Social Networking ROI
There is plenty of speculation about social networking and the actual return on investment. Old corporate executives are sitting in their boardrooms looking at dollar signs and little else. What is our cost-per-like? What is our revenue-per-fan? What’s the difference in profit margins between Facebook Fans and Twitter Followers? What’s the average Klout score for 2010 Fans versus 2011 Fans?
Anyone that has ever managed costs for a business can understand the rationale in asking these questions, and therein lays the problem. Large corporations have trained their managers to manage by the numbers. Sure, valuable, real-time demographic data can be extracted and analyzed, and a variety of stats and facts can be conceived, but this approach misses the most incredible opportunity available to business owners in social networking – the real ROI.
You see, a social network isn’t an advertisement per se. It shouldn’t be published with the intent of generating as many likes, fans or followers as possible. This is flawed thinking, and using this approach will surely leave you wondering where your return on investment is.
Social networking is a communications medium. It’s a place where your customers can go to share their unique insights about your products or services. And it’s a place where you can speak back to them and show them how you handle customer complaints and show customer appreciation. Social networks are about being social. They are about having 1-on-1 dialogues with your customers that require nothing more than a bit of insight, patience and a few minutes to type up a smart, calculated response to their comments.
You can choose to do what many companies are doing and just ignore it. This is about the equivalent to ignoring their phone calls or even their requests to speak with you in person. If a customer is going out of their way to voice their opinion about your company, what more could you possibly want? They’re giving you their honest feedback.
Unfortunately, some companies have tried to embrace social networking, only to find that they weren’t prepared or didn’t understand how to best use it to their advantage. As a result, many have been burned. These stories have been amplified by brand managers and corporate executives to the point where many people feel so uncertain about these new technologies that they’ve chosen to ignore them. This is a huge mistake.
I credit the guts of this article to Gary Vaynerchuk and his new book, The Thank You Economy, in which he points to some great examples of brick-and-mortar powerhouses that failed to embrace new internet technologies that were changing the way we do business.
For example, at the beginning of the new millennium, Blockbuster Video had a virtual monopoly on the video rental market. The internet came about and they chose to ignore its endless possibilities. Look at them now.
Borders is another example. They were a powerhouse bookstore company with over 500 stores in 2010. Today, they are bankrupt. Rather than see the incredible potential of e-commerce, they turned over their online sales to Amazon, believing that the majority of their customers would still prefer to come into their stores for their purchases. They were dead wrong.
Sure, these examples refer to the internet and e-commerce rather than social networking, but the point in using them as examples is that they both chose to ignore new technologies that were fundamentally changing how we do business. Because they didn’t have any hard evidence that their customers would embrace them (they were still so new), they assumed that their customers would continue to follow their traditional buying patterns.
Fast forward a decade and both of these multi-billion-dollar corporations cease to exist in any relevant manner. Netflix staked a huge piece of the video rental market and Barnes & Noble (BN.com) and Amazon have emerged as the leading bookstores of the world.
Technology is changing how we do business in almost every way imaginable. Business owners can live in fear, resist change, ignore reality, and they may soon find themselves in the same shoes as the aforementioned failed conglomerates. The other option is to embrace these new technologies, and understand that they offer the most powerful means of communicating with your customers that the world has ever known.
Your social network is a forum. A place where your like-minded customers can come together and celebrate the joy they share in doing business with your company – or their frustrations. Whichever it is, to ignore this free, priceless feedback is to ignore your customers. As any successful business owner understands, your customers are the lifeline of your business. Ignore them and soon there will be no business.
So what is the ROI with social networking? How about just that? Free, unedited, raw feedback from the people that keep your business humming, and the ability to efficiently maintain communication with them in a place where everyone can see how much respect and appreciation you show for your customers. Sounds like a worthwhile investment to me.
Oh and by the way… if you have any feedback on this article, please feel free to post a comment below or visit our Facebook Fan Page and comment there. I promise you will hear back from me:)
- Benjamin Gray
Principal, Gray Spectrum
