Red 7

If 2010 was the year that corporations and individuals accepted the fact that social media was not longer a fad, 2011 will be remembered as the year that a return was expected. It’s not surprising that something so popular would be expected to be profitable. How else could you justify the expense in time spent participating. The question is a good one, and not new, however in the social media space, difficult to answer. A search on articles and blog posting with keywords “ROI” and “social media” results in multiple listings daily.  It’s a challenge to keep up with the different theories and ideas surrounding the actual return that a company or organization generates by participation.  And therein lies the problem- we are hard wired to expect one.

Recently Olivier Blanchard released a new book entitled Social Media ROI, Managing and Measuring Social Media Efforts in Your Organization.  Brian Solis was asked to write the forward for the book and he related his experience in FastCompany.com. On the subject of ROI in social media, Brian writes that there seems to be an expectation among marketers and decision makers that a measurable return must exist to justify and validate participation in social networking. The problem is, we first need to decide and identify what metrics would mean success.  When asked, what the ROI of Social Media, Brian says “you can’t measure what it is you do not value or know to value.”  He continues,

As in anything in business, the ability to tie activity to the business values is critical.  If we are to commit time, resources, and budget to social networks our investments must be justified.  Indeed, social media strategies must prove long-term value and contribution to the bottom line in order to evolve into a pillar of business success.  But how do you measure something when best practices, case studies, and answers in general are elusive?

When it comes to social media measurement and defined metrics of success- it’s still the Wild West.   I agree that it’s elusive to illustrate a direct measurable correlation between social media use and sales, however, I think the expectation of one, should be seen and received as a positive sign.  If an expectation for a return exists, then the powers that be  have “bought-in.”  This tells me that they agree that a social media strategy may be worth exploring.  Baby steps, baby steps.

The issue of social media metrics is that we are placing their returns in the same category as other marketing methods.  By doing so, we fail to grasp that social media transcends more traditional marketing and  sales approaches.   Although the fundamental concept of social is something that has been with us since the beginning of time, it has never been available at the global scale it is now.  In social media, there are limited barriers of entry, light speed distribution, and a built in global audience.  It IS the industrial revolution of communications on a universal scale. You don’t have to look too far to find ways in which the social world has begun to influence behaviors (purchasing decisions, relationships) and even revolutions.  It is likely that many of these behaviors would have happened with or without social media, however, unlikely to have happened as quickly as they do today. On a more local business scene, online interaction and engagement have become digital proxies for the social networks we’ve created as humans in market places, groups, associations, chamber mixers, and networking events.  Humans are social animals, and social media networks have created a whole new set of watering holes.

As a student of interpersonal communications I am fascinated by the growth and influence of social media on a daily basis.  The entire paradigm of communications is changing providing the opportunity for a conversation to begin as a simple dyad (one-to-one exchange) and blossom into a global conversation while still maintaining the intimacy of the first exchange.  We now have the tools to take a small group conversation or idea and like a virus spread it across borders, oceans  and ideologies.  When someone shares content (a video, a photo, a link, etc)  they are doing so much more- they are creating an opportunity to enrich, educate, entertain, and engage (the 4 E’s according to Denise Wakeman). Individuals with large networks have the ability to exercise their influence and drive purchasing decisions for products and services.  Again, this is not a new concept, however the channel to exert this influence is growing daily with each new subscriber.  Smart companies are well aware of this influence.

Consumers are adopting these new tools and their buying behavior is adapting to the new process.  Note how many online vendors provide opportunities for consumers to rate and review the product.  They recognize the power of social influence and will risk the possibility of a bad review in exchange for the credibility gained by providing full transparency and authenticity.  And guess what, it works!  These days, I am hard pressed to book a hotel room, buy a book, or see a movie before checking out what others had to say about the hotel, book or movie.   My time is limited as it is, and the little time spent reading reviews and the opinions of others is saved in the aggravation and disappointment of a bad experience. As a result, businesses need to gauge social media engagement and ROI not in what it can gain, but what it could potentially lose by NOT participating.  Hence a Return on Relationship (ROR) versus a Return on Investment.  And if you are fixed on having an RO-I, I propose it be a Return on Influence.

Measuring relationships may be elusive, however it doesn’t take much to know when a relationship is good,  and when it’s bad.  In the financial services world, it’s the difference between keeping a client that provides referrals and additional business, and clients that walk away or stop engaging altogether.   Traditional client acquisition methods like cold calling, direct mail and seminars relied on old school prospecting dependent on numbers.   If I made X number of calls, I will get Y number of leads, that will generate Z number of appointments, to yield S number of clients.  The entire process is designed to create new relationships that will lead to new business.  As your business grows, and the prospects  become clients the attention shifts towards providing quality service and attention with the hope of securing more relationships from your existing book.  Over time, client retention becomes more and more important to maintaining your business as the the cost of new client acquisition, both in time and  money, grows.

Existing client relationship are valuable, and social media provides a way to further enrich and grow your  relationships by offering an additional medium to connect, engage and  and share.  In the financial services industry we strive to develop relationships to a point where the focus of the conversation focuses less on numbers and more on goals, dreams and aspirations. Social media provides the platform to foster and grow these connections and relationships that are not time bound or restricted by borders and geography.  A connected advisor adds value to the clients they serve, and it would be much harder to leave an advisor that is available and providing multiple channels for engagement.  Given the no cost of distribution, and wide reach social media provides, it would be foolish not to use the tools to grow and maintain your business.  My primary issue with firms not adopting these tools is their lack of vision to appreciate the power of the medium, the power to connect and engage.  Although firms would like us to have strong  relationships with clients, they continue to dictate the mediums by which we can engage with them.  Guess what? E-mail, phone calls and a pretty website is not going to be enough for the next generation of investors, OR advisors.

Social media is democratic, transparent and authentic, allowing everyone to see who you are, what you know, and what you have to offer.  In the aftermath of 2008 and 2009, clients are expecting a new level of openness and transparency-and they deserve it.   It would be foolish for any advisor to believe today that a new prospect is NOT doing a Google or LinkedIn search prior to the first meeting.   If you don’t believe me, ask next time.   So ask yourself, is your profile up to date?  Do you have one?  If your answer is “no” to either of the two questions, you are already behind.

In summary, I understand why we want and expect ROI, however it blinds us to accept a more traditional metric of success that can only be measured in dollars and cents.  I propose we look beyond the monetary value that can be gained by participating.  If you are to survive in this competitive business, and relate with the new generation of investors, you’ll need to increase your focus on ROR- the Return On Relationships, the Return On Retention, and the Return On Reality.  In social networking, the only ROI that really matters is the Return on Influence!

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