Here are all of the posts tagged ‘ROI’.
The most successful brands don’t just predict the future; they define the future on their own terms.
To that end, we’ve developed Social Brands & The Future Of Marketing – a series of provocations designed to help you shape your brand’s vision of the future, and to start bringing that vision to life today.
We’ll be sharing all 8 provocations on the We Are Social blog over the next few days, and we’re kicking things off today with a contention that addresses one of the thorniest questions when it comes to social media: “How do we deliver real ROI”?
Social Equity Drives Brand Equity
As we’ve highlighted before, the key to delivering meaningful ROMI is to set clear business objectives at the outset, and to make sure that everything the brand does is focused on delivering those objectives.
However, many brands are still stuck in short-term, cyclical marketing. For reasons often beyond our control, marketers are still overly focused on this quarter’s results, and as a result we often miss the wood for the trees when it comes to social ROI.
The reality about relationships is that they take time to deliver their full potential.
However, once relationships reach this potential, the returns keep coming; ‘returns on relationships’ aren’t a one-time result.
So how do we build these meaningiful relationships?
The secret lies in understanding why people choose to talk about brands.
The Sociology Of Choice
The observation that people are highly social creatures is hardly a revelation, but it’s important to remember that people don’t make personal choices in isolation.
Indeed, many of the choices we make are influenced by our expectation of the reactions those choices will elicit from those around us.
The more confident we are that these expectations will be met, the greater our level of conviction when it comes to those choices.
As a result, the conversations we have with other people are one of the most important determinants of our brand choices.
Conversation Drives Compensation
Again, that’s hardly a revelation. However, many brands appear to be missing its commercial significance.
The reality is that brands which succeed in inspiring more favourable conversation are the ones that will succeed in building the greatest propensity for trial, and that are best placed to form lasting relationships with their audiences and consumers.
Therefore, more favourable conversations drive a more favourable financial outcome.
Critically, though, it’s the conversations between people that matter most, and not necessarily the conversations that those people are having directly with the brand.
Similarly, the conversation doesn’t have to start in social media for it to have value; everything the brand does – from packaging to advertising, and from customer service to recruitment – should be designed to maximise the greatest volume of peer-to-peer conversation.
Brands Worth Talking About
The implications of this are huge; for example, when it comes to a ‘content’ strategy, we shouldn’t start with the usual suspects like video or ‘fill-in-the-blanks’ status updates.
More importantly, we need to stop relying on conversations about content, and look at content as a means of inspiring and fuelling the conversations that really matter.
This means re-thinking our approach to brand communications.
Talk Is Cheap, But Conversations Have Value
We need to start by identifying what we want these brand conversation to be about, and then work out the most engaging and motivating ways of inspiring conversation.
That inspiration can come in many, many forms, and only a small number of them need to start in social media.
However, before you make any investments, be very clear about why the audience might want to be a part of this conversation.
Be honest with yourself – will they actually care? Is it really worth talking about?
ROI = “Return On Interest”
The good news is that getting this right has huge financial potential; a brand worth talking about is a brand that people are willing to pay more for.
In order to take advantage of this potential value, spend more time working out how your brand can become a relevant ‘social entity’.
Ultimately, building your social equity will help you to build your financial equity.
Want to join the conversation? We’d love to hear your thoughts and reactions, so why not share them in the comments. In the next post in this series, we’ll explore the importance of building communities instead of buying audiences.
As I’ve mentioned before, measuring the ROI of social media on a campaign level is pretty tricky and as Sandrine pointed out a couple of weeks ago, companies may need to take a long term view in order to fully reap the benefits of social media.
- In step 3 (slides 44-46), you should also consider measuring other things like:
- Customer retention/loyalty (to understand why this is important, have a read of Chris Stephenson’s overview or his entire paper on the subject)
- Net Promoter Score (see Paul Marsden’s study around NPS and how advocacy drives growth)
- Brand equity (Andrew Sharp sharp gives a good overview of why you should be thinking about this).
- In steps 6 & 7 (slides 54-55) it’s possible there will be a significant lag between your efforts in social media and their potential effects so try to take this into account when looking for them
Having worked client side for over 10 years before joining We Are Social, I totally get the ROI culture of most companies – this is how things work, especially in these recessionary times when every penny counts.
The frustrating thing is that measuring the ROI of social media is tricky (as Scott Monty, Ford’s head of social media famously said “What’s the ROI of putting your pants on in the morning?”). However, I joined a social media agency not only because I am passionate about social media but mostly because I am 100% convinced that social media 1) will become a core activity for businesses of all shapes and sizes and 2) it will transform the way companies operate. To me, social media is a long term commitment.
With that in mind, Chris Lake draws a very interesting parallel between social media and e-commerce:
We’re still hearing a lot of hype about something that is unproven, in ROI terms. That remains true, although some companies are generating ROI today, whereas others may take a hit before seeing a return. If you buy into the idea that this might work, then you need to be prepared to wait in order to see some positive results.
There are parallels with the great leaps into e-commerce a decade ago (amazingly some retailers have yet to dip their toes into the water). The cynics at the time doubted that selling things online would ever become a mass market no-brainer, as it is today. I wonder if the same applies to adopting social media?
There’s no doubt that the internet has done wonders for many companies. Tesco may pull in around £2bn of sales from its online operations this year, and perhaps £100m in clear profit. And John Lewis now counts its website as its biggest store, ahead of the huge ‘flagship store’ on Oxford Street. If that’s not progress, I don’t know what is. Not that it happened overnight. ROI obviously wasn’t generated immediately. Both Tesco and John Lewis needed to pony up a large wedge of development money in order to set up their websites, and to recruit appropriate people to run them. They had to pay to play, in order to transform their businesses.
The next decade will be the age of customer engagement and customer satisfaction. Don’t want to miss out on the next big revolution? Then start engaging with social media now.
It’s a question we get asked a lot, and despite the temptation to reply with Scott Monty’s (the head of social media for Ford) famed response – “What’s the ROI of putting your pants on in the morning?”, we usually say something more considered. We talk about how, despite the fact that we can measure the outcomes of the work that we do (and that we’re getting pretty good at it) and that we work with our clients to set meaningful KPIs at the beginning of engagements, it is still really hard to map those back to business metrics like ROI.
This is why we’re working closely with the rest of the IAB’s Social Media Council to get our research into the effectiveness of social media at a campaign level off the ground (you would not believe how hard it is to devise appropriate and affordable research methodologies to do so), and also one of the reasons we’re active participants at MeasurementCamp.
However, those that tell you can’t measure anything are wrong. If you’d like to know more, Jon ‘yongfook’ Cockle has a great presentation and accompanying blog post that outlines an approach to measurement that pretty much mirrors our own: