Home > Marketing & PR, Reciprocity, Social Media, Startups > Defining ROI of Social Media by Identifying Opportunities with Social Media

Defining ROI of Social Media by Identifying Opportunities with Social Media

There is a lot of buzz about social media.  There is also a lot of noise. So, I’m never surprised when brands are confused and misguided about what the value is of participating in social media and how to begin.I came from the movie business where the trades analyze box office numbers like sports stats. The whole industry has become focused on opening weekend, and if the movie doesn’t perform, it’s likely not going to be given the opportunity to develop an audience. It’s all about creating excitement and anticipation before the movie’s release vs. allowing the content to gain positive word-of-mouth and momentum after its release. It’s all about winning the sprint.The social media industry as a whole is following a strikingly similar approach.

In the startup world there are rumblings of a bubble. It’s sexy to invest in social media startups in hopes of getting in on the next Facebook or Twitter or LinkedIn or even Groupon. The problem is that many investors trying to get into the industry don’t know what to look for, and so many entrepreneurs are, as Charlie O’Donnell so adequately stated in his newsletter a few weeks ago, “solving to get funded” instead of building products that are creating value by improving the lives of the greater population. It’s about the sprint, and the finish line is getting funded by a VC. While any VC or entrepreneur worth their salt knows it’s really about the execution, and that is akin to running a marathon several times over.

In the marketing world, we are reporting on the most-viewed, viral branded videos. We’re creating badges for every action and trying to figure out which new check-in or check-out startup we should use on the next campaign.  We’re confusing brands about what’s important and valuable – probably because this is all still so new that we are, in part, figuring it out as we go.

So, I have a challenge for everyone: keep it simple and focus on the longview.

Here’s what I mean by that:

Social Media Is Not New
Instead of trying to give you a lesson in the history of social media, I’ll just refer you to a series of posts by Mark Suster. Honestly, he explains it better than I could. Here are Part 1 – Social Networking: The Past, Part 2 – Social Networking: The Present and Part 3 – Social Networking: The Future.

What it comes down to is that there is a common thread between the technologies from thirty years ago, and the ones today. What has changed is that the internet is now ubiquitous and the platforms more sophisticated in enabling people to connect with each other, and find, filter and share content that they find relevant and valuable.

When analyzing new technologies, focus on those that solve a real problem for a large audience (broad or niche) and create a community (i.e. a network or fan base) around that product/service.

So, What’s the Value of Social Media for a Brand?
The most valuable thing that a brand can do in social media is leverage its platforms to listen to, and communicate with, their customers to create an owned advocacy network where a brand’s most avid advocates can

  • inform the brand directly on valuable improvements that the brand can make to its product/service
  • help other customers solve issues that they’re having with the product/service
  • gain exclusive access to content that the advocates crave and can use for their own social activities (participating in forums, blogging, etc.)

This is valuable because

  • customers transform into advocates with an emotional connection to the brand
  • brands can implement the insights from their advocates into product/service updates, improving their brands in a meaningful way
  • advocates earn a real voice in the brand’s development and identity, which only deepens their connection with the brand and makes them want to participate more, leading to more insights and more positive word-of-mouth and content (and high search results) for your brand
  • less money and time spent on a customer service team because your advocates are already answering many of the questions that a customer may have. And, they may be answering those questions in a clearer and more timely fashion than your customer service team would

What Does This Really Mean for a Brand?
A tectonic shift in the way a brand manages its business. It must start behaving like a transparent startup, and that directive has to come from the C-Suite down. The value can be tremendous. Social media gives brands a channel to encourage innovation informed by its greatest advocates. It eliminates the guess work when thinking of improvements to your product/service – just listen to your advocates and you know that there will be a consumer base that appreciates the updates.

Bob Pearson describes this phenomenon well in his book “Pre-Commerce”, as does Gary Vaynerchuk in his book “The Thank You Economy”.  I highly recommend both reads.Warren Buffett Says
I’ll leave you with two Warren Buffett quotes:
  • “The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective”,
  • “There seems to be some perverse human characteristic that likes to make easy things difficult”.

Well, essentially, the same goes for social media. The press and ad agencies and VCs and startups generate a lot of noise and make social media sound a lot more complicated than it really is.

Focus on the simple behaviors – the basic actions that people take online. Understand why people take those actions and empower them to do more of it, while providing them value with your brand. And, remember that it all starts with listening.

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