This blog series covers insights shared by Chris Brogan, Charlene Li, David Meerman Scott, and Martin Giles (moderator) on The Business Value Behind Social Media (part of The Premier Business Leadership Series presented by SAS). Part 4 covers the panel's discussion and suggestions on how to get started in social media (particularly for organizations late to the game).
Part 5 highlights the panel's insights on measuring social media's business impact by:
* Defining what metrics are valuable (and which are not)
* Understanding how your company performs in search engine results (i.e., SERPs)
* Showing how social media activity "bridges or links" to an organization's bottom line
* Acknowledging the real reasons driving an organization's desire for measuring social media initiatives
This post highlights the panel's discussion from 36:57 to 43:18 of the embedded video.
Track and Measure Meaningful Metrics
Number of Followers, Fans, or Page Views Is Not a Valuable Performance Metric (37:07 - 39:18). According to Chris, reliance on metrics quantifying potential reach or number of people "who possibly saw" your message is a mistake. The traditional pubic relations imprint methodology for quantifying success is not what you want. Why then do people cite these figures? Because people want to bring large performance numbers to the C-Suite executives supporting the social media initiatives.
Customer conversion numbersare the more refined and accurate number marketers should cite (i.e., "how many people clicked on the link you wanted them to click on"). Chris elaborates that earning 1.5 million You Tube views isn't enough. If none of these viewers takes action on the link that leads to your cash register (e.g., convert to paying customers or take a specific action), then you're missing business opportunities.
Track Metrics Articulating a Specific Business Outcome(s) (38:10 - 38:32). Chris encourages his clients to track the following metrics when evaluating social media initiatives:
- Revenue Increases
- Lead Acquisition (particularly decreases in cost of lead acquisition)
- Number of Subscribers to Company Newsletters
- Impact on Open Rates to Existing Company Media
- Percentage of Conversation / Percentage of Mind -- Sentiment Metrics
Percentage of Conversation / Percentage of Mind ( 38:33 - 39:17). Chris believes sentiment metrics are valuable because they provide an understanding of what and how often customers are talking about your company's products or services (especially relative to your competitors). He suggests companies locate the most active online forums where their products / services are being discussed and track this metric:
- How much percentage of mind is positive (+)
- How much percentage of mind is negative (-)
The key is to remember how your choice of tracking metrics will always depend on the business goal sought. Therefore, always tie your social media tracking metrics to specific business outcomes.
Understand and Improve Your Search Engine Results
The Importance of Search Engine Results Pages - SERPs (39:19 - 39:47). David explains it's important to know two (2) things about search engine results:
(1) What are the important keywords and phrases relevant to your industry
(2) Where do your firm's products / services appear in the search results for these keywords and phrases. Take careful note of how your results fare relative to your competitors in these searches.
Search engine results matter because a buyer's intent starts with online search. If a company's products / services are currently landing on the fifth (5th) page of Google searches, social media can improve those results so the company earns first page placement.
Side Note: I wrote a blog post on the value of page one Google results in organic search. According to the research documented in that post, ~95% of consumers stop looking at their search results beyond the second page (regardless of the search engine used). This is why search engine rankings matter.
Bridge / Link Social Media Activity to Specific Business Outcomes
Duration of Sales Cycle Close and Linking Other Business Activities to Social Media (40:18 - 41:08). Chris notes how tracking the time to close sales is important. If you can accelerate / shorten the sales cycle duration, you are demonstrating how social media contributes to revenue generation. Other valuable metrics:
(1) Number of Customer Interactions / Touches: Research says you need to touch / interact with the customer approximately nine (9) times before making a sale. With social media, an organization can increase the number of customer interactions and beyond industry benchmarks.
(2) Competitive Intelligence Data: LinkedIn Company Profiles allows you to see which companies are researching your firm on LinkedIn. Also, you can find additional information about competitors on the Company Profiles Pages.
(3) Link to Existing Sales Funnel Metrics - Car Dealerships and Test Drives: Chris points out that number of page views on specific car model's home page is good, but that doesn't tell you a lot about overall impact on sales. Therefore, car dealerships are linking and tracking social media activity's influence on number of test drives. By linking social media activity to number of test drives, the car dealership links to an existing and trusted sales funnel metric.
To Chris, the type of linking described in the car dealership example is "the gold of social media." Why? The car dealership example shows how social media can improve customer conversion.
What's Really Driving the Social Media Measurement Obsession?
Is It Fear? (41:25 - 42:47) When David hears senior executives questioning the financial validity of social media, he thinks it's really a veiled response for "I don't want to be bothered with social media." Therefore he addresses that objection by posing the following question:
"As soon as you can tell me the ROI of giving each salesperson a Blackberry, I'll tell you the ROI of participating in social media."
We Do Certain Things in Business Because It's the Right Thing to Do. Here are additional examples of existing corporate activities that David cites as having no quantifiable ROI, but we do them because these are the right things to do:
Painting the walls
Maintaining a nice-looking corporate campus
Providing salespeople with Blackberry smartphones for client management (and as a company expense)
It's Not Always About Putting in $X and Always Getting $X Back . David concluded his point-of-view with an important point. Yes, measuring social media is important, BUT make sure you're divorcing your indvidual fears/ignorance/bias before justifying the need to measure something.
We Tend to Overvalue the Things We Can Measure and Undervalue the Things We Cannot (42:49 - 43:48). Charlene cited this quote from John Hayes, Chief Marketing Officer of American Express, when describing the social media measurement obsession.
She elaborates it's not a matter of "is social media worth it" because we already know there's value in it. In the big picture perspective, she points out:
Is it really possible to value a relationship?
If so, how much value do you place on that relationship?
How Much Do We Value Relationships? This should be the governing question for all organizations when evaluating and measuring social media business impact. Why? The resounding theme expressed by Brogan, Li, and Meerman Scott throughout the video always comes back to:
It's All About Relationships
Companies who've founded their reputations on this moral value are the ones genuinely investing the time, resources, and money to become relevant social media citizens. Companies like Starbucks, IBM, Best Buy, Intel, H&R Block, Boeing, HubSpot, Amazon, Dell, fall into this mix.
Cold, Hard Fact: Social Media is Reinventing the Power of Customer Influence. The power of one individual (or a collective group) to influence a company's online reputation is significant -- and that power is here to stay. In fact, that word-of-mouth power (WOM) is escalating.
This brings me to a simple question:
Is Social Media ROI really just Corporate Code for CYA?
I would argue Yes. Please understand, I strongly believe in measuring social media's business impact and linking its activities to targeted, business outcomes. Doing so allows an evaluation and understanding of the social media activities making a positive business impact (and even more importantly, those that are not). Making that determination is critical because successful social media initiatives require the significant investments mentioned earlier. As a result, measurement drives informed decisions on resource prioritization.
Therefore, let's not go down the paralysis analysis road to financially justify every aspect of social media participation. Let's keep an eye on the ball and the big picture. While you kindly invested time to read this post, someone is online. And he/she is positively or negatively influencing your company's financial success RIGHT NOW.
In closing, if our customer and client relationships are strictly based on the bottom-line (e.g., transactional), then we're making a momentous mistake. Here's a direct quote from MG Siegler's December 17th Tech Crunch article describing Yahoo's current financial and strategic challenges:
"Yahoo is all about the shareholders now. It's all about the bottom-line. That's all that matters. It's not about the users. It's not about building or maintataining great products. It's about finding the ones that make the money and slicing the rest."
Remember, at the end of the day, it's not about you or me. It's about clients, customers, and helping them make informed decisions about the business challenges they confront. It's about something bigger than ourselves.
It's All About Relationships.
Tony Faustino is a marketing and corporate strategist. He writes about how The Internet reinvents marketing strategy for organizations and individuals in his marketing strategy blog, Social Media ReInvention. Follow his tweets @tonyfaustino or circle him on Google+.
Thank you for spending your valuable time in reading this installment of The Business Value Behind Social Media. Please tune in for Part 6 - Social Media and Crisis Recovery.
I'm targeting January 15, 2011 for publishing Part 6. I want to get it right, and I'll also be catching up in my "regular job" after returning from vacation over the holidays.
Many Thanks and Have a Safe and Happy New Year's Day!