup of coffee. Ten minutes into our conversation, I realized that I should’ve charged!
My “client’s” business was teetering on insolvency. He had spent thousands on marketing and he still had a backroom full of inventory he couldn’t give away. I listened to him list dozens of reasons why his sure-fire business hadn’t gained any traction: the economy, dumb customers, bad employees, the weather. Everything had conspired to turn his dream into another failed business statistic.
But, he had one more idea. A “Hail-Mary pass” that would save his business. He would “do some social media.”
That’s why he had made his smart $3.00 investment in our meeting. I had a feeling he would be dumping the coffee in my lap before our time was up.
“I’m sorry, but social media can’t”
I have a “tell” a sign that I’m frustrated beyond words or consolation. I remove my eyeglasses, pinch the bridge of my nose and expel a tortured sigh. Those close to me understand the tell and backtrack, flee, or change the subject. My friend across the teetering table missed the sign.
“Tell me something. Why do you think social media can sell a product that no one wants?”
I swear the entire cafe stopped their conversations in mid-sentence in anticipation of brilliance or violence.
“Social media will help my customers understand my product,” he said. “I can tell my story directly to them.” He almost had me. Say story and social media in the same sentence and you have a fighting chance with almost any social media consultant.
Not this time. I continued to work the bridge of my nose like an obsessive masseuse.
“I’m going to be frank with you,” I said with feigned sympathy. “Social media will only make your problem worse. You have to have a compelling product first. If you don’t social media will only pour gas on the fire that’s burning your business down.”
“By the way, can I get a danish with this coffee?”
A Tough Assessment
A great product and business model is essential for social media to work. There has to be “something” that gets your customers talking. It can be the retail experience. It can be your fanatical attention to detail. Whatever it is, it has to be compelling on its own.
Social media amplifies the appeal of a praise-worthy product.
Ideally, your customers are already talking about your product without your Facebook page or Twitter account. Bloggers should be mentioning your product and directing customers to your website. Your customers should be asking when you plan to write a blog.
If no one is talking about your product, or heaven forbid they are saying bad things, then you need to fix the product and repair the relationship first. Social media can wait.
Be careful of anyone that insists that influencer programs, reputation management, and content marketing can sell a product that sucks. They can’t. They only offer false hope.
What Social Media CAN Do…
Social media is the world’s largest and most effective focus group. Find your customers and listen to what they are saying. What products are they sharing? What features are most popular? What do they hate?
Use what you learn to improve your product. Then go back to this audience, pick a few of the most insightful and ask them to try out your product. Again, listen to what they have to say. Make the changes, go back, get volunteers, and start the process over again.
The smart kids in the lean startup community call this the “validated learning loop” and it works. Add the real-time feedback from social media and you have a precise and inexpensive way to calibrate your product’s appeal.
Once you’ve completed the tough work, you can turn your attention to exponentially increasing your audience with social media and content marketing.
Make sense? How do you use social media to validate your product’s worth and appeal?
Contributing Columnist Stanford Smith obsesses about how to get passionate people’s blogs noticed and promoted at Pushing Social, except when he’s chasing large mouth bass!
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