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Tuesday, January 12, 2010

If you do your job right, nobody will ask about social media ROI

Listening to David Meerman Scott’s epic rant on ROI, a few thoughts crossed my mind:

• David is able to exercise remarkable self control. There’s little doubt that “freaking” wasn’t the word he wanted to use.
• The ROI issue continues to inspire debate. Some of the 45 comments left to David’s post insisted that ROI calculations are necessary for social media. More to the point, though, Google’s Blogsearch reveals nearly a quarter of a million posts on social media and ROI.
• I’m more convinced than ever that ROI is simply not a relevant metric for social media, although the results of a social media effort certainly need to be measured.

The most important thought to cross my mind, though, was this:

It’s a point I wound up articulating—after some discussion with my co-host, Neville Hobson—on yesterday’s episode of FIR. You can listen to the segment below (it runs a little over 10 minutes and inlcudes David’s original rant):

Any communicator worth his or her salt will build measurement into a communication plan. Even the simplest, quickest, down-and-dirtiest communication effort needs to be based on the need to achieve a business objective. You need to know whether—and to what degree—you’ve achieved that objective. So any communication you undertake needs to begin with what the objective is and how you’ll know whether you’ve achieved it.

If you can show those two items to management, nobody will ever wonder about the ROI of your efforts.

The reason measurement must be a fundamental element of any communication is simple. Companies fund communications with the expectation that communications will help drive the business. If you can’t show how your efforts are helping the company achieve its goals, why should the company waste money on it? I’d give a long look at anyone who claims to be a social media consultant who doesn’t bake this kind of measurement into his or her social media schemes.

Measurement is important. ROI is the wrong measure. I explained why back in early November. Still, nothing helps explain a point like a good example. When Dell got started in social media, it was because the company was taking massive hits in online discussions. The business objective was to reduce the amount of negative conversation and increase the amount of positive and neutral discussion. Few executives would argue with the benefits to the business of having people say good things instead of bad things. And, in fact, Dell’s social media efforts resulted in negative sentiment declining from 48% to 23% from August 2006 to mid-2008. (That’s when Dell’s Richard Binhammer and I co-presented a session on social media to Comcast’s communications staff.)

You can’t point to the value of that improvement on a balance sheet. But nobody will ask for ROI if your plan goes like this:

1. We’re being hammered in online discussions. It’s surely affecting purchase decisions. Right now, nearly half of all comments about us are negative.
2. We plan to initiate a variety of social media efforts designed to turn the situation around.
3. We’ll monitor the space to assess whether our effort is having an impact. Our goal is to reduce negative commentary to 20% within two years.

Measurement of communication—any communication—is all about the degree to which you achieved the measurable objective that drove the communication in the first place.