ROI

Return on Relationship: The New Measure of Success

Social media is quickly becoming a way of life… and a way of business as more and more companies are realizing they need to integrate social media into their marketing strategies.  We can’t, however, expect to do “business as usual” and succeed in building an eager audience around our brands.

If you want to continue to reach your market in this social media age, the marketing focus needs to be on building relationships, and metrics need to expand beyond ROI (Return on Investment) to include ROR: Return on Relationship.

Most measurements and empowerment stats that are used with regard to relationships (i.e. number of Facebook fans, Twitter followers, retweets, site visits, video views, positive ratings and vibrant communities) are not financial assets, but that doesn’t mean they are worthless.  Instead, these are leading indicators that a brand is doing something that is creating value that will be with you for the long term and will drive ROI if developed and used effectively.

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Build Relationships, Not Billboards!

The marketing paradigm is shifting with much greater “power to the people” facilitated by social media.  If you want to continue to reach your market, it’s not about advertising any more, but about building relationships.

Consider the following differences:

Advertising Building Relationships
1.     Telling

2.     Starts with “me” (the brand, the product, the service)

3.     Focuses on “what can you give me?”

4.     Goal:  instant impact

5.     Where’s the money?

 1.     Listening, hearing, empathizing, asking,

2.     Starts with “you” (the customer’s needs, wants, interests and expectations)

3.     Focuses on “how can I serve you?”

4.     Goal: ongoing engagement

5.     Who are the people?

1. Telling vs. Listening

It may sound counterintuitive, but if you truly want to be heard above the growing social media “noise,” you need to listen.  Listen to what your consumers and potential consumers are saying before you even put one word out there:  What are they saying, what are they feeling, what are their pain points, what solutions do they need?   Then when you do “speak” (type), empathize with them and ask them questions.

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Is It Time to Shift Marketing Dollars?

There are 100 opinions on what percentage of social media should be in your 2011 marketing mix, but across every industry there’s one unified call for quantifiable ROI.

We marketers know that Return on Investment and Return on Information depend on a company’s goals. While it may be difficult to measure the short-term effectiveness of a Twitter campaign in profitability terms (ROI), it’s no excuse not to pursue an initiative or forego measurements.

Do you know the ROI of the ad on the bus bench? Or four hours on the golf course with a CEO, or the in-flight magazine ad?

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The Truth About Social Media ROI (and why Facebook isn’t enough to deliver)

I recently found myself in a heated debate on Twitter about the ROI of social media. In one corner sat those promoting ‘there is no return on social media…yet’ and in the other sat myself insisting ‘it’s not only possible, it’s happening.’

The skeptical side of me wondered if those who are promoting the ‘no ROI from social’ stance are those who are truly generating ‘no ROI from social’ and are perhaps looking to substantiate that result. But then again, maybe I was wrong. After all, there were some pretty smart people in that opposite corner publishing blogs on Huffington Post and ClickZ – all reaffirming the belief that Social ROI does not exist.

But after further consideration and more research, I’m sticking to my guns. Social media ROI is not only attainable, it should be expected. The harsh reality is that most business executives measure value in terms of financial metrics – not fans. While it’s true that the long-term benefits from real engagement through social media will likely be far greater than any of us realize today, it’s also true that many companies are positioned to start delivering financial returns now, particularly strong CPG brands.

The game will change in 2011
For most CPG companies today, ‘we need a social media presence’ means Facebook and Twitter. Although deeply simplified, this strategy plays out a lot like this:

  • How many fans do we have? Hooray!
  • How many are following us? Hooray!
  • How many times is our brand mentioned on the social web? Hooray!

By all accounts, the results exceed expectations. But while you’re patting yourself on the back for attracting a social following, understand there’s someone within the company scratching their head and asking: So what? How is this investment bringing me any value?

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Determining and Delivering the Ultimate ROI of Social Media

There is one thing that makes social media special — not to mention social — and, from a business perspective at least, it’s the one reason SM is worth investing in.

It comes in the form of the conversations that used to occur at the water-cooler or over the backyard fence, or in the good-old-fashioned (un-choreographed) town hall meetings. It is about give-and-take, and real-time feedback.

While one of the primary ways we evaluate marketing tools is in terms of how effectively a message is delivered, social calls for a new way of thinking about media. (Or, more accurately, it can actually help refocus our perspective on what constitutes successful communication. But that’s another discussion.) This is a new brand of media, made up of the fabric of relationship. This tool is far from one-way, one-sided or one-dimensional. It is about participation, collaboration and interaction.

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Innovative Use of Traditional Metrics

Here’s an interesting concept: using traditional measurement tactics to determine the success of non-traditional (social media) marketing.

At first, it sounds as though this goes against my persistent encouragement for companies to measure the Return on Relationship rather than just the standard Return on Investment, but actually it doesn’t.

In his July 19 blog post entitled “The ROI of Social Media Marketing: More Than Dollars and Cents”, Forrester blogger Augie Ray introduces the Social Media Marketing Balanced Scoreboard. The key word here is balanced. Although he still uses the phrase “Return on Investment,” what he’s writing is actually about much more than the standard notion of return on financial investment only.

Ray writes, “Facebook fans, retweets, site visits, video views, positive ratings and vibrant communities are not financial assets—they aren’t reflected on the balance sheet and can’t be counted on an income statement—but that doesn’t mean they are valueless. Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.” In other words, ROR – Return on Relationship!

This Social Media Marketing Balanced Scorecard encourages “interactive marketers” to measure success across four areas:

  • Financial
  • Brand
  • Risk Management
  • Digital

Notice that the scorecard doesn’t measure only financial success – nor does it measure only brand success. Both are included here.

Bottom line? While we social media marketers tend to be all about innovation, there is still room for some things traditional – when used deliberately and wisely!

Ted Rubin

Resisting The Temptation of Meaningless Metrics

With the question of measurable ROI of social media echoing at the financial end of the C-Suite, it is tempting to fall back on the numbers. And while hits, followers, friends and connections are measures to be sure, are they the measure of social media success? (For that matter, are the numbers a smart measure of the potential?)

In a recent roundtable with colleagues, a marketing manager described a campaign designed to do nothing more than exponentially increase hits on a consultant’s blog. The campaign sounded like a radio station-style promotional gimmick with one major exception: the overwhelming majority of those lured to the consultant’s blog were not in any way, shape or form targets for the blog’s content. The goal was simply to achieve thousands of “hits.” The “hook” for the campaign was a blatant example of false advertising, and well over 99% of those hitting the site, left as quickly as they arrived. Any thought that they might one day be an actual target of the consultant overshadowed by the fact that any hope for credibility was forever lost.

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