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Tuesday, March 10, 2009

The Social Media ROI discussion

Just read a post from Faster Future on the ROI for Social Media. This is how I see the issue:

Calculating ROI implies that you have a formula, but as you mention it is hard to come up with such a thing for social media.

What is possible however is to draw from empirical data to get a feel for the type of return you will obtain.

The best I have seen in this area is the essay from Xavier Comtesse on the "Direct Economy", where he looked at how companies were able to improve their productivity by involving the stakeholders in the value chain. And from his studies he came up with the concept of a "value chain 2.0", showing all the possible places where involving stakeholders can save you money while improving satisfaction.
To take an example that is close to home, one of the best thing I have seen recently is what happened with airline and self service check-in: I can now print my boarding pass at home the day before, and then the day of the flight I check my luggage in myself. The result:
- only a few attendants behind the counter
- no more long waiting in lines for check-in
- I do the work, but I am happier

There are many example like this. The key is to remove bottlenecks by providing stakeholders with the necessary information and infrastructure that will allow them to participate more efficiently.

So getting into Social Media should be about a lot more than just pushing content a different way and measure impact. It should be a strategic move into a new way of doing business that has proven to be more efficient and more satisfying for people within your business ecosystem.

So I guess my answer is that Social Media should not be an ROI discussion. If your customer does not think that way, chances are his project will fail. And if he does, it is a different sale, a strategic discussion. Management consulting services rather than marketing services.

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