Blogging was where we began, and how we built our company so we have preserved this archive to show how our thinking developed over a decade of developing the use of social technology inside organisations

Unlocking social media ROI through business transformation

by Robin Hamman

Last night I attended one of the Social Media Week events, Show Me the Money: Where’s the ROI in Social Media?, a panel discussion organised by Chinwag and hosted by Sun. The discussion, chaired by Andrew Gerrard, included Robin Grant from We Are Social, Luke Brynley-Jones of Our Social Times, Marshal Manson from Edelman, Mark Rogers of Market Sentinel and – the only one I wasn’t familiar with – Geoff Watts of Stylesignal.

As social media marketing becomes more mainstream, more and more people are asking for real evidence that these activities generate a positive return on investment (ROI). Measuring ROI isn’t just a problem for social media marketers – it’s a problem with the marketing industry in general. No one can demonstrate, beyond a doubt, that the £30 million television advertising campaign company X ran last year caused the 5% increase in year on year sales rather than low interest rates, the good weather, or some other external factor. Sure, the industry has come up with all sorts of qualitative and quantitative measurements for marketing ROI, but these measurements do still require at least some suspension of disbelief.

As I’ve discussed here before, during the 20th Century, production and service delivery became profit, rather than consumer, focused. What this means is that product and service offerings are now frequently devised on the basis of their potential profitability, not upon genuine consumer needs. In this situation, marketing is an essential activity as it helps to create a market for products and services that most of us otherwise would never realise we “need”. And when consumers have to be convinced that they need something, some are likely to be disappointed as they realise that those products and services don’t, actually, meet their requirements – that’s where after sales support and PR come in.

The vast majority of marketing and public relations activities, if you really sit down and think about it, probably contribute very little to society other than jobs in the industry and, those involved in that industry might argue, generating the sales required to sustain economic growth. They’re not, however, activities that are really central to much of anything, at least not as those industries are configured today. This doesn’t have to be the case.

I know a lot of skilled, creative, thoughtful people who work in marketing and public relations. They are natural communicators, skilled at creating positive messages about brands, listening to consumers and audiences, and providing helpful responses where appropriate. These are skills that can be deployed so much more usefully – and measurably – within a more socially calibrated business.

Several of the panel members touched, briefly, on the idea of using social media for business transformation. Marshall Manson from Edelman said that although social media can be transformative, giving the example of Dell, most of his clients aren’t asking for that – they just want a social media campaign. Robin Grant, too, mentioned how Eurostar shifted it’s approach, following the recent problems with cancellations due to trains stuck in the Channel Tunnel, from trying to explain what had gone wrong to trying to help people get home.

In both these examples, the shift has been from getting the message out, to listening, engaging in conversations with customers, learning from those conversations, then providing better products or services based upon those conversations.

Many marketing and public relations people are familiar with social monitoring tools and techniques of engaging on social networking sites, content sharing services, blogs and forums. The problem is, at present, most businesses that undertake these activities deploy small, specialist teams that effectively act as a blockage between audiences and consumers “out there” and business processes behind the firewall.

StyleSignal, one of the companies represented on the panel last night, has turned this sort of thing into a business: they monitor what fashionistas are saying online and provide trend forecasts for their fashion industry clients, allowing them to react immediately with new styles and designs.

Yet it’s possible to do even more by integrating social tools into core business processes: invite audiences and consumers to co-create innovative product and service offerings, bounce ideas off them, let them get their hands on and provide early feedback about new products, involve them in marketing, encourage them to assist other customers – essentially, involve them in a range of activities which have a known cost, but also a measurable ROI, to your business.

Sticking, for a moment, with the fashion industry, let’s talk t-shirts. Say you’re a t-shirt company. You invite people to submit their own designs to your site, potentially with incentives such as a design competition, free products, or a revenue sharing agreement. Marketing people come up with this sort of thing all the time, but keep reading, because here comes the measurable ROI. You know that it usually takes you 5 people days to create a new t-shirt design, and this has a known cost to your business. Each time a design contributed by a member of the public goes into production, you have reduced your cost base. Perhaps you don’t even need to employ designers anymore (boooo!). Before you print up any of those t-shirts, you put the designs on the site and let people vote and comment on them, effectively doing your market testing and helping refine your offering. Then, once you do print the shirts, the person who designed it, and people who pro-actively took an interest in voting for it or helping improving the the design, will feel a sense of pride and ownership in the resultant product. They’ll probably buy it themselves – because they actually want it – and send links to their friends, add it to their facebook wall, post images of themselves proudly wearing the design on flickr, etc. This is exactly the idea behind Threadless, which is a great example of a business that puts the consumer community at the very centre of everything they do – they’re a social business.

Not everyone has the desire, or skills, to engage directly with members of the public, but marketing and public relations professionals tend to have these skills in abundance. Social tools offer opportunities for those with these skills to do so much more than protect a brand’s reputation or sell stuff – it offers the opportunity to be at the centre of a transformation in business critical processes. The result will essentially be the same – brand reputation will be secured and more stuff will get sold – but it will, at last, also result in directly measurable ROI that doesn’t require any suspension of disbelief at all.

3 Responses to Unlocking social media ROI through business transformation

  1. By Lars Plougmann on February 3, 2010 at 12:09 pm

    Your t-shirt story illustrates a point that reflects my view on the whole social media ROI discussion: Concepts, technologies or tools don’t have ROIs; process improvement does.
    Show me your processes and we can work out the potential ROI of applying social business design principles to those processes.

  2. By Peter on February 3, 2010 at 8:45 pm

    Yesterday, a splendid post by Tara Hunt on the importance of human values for business, and today, this equally valuable one. Maybe they’re like London buses – better keep an eye out for another one soon.
    I was at a meeting about tracking and monitoring earlier today – could have done with material then!
    Thanks for posting – good stuff.

  3. By Melanie Cook on February 4, 2010 at 1:01 pm

    I was at this event too, and this post as well as the event itself opened up the question of what is the R and I in ROI. As illustrated by the T-shirt story it could be argued that the R is the money saved in manpower (boo…) and the I is the time (read money) it takes to set this customer-led design process. The good thing about this type of investment is that it can be costed, and the return easily measured.
    From an Account Planning viewpoint the direct access to customers and their unimpeded opinion on brands is priceless. I am going to attempt to put a monetary value on it: the R would be better true-insight led work that leads to incrementally higher response and conversion rates, thus sales. I suppose one could argue that the saved cost of creative research could be included in the R. The I is the Planner’s and/or Client insight department’s time to read and extract the insight. No suspension of disbelief required if operational costs were included in communications measurement.
    You’ll also notice that both the I’s above do require a structural change aka the business critical processes mentioned above, but here a am suggesting that is needs to happen on both sides of the Agency:Client fence.