I wasn’t going to do it. I wasn’t going to post on ROI, because it’s a saturated subject right now that I think needs time to marinate. But I cannot, CANNOT get past a niggling issue of mine that keeps getting missed. So I’m going to concentrate my perspective here.
You cannot calculate a return on anything unless you know whether or not your goals – and your definitions of both Return and Investment – are the right ones.
As a marketer or a communicator, you may determine that you want to drive traffic to your site, increase subscriptions to your newsletter, get people to blog about you. We’ve often measured success in marketing based on eyeballs. Awareness. These things are measurable. But sometimes they’re based in our own corporate egos.
Is that what makes your customers do business with you? Do you know for sure that those 25 blog post mentions are moving them closer to you? Is it enough to increase their affinity to your brand, or is a sale the only metric that “really counts”? What about the journey toward that sale? Does that have value?
And have you asked your customers these questions?
I’m not talking about a sterile survey. I’m not talking about a misappropriated focus group (sorry, Frank Martin – I’m talking about those that are ill conceived). I’m talking about rolling up your sleeves and digging in with your customers, on a one-on-one basis. Giving them mechanisms to tell you, and listening to them. It’s time consuming. It’s difficult. It’s subjective. And it’s irreplaceable.
Finding the right goal – the one that actually allows you to map success – is the only thing that matters. You can put up all the fan pages or Twitter accounts or blog posts or “viral” (cough) videos you want. But if the only reaction to that is a momentary, fleeting attention span based in superficial curiosity that does nothing to bring that customer one step closer to buying from you, it’s wasted. Yes I said it. Wasted.
Relationships require nurturing. Your goals must be based on this notion, and the “Return” that you’re calculating based on your “Investment” needs to be about your customers’ ideas about what moves the needle for them. Not yours.
(Incidentally, if you’re going to try and tell me that we have to report on these misguided metrics because that’s the way that we’ve always done it, or because that’s the “reality” of the way the corner office sees it, then you haven’t been reading about why I think social media is as much about education and culture change as it is execution. It’s time we quit using our flawed notion of relevant metrics as a scapegoat and started changing the game to reflect the way it’s actually played.)
True return for any communication effort – whether social media related or otherwise – had better have its roots in the natural progression of relationships and the tendency for humans to make their decisions based on personal feelings of trust, affection, loyalty. If you haven’t figured out what that means to customers in their own words, then throw all the darts at the board you like, and go ahead and measure where and how often they hit. Graph them, craft reports, make PowerPoints.
The darts will still miss. And the true ROI will continue to elude you.
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Spot on Amber. One of the steps that appears in all of our interactive processes is to have the client and the account team define what success is. Part of this is the obvious – so that we’re all working towards the same goal – but there’s a subtext we’re are trying to train our account people to look for: Has the client set a realistic and appropriate definition of success?
Does the client want an AdWords campaign with a goal of increasing sales by a certain percentage? If so, then we need to re-educate the client that an AdWords campaign can only drive a potential customer to a website – that the purpose of an AdWords ad is simply to get someone to click it – nothing more.
The same is true for social media engagement. Does the client want to get a Facebook page/Twitter account so they can use it as another channel to push their message? Again, this would tell us that we need to educate the client on the purpose of social media.
Spot on Amber. One of the steps that appears in all of our interactive processes is to have the client and the account team define what success is. Part of this is the obvious – so that we’re all working towards the same goal – but there’s a subtext we’re are trying to train our account people to look for: Has the client set a realistic and appropriate definition of success?
Does the client want an AdWords campaign with a goal of increasing sales by a certain percentage? If so, then we need to re-educate the client that an AdWords campaign can only drive a potential customer to a website – that the purpose of an AdWords ad is simply to get someone to click it – nothing more.
The same is true for social media engagement. Does the client want to get a Facebook page/Twitter account so they can use it as another channel to push their message? Again, this would tell us that we need to educate the client on the purpose of social media.
Great post Amber, I agree with you in that it requires a shift of perception to quantify the ROI of social media. I was working on a post about it myself, but it ended up being so long that it turned into an eBook that I’ll be putting out within the next 2 weeks.
I’m really glad you made this post, I always enjoy your view point on topics and I think you’ve made a really good point about why people say “there is no way to measure roi of social media”. It’s because their going about it with the wrong mentality. Thanks for this post, it was exactly what I’ve been thinking about lately.
Josh Peterss last blog post..test
Great post Amber, I agree with you in that it requires a shift of perception to quantify the ROI of social media. I was working on a post about it myself, but it ended up being so long that it turned into an eBook that I’ll be putting out within the next 2 weeks.
I’m really glad you made this post, I always enjoy your view point on topics and I think you’ve made a really good point about why people say “there is no way to measure roi of social media”. It’s because their going about it with the wrong mentality. Thanks for this post, it was exactly what I’ve been thinking about lately.
Josh Peterss last blog post..test
Amber – great article. It seems like too many in marketing are starting to view social as a quick fix or ways to automate normally intensive processes. It is important to realize that social marketing can be great enablers and handy tools but it can not be the only tool or the only mechanism. I completely agree about the metrics. The old metrics are pretty useless. So what if 30 people talked about your product – that’s great – but unless your goal is just reputation management – is not all that great when the boss wants to see some bottom line growth.
Shailesh Ghimires last blog post..What Makes a Good Marketing Partner
Amber – great article. It seems like too many in marketing are starting to view social as a quick fix or ways to automate normally intensive processes. It is important to realize that social marketing can be great enablers and handy tools but it can not be the only tool or the only mechanism. I completely agree about the metrics. The old metrics are pretty useless. So what if 30 people talked about your product – that’s great – but unless your goal is just reputation management – is not all that great when the boss wants to see some bottom line growth.
Shailesh Ghimires last blog post..What Makes a Good Marketing Partner
Rock on, Amber!!!
We can’t talk about ROI enough. Seriously. Having spent the better part of 15 years on the client side, one thing I’ve learned is this: ROI is everything. Most marketing firms and agencies’ account execs ultimately fail because they focus on selling services and products instead of value. They don’t see it that way, they don’t realize that they are doing it, but what they say and what the client hears are completely different things. By talking about ROI, you zero-in on the one thing that matters to the client. So don’t apologize for bringing it up. 😉
I’m glad you also touched on the notion that ROI is subjective. That every client, every campaign, every tool and every moment in time can call upon a very specific set of goals – goals which have to be identified and discussed at the very start of the conversation.
I always start my relationships with prospective clients (and projects as well) with a question: What are you trying to accomplish? If they answer “we just want a cooler looking website,” then I know they haven’t really thought it through all the way. More questions need to be asked: Why do you need a cooler website? What do you want the new website to do for you? Etc. What is really at the root of this meeting? What do you ultimately want to see happen?
The great thing about properly defining goals from the start is that you end up clarifying exactly how you will measure success as well. You can’t do one without the other. You have to know where you want to go before you can figure out how best to get there. Simple, but too often overlooked by marketing folks.
Great post, as always.
olivier blanchards last blog post..Design: The secret ingredient behind every great brand.
Rock on, Amber!!!
We can’t talk about ROI enough. Seriously. Having spent the better part of 15 years on the client side, one thing I’ve learned is this: ROI is everything. Most marketing firms and agencies’ account execs ultimately fail because they focus on selling services and products instead of value. They don’t see it that way, they don’t realize that they are doing it, but what they say and what the client hears are completely different things. By talking about ROI, you zero-in on the one thing that matters to the client. So don’t apologize for bringing it up. 😉
I’m glad you also touched on the notion that ROI is subjective. That every client, every campaign, every tool and every moment in time can call upon a very specific set of goals – goals which have to be identified and discussed at the very start of the conversation.
I always start my relationships with prospective clients (and projects as well) with a question: What are you trying to accomplish? If they answer “we just want a cooler looking website,” then I know they haven’t really thought it through all the way. More questions need to be asked: Why do you need a cooler website? What do you want the new website to do for you? Etc. What is really at the root of this meeting? What do you ultimately want to see happen?
The great thing about properly defining goals from the start is that you end up clarifying exactly how you will measure success as well. You can’t do one without the other. You have to know where you want to go before you can figure out how best to get there. Simple, but too often overlooked by marketing folks.
Great post, as always.
olivier blanchards last blog post..Design: The secret ingredient behind every great brand.
Great points, Amber. If new marketing and social media needs to be at the core of redefined business models, it will require a whole new set of goals and (qualitative) metrics.
How do you measure community? What’s the return on relationship?
Great points, Amber. If new marketing and social media needs to be at the core of redefined business models, it will require a whole new set of goals and (qualitative) metrics.
How do you measure community? What’s the return on relationship?
Finally, someone has finally said something about measuring ROI on social media that actually makes some sense. Thanks for a great post and for taking the time to post it. I for one am glad you did not let this discussion marinate any more.
Grant Griffithss last blog post..Not Getting Noticed — What You Should Not Be Doing
Finally, someone has finally said something about measuring ROI on social media that actually makes some sense. Thanks for a great post and for taking the time to post it. I for one am glad you did not let this discussion marinate any more.
Grant Griffithss last blog post..Not Getting Noticed — What You Should Not Be Doing
This is my favorite part:
“Relationships require nurturing. Your goals must be based on this notion, and the “Return” that you’re calculating based on your “Investment” needs to be about your customers’ ideas about what moves the needle for them. Not yours.”
I have been reading quite a bit on Social Media ROI, but this is the most significant point so far.
Charity Hisles last blog post..CharityHisle: @maniactive I hope he doesn’t burn your house down like in that movie Meet the Fockers.
This is my favorite part:
“Relationships require nurturing. Your goals must be based on this notion, and the “Return” that you’re calculating based on your “Investment” needs to be about your customers’ ideas about what moves the needle for them. Not yours.”
I have been reading quite a bit on Social Media ROI, but this is the most significant point so far.
Charity Hisles last blog post..CharityHisle: @maniactive I hope he doesn’t burn your house down like in that movie Meet the Fockers.
Well said, Amber. But I think that puts the onus on us as marketers to have ways of measuring the things we are trying to build. The reason we have (weak) measures like CPM and click-through ‘conversion’ rates is because we have only figured out how to measure the ad-transactional, not the relational. (Some of this is the tyrrany of advertising we must change, but I digress.) I’d like to see CRM platforms do a better job of just this. How powerful is your customer relationship, really? We need a way to articulate that so that when we build and develop and leverge relationships — especially as part of building a brand community — we can bettter articulate the achievements to third parties … especially when those achievements are ‘pre-revenue’ or adjacent to revenue.
Adam Needless last blog post..Top 20 Cross-channel Marketing Execution Platforms?
Well said, Amber. But I think that puts the onus on us as marketers to have ways of measuring the things we are trying to build. The reason we have (weak) measures like CPM and click-through ‘conversion’ rates is because we have only figured out how to measure the ad-transactional, not the relational. (Some of this is the tyrrany of advertising we must change, but I digress.) I’d like to see CRM platforms do a better job of just this. How powerful is your customer relationship, really? We need a way to articulate that so that when we build and develop and leverge relationships — especially as part of building a brand community — we can bettter articulate the achievements to third parties … especially when those achievements are ‘pre-revenue’ or adjacent to revenue.
Adam Needless last blog post..Top 20 Cross-channel Marketing Execution Platforms?
Amber, a great article! I should say that’s a
social point of view of ROI. It’s hard to get
into my mind any associantio with its financial
view. And the quantity approach does not count.
The quality and trust play their roles.
Amber, a great article! I should say that’s a
social point of view of ROI. It’s hard to get
into my mind any associantio with its financial
view. And the quantity approach does not count.
The quality and trust play their roles.
Excellent. Said it before and I’ll say it a million times more. Marketing in any form that does not drive cash flow through the decision cycle is wasted.
Frank Martins last blog post..Marketing Questions
Excellent. Said it before and I’ll say it a million times more. Marketing in any form that does not drive cash flow through the decision cycle is wasted.
Frank Martins last blog post..Marketing Questions
Well done. I do tend to harp on ROI a lot – but only because marketers need to think more about how their efforts specifically contribute to revenue and profitability.
Your comments align very well with that. Enjoyed your post.
Chris Sellands last blog post..cselland: pretty cool – RT @carsonmckee: This site sucks in the content of a blog and analyzes the author’s personality… http://www.typealyzer.com/
Well done. I do tend to harp on ROI a lot – but only because marketers need to think more about how their efforts specifically contribute to revenue and profitability.
Your comments align very well with that. Enjoyed your post.
Chris Sellands last blog post..cselland: pretty cool – RT @carsonmckee: This site sucks in the content of a blog and analyzes the author’s personality… http://www.typealyzer.com/
Very timely, Amber. I think one of the biggest problems with the whole ROI discussion is that its very campaign oriented. By its very nature, social media should not be campaign-oriented, but invested in for the long term. Can you do benchmarking? Sure. Can you tweek what you’re doing? Sure. But, slapping something up and then being disappointed 6 months later isn’t giving this realm a fighting chance.
robin seidners last blog post..November Mile High SMC on community – recap
Very timely, Amber. I think one of the biggest problems with the whole ROI discussion is that its very campaign oriented. By its very nature, social media should not be campaign-oriented, but invested in for the long term. Can you do benchmarking? Sure. Can you tweek what you’re doing? Sure. But, slapping something up and then being disappointed 6 months later isn’t giving this realm a fighting chance.
robin seidners last blog post..November Mile High SMC on community – recap
Great points Amber, the first word in Return on Investment is “return” if you can’t get them to come back to your site there’s no point in sending them there in the first place. Studies show that the buy-in for a first time visitor to a web site is pretty low. Get them to come back or it’s likely you won’t make the sale.
Great points Amber, the first word in Return on Investment is “return” if you can’t get them to come back to your site there’s no point in sending them there in the first place. Studies show that the buy-in for a first time visitor to a web site is pretty low. Get them to come back or it’s likely you won’t make the sale.
Amen sister!
Part of the reason I changed the direction of my business was to address this problem – I see so many business owners that say oooh facebook! Ooooh blogs! Gotta get on twitter or I’ll miss out! But they have no strategy backing up what they’re doing. Using social media is easy. Intelligently integrating it into your larger marketing strategy requires more thought.
Amen sister!
Part of the reason I changed the direction of my business was to address this problem – I see so many business owners that say oooh facebook! Ooooh blogs! Gotta get on twitter or I’ll miss out! But they have no strategy backing up what they’re doing. Using social media is easy. Intelligently integrating it into your larger marketing strategy requires more thought.
Great points, especially last paragraph. That is going into my next presentation, with full credit to you, this website, and anything else you’d like me to tag on – just let me know!
Great points, especially last paragraph. That is going into my next presentation, with full credit to you, this website, and anything else you’d like me to tag on – just let me know!
Great post and everyone above definitely said a lot of what I was going to write, so I’ll include a few thoughts from all the ROI conversations I’m having.
I’m continually surprised at how many marketers are not aware of their companies business goals on a quarterly basis. How can you perform any sort of marketing activity, social or not, without strict goals that can be used later on for measurement? ROI is hard-work,but if you don’t know your business goals, you can never accurately measure.
As for the return you may see from relationships; I’ve been looking at a method to measure Impact of Relationships or IOR. It is an add-on to ROI and not just in letters. It takes into account many of the items you mention, but also the hard-core face-to-face information you get from these people. In this manner we can truly look at how the needle is moving for them AND for us as a business. You hit the nail on the head when you say it is hard work, but in the end it is enlightening and extremely helpful.
Looking forward to continuing the conversation.
/kff
Kyle Flahertys last blog post..Blog Comments Drive Community Engagement
Great post and everyone above definitely said a lot of what I was going to write, so I’ll include a few thoughts from all the ROI conversations I’m having.
I’m continually surprised at how many marketers are not aware of their companies business goals on a quarterly basis. How can you perform any sort of marketing activity, social or not, without strict goals that can be used later on for measurement? ROI is hard-work,but if you don’t know your business goals, you can never accurately measure.
As for the return you may see from relationships; I’ve been looking at a method to measure Impact of Relationships or IOR. It is an add-on to ROI and not just in letters. It takes into account many of the items you mention, but also the hard-core face-to-face information you get from these people. In this manner we can truly look at how the needle is moving for them AND for us as a business. You hit the nail on the head when you say it is hard work, but in the end it is enlightening and extremely helpful.
Looking forward to continuing the conversation.
/kff
Kyle Flahertys last blog post..Blog Comments Drive Community Engagement
Amber,
I like your approach – granted, any CFO would not be happy with it. Alas, I think you are making a great point that goes well beyond ROI: don’t start anything unless you are sure it meets your goals and your needs. Strategy is everything, and your SM initiative needs to have one attached to it. I like that (and I hope you are saying that :))
I have been dealing with the issue of putting a financial return (ROI) on customer relationships for over 10 years. Whether it was for CMR, CEM (I just finished a series on this in my blog, link below), Feedback Management or whatever other “thing of the week” for managing customers, I have been there. And I am tired of saying you cannot put a price, or value, on that and have CFOs sneer and snort.
I think that the essence of what you do with your business cannot me measured in normal metrics – and maintaining closer, better customer relationships falls in that camp. Whether we are talking SM or anything else.
Esteban Kolskys last blog post..ROI for CEM? NWJ (No Way Jose)!
Amber,
I like your approach – granted, any CFO would not be happy with it. Alas, I think you are making a great point that goes well beyond ROI: don’t start anything unless you are sure it meets your goals and your needs. Strategy is everything, and your SM initiative needs to have one attached to it. I like that (and I hope you are saying that :))
I have been dealing with the issue of putting a financial return (ROI) on customer relationships for over 10 years. Whether it was for CMR, CEM (I just finished a series on this in my blog, link below), Feedback Management or whatever other “thing of the week” for managing customers, I have been there. And I am tired of saying you cannot put a price, or value, on that and have CFOs sneer and snort.
I think that the essence of what you do with your business cannot me measured in normal metrics – and maintaining closer, better customer relationships falls in that camp. Whether we are talking SM or anything else.
Esteban Kolskys last blog post..ROI for CEM? NWJ (No Way Jose)!
Wow.
That’s the most sense I’ve ever seen anyone talk about marketing… impressively accurate perspective :o)
Wow.
That’s the most sense I’ve ever seen anyone talk about marketing… impressively accurate perspective :o)
The ROI of Social Media is one of the topics that is only going to get hotter and hotter as the economy continues to slump and businesses look to squeeze every penny of value out of their budgets. I am glad that you addressed this, and you hit the nail on the head, “You cannot calculate a return on anything unless you know whether or not your goals – and your definitions of both Return and Investment – are the right ones.”
One must define the goal as specifically as possible in order to be able to measure it. So many are unable (or unwilling) to put in the effort to define the goal in concrete terms rather than the traditional “corporate mumbo-jumbo”. Vision statements and mission statements need to move from the realm of feel-good phoney-baloney to actionable and measurable statements of purpose.
Business leaders also need to re-think the way that ALL aspects of marketing are used, measured, and iterated. Facebook, LinkedIn, and Twitter are as important to customer engagement as golf outings, Chamber of Commerce events and trade shows. It is about dialogue and on-going relationship development.
The ROI of Social Media is one of the topics that is only going to get hotter and hotter as the economy continues to slump and businesses look to squeeze every penny of value out of their budgets. I am glad that you addressed this, and you hit the nail on the head, “You cannot calculate a return on anything unless you know whether or not your goals – and your definitions of both Return and Investment – are the right ones.”
One must define the goal as specifically as possible in order to be able to measure it. So many are unable (or unwilling) to put in the effort to define the goal in concrete terms rather than the traditional “corporate mumbo-jumbo”. Vision statements and mission statements need to move from the realm of feel-good phoney-baloney to actionable and measurable statements of purpose.
Business leaders also need to re-think the way that ALL aspects of marketing are used, measured, and iterated. Facebook, LinkedIn, and Twitter are as important to customer engagement as golf outings, Chamber of Commerce events and trade shows. It is about dialogue and on-going relationship development.
Amber, well said. I think part of the problem, and the basis for my post at Marketing Profs Daily Fix, is that most marketers don’t know how to plan…and planning is what will force them to do what you are suggesting (hopefully, anyway). Planning has a way of making companies ask tough questions. Sure, it’s easy to throw out a lofty goal, but when they have to set objectives (that are measureable) against that goal…well, that’s when the challenge begins.
I absolutely agree, most companies look inward to set goals, not outward. I have asked this question several times and still haven’t received any good answers: Why are companies afraid to talk to their customers?
This is a topic that requires much more discussion.
Beth Hartes last blog post..Social Media in Action
Amber, well said. I think part of the problem, and the basis for my post at Marketing Profs Daily Fix, is that most marketers don’t know how to plan…and planning is what will force them to do what you are suggesting (hopefully, anyway). Planning has a way of making companies ask tough questions. Sure, it’s easy to throw out a lofty goal, but when they have to set objectives (that are measureable) against that goal…well, that’s when the challenge begins.
I absolutely agree, most companies look inward to set goals, not outward. I have asked this question several times and still haven’t received any good answers: Why are companies afraid to talk to their customers?
This is a topic that requires much more discussion.
Beth Hartes last blog post..Social Media in Action