In the first of a two-part series, MyCustomer.com caught up with Gartner analyst Adam Sarner to discuss why so few brands will see a worthwhile return on their social CRM investment.
How do you measure the ROI of your social marketing campaigns? That’s the question marketers across the globe are desperate to deliver on and the answer every CEO wants to know. Sales and marketing staff may be ramping up their use of social applications, but not every company will get a worthwhile return from their social CRM investments this year.
According to Gartner predictions in May earlier this year, the worldwide market for social CRM software licenses and subscriptions will total $2.1bn in 2012 – up from $850m in 2011 – whilst B2B applications for sales use will have the fastest growth and account for 30% of social CRM spending by 2015.
However, despite these expenditure, analyst Adam Sarner forecasted that by the end of 2012, just 50% Fortune 1000 organisations will see a return on their investment, resulting in many failed projects. “Among the companies who will not see a worthwhile return, only 20% will even have the data to evaluate where their social strategy is falling short. These organisations will be unable to justify future funding,” he said.
Worse than predicted
So was he right? Speaking to MyCustomer.com recently, Sarner explained that it’s worse than he predicted, with 56% not measuring ROI. He explains that when quizzed about why they’re not ready, most companies said that it’s too early, whilst others believed it was not required or important to the project whereas others simply had no idea how.
Sarner says: “A lot of these answers were OK in 2009 or 2011 but for 2013, this is where budgets really come in. We’ve done the experimentation – the CEO saw his daughter on Facebook and said ‘We have to do something Facebook-y’.
“We did all that and now people are coming back nine times out of 10 and asking ‘Ok we're on Twitter and Facebook, and on communities, how do we pull this all together and prove that what we're doing is changing the marketing mix, being successful in call deflection in customer service or being able to turnkey sales leads from a six-month cycle to a three-month cycle?’
The analyst explains that those 44% that posted ROI results from social projects displayed mutual purpose – both the customer and the business benefit. He says: “I’ve listened to a strategy before and can't identify why the customer/prospect/community member wants to be social with the company, I don't see the motivation.
“And when I ask these companies what are you trying to solve, they sometimes can't articulate that. More engagement – so what? Or there's a complete imbalance. So a CEO blogging about how super excited about he/she is about some dumb thing nobody's excited about, including the CEO, that's not social. There's no inherent mutual benefit there. It's just a company doing a press release through social channels. If it's too much about the customer then it's a dating service. They’re having a good time, getting a bunch of enjoyment out of it but we're not selling widgets.
“When I see a successful SCRM strategy in place, that mutual purpose pops out immediately. Can see why the customer wants to do it and why the business is doing it. When those two are in place and balanced I actually see money come out of it.”
A meeting of the minds
One of the 44% getting it right is Californian basketball team the Golden State Warriors. Using a lead management idea that involved lead qualifying, nurturing and scoring, the brand was able to measure a social media investment of $5,000. “They came up with a campaign of unveiling a new logo for the basketball team. They got people to talk about the logo and players to tweet their guests, while all the while gathering leads, putting them into a season ticket trip campaign and selling half a million dollars worth of seats for the season,” he explains.
Another example is mobile network provider GiffGaff. He explains that the brand’s ethos of selling cheap SIM cards but providing only community support is a great instance of mutual purpose. It takes just 93 seconds for customers to have their queries answered via the community, with the firm ranking 73% in Net Promoter Score as a result.
“93 seconds – that is faster than any call centre I’ve used ever! It’s not just a 'Go do it’; it's a meeting of the minds, a value proposition for both sides. They’re getting getter quality answers faster.
Insurance company Swiss Re and KLM airlines are two additional brands that are getting it right. Sarner explains that the brand used social to help customers understand complex problems, such as underwriting a tsunami. Working from a social standpoint, the firm connected with other teams and partners to come up with some brain storming ideas and put numbers around those complex highs.
KLM airlines’ Miami flight campaign saw 250 people sign up via Twitter within just two hours. He adds: “It was a win-win value proposition for both sides, a business result with purpose.
“It’s areas like these – customer service, sales and marketing – that when they get a little bit more specific with this balance of what's in it for them and the customer, those are the typical ones where we see some actual measurable results.”
Whilst these brands are seeing ROI on their social activities, overall Gartner suggests that 56% are still wasting investments. But despite the results showing a worse reality than he predicted, Sarner is still positive that this will change. “I’m not surprised that you’re getting a little higher than half not measuring ROI. Social is still transitioning from this largely experimental phase to coming up with a strategy that helps facilitate the relationship between company and customer,” he says.
In the second article, Adam Sarner provides best practice advice and outlines his predictions going forward.