Let’s End The Magical Thinking About Social Media ROI

Last year at SXSW, I participated in a panel on social media measurement with Margaret Francis of Exact Target, Megan Costello of Crimson Hexagon, Blake Robinson of CNET and Chris Lightner of Edelman, called “Advanced Integrations of Social Media Analytics.” In retrospect, not the most user-friendly of titles, but it was essentially a workshop, with framework, examples and tips on social media measurement.

We prepped intensely, meeting weekly to run through the most recent and useful examples, tips and tools we could find. Our slot was the highly-coveted Tuesday at 3:30 session, by which point, we figured, we’d have to yell over the sound of the vacuums to the one hungover guy who’d missed his plane and was snoring in the back. The room was packed; people need and want to know this stuff.

In the interim, I published my research report, “A Framework For Social Analytics,” in which I interviewed about 40 brands, vendors and agencies on how they measure the business value of social media. It’s an emergent, imperfect discipline, still as much art as science, but there’s no question: companies are measuring social media, many with rigor, significant investment, and most importantly, useful results.

All of which is to say: Social media is measurable. It can be done. To say social media can’t be measured is a cop-out, and dangerous for anyone who works in an organization that, say, plans to make or raise money at some point in the future.

This year, I thought it would be interesting to go to SXSW as a tourist and see as many sessions and meet as many people as I could. I met with a bunch of companies including some interesting stealth startups whose ideas I’m sure we’ll be talking about next year. They take the measurement of social extremely seriously, and they also understand, as is a foundational philosophy at Altimeter Group, that it is innately driven by relationships. These ideas co-exist happily in their minds and business models.

So I was disappointed to miss Olivier Blanchard at today’s Social Media ROI panel, even more so to hear people whose opinions I respect recycle the same magical thinking about social media measurement that I thought (hoped?) we’d dispensed with already. Olivier quoted a lot of it on his blog post today. Here’s a representative example:

“Asking if there is ROI for Social Media is like asking if there is an ROI of the telephone or a pencil.”

Actually, no. It’s not. Social media is different. It’s not “just another channel,” because telephones and pencils simply don’t empower consumers the way that social media does.

Asking about the ROI of social media is a legitimate question, and the people who paid money and took time to attend the panel today (as do the people who funded their trips and programs and are expecting some insight when they return) deserve thoughtful and specific answers. I can think of a couple dozen people working in this space as analysts, authors, consultants, technologists and practitioners who would have sent the audience away with plenty of valuable examples. Olivier has written a book on the subject, I’ve written a research report (and am starting work on another), and there is no lack of serious work in this area. Really.

So, for the last time, we need to dispense with this magical thinking about social media; that somehow it exists on a plane beyond accountability or understanding. Jeremiah Owyang recently released a report on social media management systems in which he found that the average company he surveyed has 178 social media accounts. Are we really naive enough to believe there was no investment in these properties worth evaluating? Will they magically receive funding next year? Do we even know what they are?

We measure lots of things, and they seem to withstand the process perfectly well. We learn from what we measure, and we get better as a result. It’s our responsibility, whether we work for a magazine, an oil company, a global charity or ourselves.

So, whoever does this type of panel next year, I challenge you to treat these questions–much more importantly, your audience–with the respect they deserve. We’ll all be the better for it.

</end rant>

Make an App for That: Mobile Strategies for Retailers

About an hour ago, I was standing in the Genius Bar at the Apple store, trying to figure out a few things about my Mac. The conversation concluded with the purchase of an Ethernet cable; not the most glamorous of products, but necessary nonetheless. As I handed the associate my credit card, he grinned mischievously and said “What kind of iPhone do you have? Wanna see something cool?” And he proceeded to show me how to purchase my cable using only my iPhone and the Apple Store app.

Now this was not my first rodeo with a barcode scanner or QR code and yes it came out in November, but it was my first time seeing Apple EasyPay in action. And it made me realize that I could just wander around the store and scan and buy whatever I wanted, without the assistance of anyone in a turquoise shirt, much less a cash register. This was a dangerous realization for several reasons, not least of which was the potential impact to my credit card bill.

Helloooo, frictionless commerce.

[The other realization was that letting customers purchase independently in the store must really make companies rethink their security processes. If everyone can eventually buy stuff without having to get a bag or deactivate a security sensor, how do you know they actually purchased the things they're taking out the door? This is one of the many ways mobile is disruptive; it invokes the law of unintended consequences.]

But it also made me realize that with this simple transaction Apple has seriously tweaked yet another assumption about how the world works.

Did I buy the cable in the store? Yes.
Did I buy the cable online? Yes.
Did I buy the cable on a mobile device? Yes.

Goodbye, multichannel space-time continuum.

Now, for Apple, the channel-smashing is less momentous than it has been for other retailers, since Apple owns the revenue from both transactions. This is not the case for Best Buy, which, many have stated, has become a virtual showroom for Amazon. But don’t count Best Buy out; as my colleague Chris Silva argues in his new research report “Make an App for That: Mobile Strategies for Retailers,” Best Buy saw the writing on the wall early on and has been able to get ahead of the curve–at least for now.

But imagine the implications for say, Samsung. Or Louis Vuitton. Or BMW. What if, in the future, I could take my Shopstyle app into Saks and physically buy a handbag? Or to a dealer showroom and buy a car? It’s not that different from how we use apps today, although it would wreak some serious havoc on retail operations.

While we’re not there yet, there are glimmers. And while mobile strategy has been through several painful iterations in the past decade, the mobile shopper is finally, irrefutably here.

If you’re a retailer (and, I would argue, a manufacturer), you need to read Chris’ report, register for his webinar on Friday March 2 at 11:00 am PST, and make sure that your strategies align to your customers’ engagement paths.  And, if you have questions, you can find Chris on Twitter [at] 802.chris or on email at csilva [at] altimetergroup [dot] com.

SMW12 Wrap-Up: Now the Real Work Begins

There’s an attitude in Silicon Valley that social media is getting, well a bit tired. Soon, the idea goes, social will be integrated into business, and it will become an artifact of the oughts and teens, the years when people so quaintly thought that the idea of a business in conversation with its market was still  revolutionary. (No, I’m not forgetting the Cluetrain Manifesto: they called it years ago.)

So, depending on how much of a purist you are, social media will be a decade old in a few years–ancient in technology terms. That’s usually a signal for the cool kids to flee the cafe in favor of some new, shinier disruption.

If anyone was wondering how interested people still are in this idea of social business, Social Media Week San Francisco was a pretty good indicator. I spoke at two events–at Adobe and SAP–and people turned up and stayed. They wanted to hear about marketing of course, but they also wanted to understand enablement–how to change the organization to support the ability to engage with customers and community. And, happily, they wanted to know about measurement; what’s possible, what’s coming.

The truth is that no matter how much thinking and writing and developing and launching we do in the technology world, we are still in the midst–and will be for some time–of massive transformation. Dave Gray nailed it in a talk he did (that I didn’t hear, but saw excerpted on Twitter this morning): “Companies are optimized for line of production versus line of interaction.” That’s beautifully put. Moving command-and-control to a networked culture is a big, big deal for business.  It takes time, muscle and patience.

Here are my slides from the Adobe event. Michael Brito of Edelman and Tyler Altrup of EMC were kind enough to blog about my presentation at Adobe, and Forbes ran a post by Todd Wilms of SAP on the panel I spoke on there (that he moderated) with Shanee Ben-Zur of Nvidia and Petra Neiger of Cisco. All very different organizations with brilliant examples of making large-scale change work, within their particular organizational culture.

As always, I appreciate your point of view, so don’t be shy.

Satmetrix Adds Social Media Measurement to Net Promoter

With all the hoopla over the Facebook S-1 filing (about which my colleagues Chris Silva and Rebecca Lieb have insightfully written), it’s easy to miss other notable industry news.

Here is one smallish but important announcement that may have passed you by today: Satmetrix, creators of the Net Promoter Score (NPS), have announced SparkScore. SparkScore is a methodological update to NPS that, using a sentiment engine provided by Metavana, marries social sentiment data and NPS measurement methodology, yielding a score that mimics NPS based on social data.

Why is this important?

Currently, Net Promoter is one of the most widely adopted methodologies for measuring customer experience; specifically, a customer’s likelihood to recommend a product or service. In my interviews with nearly 40 companies for “A Framework for Social Analytics,” many of the people I spoke with indicated that their companies used Net Promoter and wanted to know when Satmetrix would integrate social data into the score. Some of the more advanced companies said they had been looking at social data in the context of NPS for some time, but hadn’t yet evolved a way to integrate the two.

Note that because SparkScore is still separate from NPS, we’ll have to see what insights customers are able to extract at the outset, as well as what interpretive challenges they face as they view the two scores side by side.  Says Richard Owen, Satmetrix CEO, “Ultimately, the goal is to integrate the data. Right now it gives us a chance to see the demographics separately.”  While this isn’t ideal in the long run, it’s a reasonable start, as the demographics of customers and of online engagement can be very different. But, Owen concedes, “everyone wants an integrated approach.”

If it’s successful, social plus NPS will help companies provide critical context to customer experience insights. “We need to be able to reconcile what companies think versus what is happening organically,” Owen says.

Owen believes that the introduction of a “social NPS” is a boon to social strategists and their teams, as it can increase the relevance of social signals in a way that is credible to executives. That entirely depends on the extent to which executives have embraced social as a legitimate source of customer insight, or whether they’re still looking at it as a condiment on top of “real” enterprise metrics.

To that end, keep in mind that adding social to NPS is a bit like adding oil to vinegar; their properties are different, and blending them is tricky. One is structured and bounded, the other is unstructured and real-time. So we can’t underestimate the challenge of integrating NPS and social data, especially at the outset.

This has the potential to leave unwary social strategists and customer experience professionals high and dry as they seek the right context in which to view and interpret these two very different data sets. While Satmetrix will provide some direction in terms of how to interpret the SparkScore data in context of traditional NPS, those of you who use NPS and SparkScore together will be on the front lines in terms of determining the right approach for your particular business.

It’s good progress, but not a magic bullet. We’ll be watching closely as Satmetrix releases its initial set of solutions. My advice? Set expectations with executives now.

If you’re an NPS company and you’re using SparkScore, or if you plan not to, I’d love to hear from you. Please comment here, or drop me a note at Susan [at] altimetergroup [dot] com.

Beyond Social Media ROI

This post is part of the Social ROI Blog Carnival at Think Customers: the 1to1 Media blog. Visit the blog carnival post “Calculating the ROI of Social Media” to check out the full lists of posts from numerous well-known social media thought leaders.

In August, I published a research report entitled, “A Framework for Social Analytics,” written partially in response to The Single Most Terrifying Question In Business Today:

“What is the ROI of Social Media?” 

I’ve heard many people stumble over, punt and otherwise avoid this question for the past several years. But if you happen to ask Gary Vaynerchuk (@garyvee), he’ll shoot back with this little gem: “What’s the ROI of your mother?”

Yes, it’s a cocky, seemingly glib answer. But that doesn’t mean you shouldn’t take it seriously, because it acknowledges that relationships are priceless. And not priceless in the unicorns-and-rainbows sense; priceless in the sense that some things in life–family, friends, education, health–accrue many and complex benefits that we can barely comprehend. This is true of social media, which is also a relationship, albeit one between organizations and their (now empowered) communities.

But we live in the real world–a world in which “many and complex benefits that we can barely comprehend,” will get you kicked out of meetings. The ROI question is unavoidable. I would suggest, however, that we not confuse the tool (media) with the objective (better relationships with our customers and community) or the hoped-for outcome (driving business value). So if the ultimate goal of social media for business is to drive value, how do we know we’re being successful? It’s time to do the math.

The first thing to remember is that there is no magic bullet, no single way to quantify the business value of social media. This is partly because it has broad impact, and partly because different companies value different things. In “A Framework for Social Analytics,” I propose six primary use cases for social media measurement, (each of which has associated KPIs), as follows:

The essence of this approach is that it distills the amorphous term “business value” into more concrete, approachable components.  For example, how does DIRECTV identify and resolve potential service issues before they escalate? How does Best Buy reduce the frequency and length of certain types of customer service calls? How does Amex determine whether sponsoring concerts influences brand reputation and/or purchase intent? All of these examples accrue to top-and bottom-line value, though in different ways.

The good news is that social media can be measured in ways that resonate with the executive suite. The bad news is that these metrics–and the tools with which to measure them–are still very immature. The worse news is that immaturity of tools isn’t even the biggest issue; most organizations don’t yet have the structures, processes, resources and training to measure social media effectively, although those with a cross-functional social media “Center of Excellence” or “Community of Practice” are a step ahead of the game.

The ideal state–and one that companies should start planning for right now–is actually to build social media programs to ensure that they are measurable at the outset. That means a repeatable process informed by a deep understanding of how social media supports business strategy, an understanding of how that success will be evaluated by management, a clear and honest appraisal of the organizational impact and, yes, the tools and data required to make it all work.

The Ticketmaster example from the Facebook Apps for Timeline launch in my previous post provides a good illustration. If, for example, you consider engagement (using the app), consideration/intent (I want to go/RSVP), conversion (Find Tickets/Buy) and sharing (Invite/Recommend) to be key performance indicators, you can build those right into your measurement framework (and your app!) at the outset, creating a self-justifying program.

The goal of social media measurement, ultimately, is to get ahead of the ROI question before it finds you. Even better, architect your social media programs so that their value is so glaringly obvious that the question never gets asked.

Facebook Apps for Timeline: Three Implications for Business

This week, Facebook announced “Applications for Timeline,” including a freshman set of 60 partners. The focus, as expected, is on entertaining, highly social activities such as fashion, music, fitness, food and travel. The idea is that people can now integrate apps into their timeline that reflect particular interests, allowing them to share–and learn from–friends with the same interests. Some of the initial partners include Foodspotting, Ticketmaster, Pose, Pinterest, Rotten Tomatoes and TripAdvisor.

On the face of it, it’s a fairly straightforward announcement–it’s no surprise that Timeline would become a major locus for development–but there are a few interesting implications for brands to think about, even at this early stage.

1. Building a richer experience for customers and community

Facebook says they are now approving any app that wants to integrate with Facebook and Timeline. The initial partner set is mostly composed of small companies, but note that Washington Post, USA Today and Ticketmaster are also launch partners. This should prompt brands to think about how and whether they should consider building a Timeline app as part of a holistic engagement strategy.

The point is not to create another push marketing vehicle, or spark another apps frenzy as we saw with smartphones and iPads, but to be brutally honest about how such an app could be of value to the user.  The best apps will make people smarter about what they and their friends are doing, aid in discovery of interests and new friends, and provide entertainment and informational value.

It goes without saying (yes I’m saying it anyway) that new types of interactions carry the potential for unforeseen privacy implications, so companies must be scrupulous to build in appropriate controls at the outset.

2. Engaging based on the interest graph and the social graph

I love my friends, but I don’t always share their interests in fashion, music and travel. But there are plenty of people–friends, or friends of friends–whose interests I share, and I learn about new bands, books, dishes to try, places to visit and tons of other things from them.

Adding apps to Timeline makes it easier for brands to host communities of people with similar interests, leveraging not only the social graph but also the interest graph, which is by definition more targeted. The implication is that an interest graph grants you access to like-minded people, not just friends, and data about who influences whom. This could be the seed of advocacy and influencer programs of the future.

3. Insight into the impact of  social engagement on your business

One of the most intriguing implications of OpenGraph has been the idea that Facebook can now move beyond the ubiquitous (and not very meaningful) “Like” button to a more granular view of attitudes and actions. The impact to brands is that more granular action buttons yield more granular data, so they can start to better understand just how people interact with them in the social sphere. For this reason, one of the most interesting apps I saw at the launch was by Ticketmaster, which lets users share their event-related plans, invitations, recommendations, and even purchase tickets from within the app.

What’s useful for social analytics wonks is that the action buttons correspond cleanly not only to points in the traditional marketing funnel (after all, “I want to go” correlates with consideration/intent), but that people can also invite, recommend or buy tickets (i.e., convert) from there.

This is critically important for businesses who are becoming frustrated with the difficulty of correlating social media activity with direct revenue generation. True, revenue should not be the primary (short-term) objective of social media, and not every brand will lend itself to such a clear and clean use case, but that is part of what companies need to learn if we are to integrate social media successfully into business strategy and measure it effectively.

For that reason, I would recommend that organizations approach Timeline as a way to test and learn about how people behave and interact, whether they’re consumables, luxury, nonprofit or even B2B brands.  This may be frustrating initially, but learning more about how people interact with you across platforms, channels and media is ultimately of tremendous value–even if you end up discovering something very different from what you had originally intended.

Defining Social Media Listening vs. Measurement

I’ve had a number of conversations lately with clients, peers and friends about what we mean by “listening,” “monitoring” and “measurement” of social media. Some people dislike the term “listening” because it seems passive and somehow not rigorous, while others dislike “monitoring” because it reads as Orwellian. “We don’t ‘monitor’ our customers, we listen to them,” they say.

And then there’s measurement. What, if anything, is the relationship between social media listening and measurement?

Most of the companies that Altimeter Group speaks and works with are global 1000 businesses which, for the most part, have formalized or advanced social media programs in place. As Jeremiah Owyang stated in his most recent research report on social media proliferation, these companies have an average of 178 social media accounts. They’re no longer dabbling; this is a significant resource investment that must first be rationalized, then justified.

I often find that whenever we start talking about listening, somehow the conversation inevitably turns to measurement: how do we know that what we’re doing is being effective? This question, in my view, is a symptom of where we are in the social media adoption lifecycle. We’re seeing social media programs mature, moving from the earlier “toe in the water” stage to, in the most advanced cases, an integrated component of business strategy.  Some contend that listening is somehow passé, a remnant of an earlier, more naive time in social media, and that we have to get “serious” about social media by starting to measure it.

I disagree with the first statement and agree with the second. Here’s why.

When you factor out the froth and hype of social media, the fact remains that it has dramatically empowered the customer, because she now has a voice and a megaphone.  This is a historic shift. So companies who want to survive this shift must realize that they are now in a much different relationship with their customers and communities.

To better understand the relationship between listening and measurement, we need to look at the ways listening is being used within organizations. Altimeter has popularized the “Learn-Dialog-Support-Advocate-Innovate” model, which defines the major objectives of social media (more detail on this in Charlene Li’s Open Leadership). But with regard to listening specifically, I would propose a slightly different view.

1. Insight and Learning. Insight gleaned from social media
2. Engagement. Engaging with customers, community, detractors, advocates
3. Customer Support. Serving customers via social platforms
4. Decision Support. Input for making business decisions
5. Performance Management. Determining the success of programs and individuals

When viewed in this context, listening and measurement become deeply interrelated; listening becomes a critical data source for the business. In fact, if you took the framework above and substituted “web analytics” or “CRM” or any other enterprise touchpoint for “listening,” you’d quickly find–perhaps with the exception of “engagement”–that it can be used in much the same way.

Today listening is business-critical for the social enterprise.

All of this demonstrates that we still struggle to fit social media into the realities of the business, but that we also struggle to fit business into the realities of social media. The challenge is to accept–and work with–the dynamic tension between these two imperatives.