Share this content
MyCustomer.com

Social media initiatives lacking solid business plans - report

by
29th Mar 2011
Share this content

Many social media initiatives lack senior management support because they have no solid business plan behind them, they are expensive and use soft rather than hard metrics to justify return on investment.

This is the key finding of a survey among 300 businesses undertaken by Hypatia Research. The study entitled ‘Benchmarking Social Media Investment: Best Practices’ also revealed that, while more organisations go down the social media route for sales and marketing reasons rather than customer service purposes, one in five invest in the channel simply because ‘customers expect it’.

This is despite the fact that social media platforms “aren’t cheap”, according to the report, and are likely to require investment in everything from upfront planning, implementation and skills, whether in-house or external.

“Social media requires a great deal of expertise and staff time. Hence many organisations are compromising with a hybrid option for staffing social media – some services from the software vendor and/or consultant, some existing staff, and maybe a temporary worker or two to get things going,” the study said.

While customer satisfaction and retention are the top two ROI metrics used by most companies, many are struggling to calculate concrete financial returns. While expected ROI varied from between ½% to more than 20%, a quarter of respondents achieved an annual return of only between 0.5% and 2%.

“While social media may be an investment that companies need to make just to stay competitive, it should not be made in the dark, especially given the huge range of software and services options on the market and the time that will be invested in planning, implementing and managing the community,” the report said.

Replies (2)

Please login or register to join the discussion.

avatar
By chrishansen14
29th Mar 2011 21:51

It's important that we segment within the concept of Social into a Hub and Spoke model.

Social channels like Twitter, Facebook, MySpace - have no 'real' value unless taken within the context of Advertising and Public Relations. People (Customers or Enthusiasts) have no real desire to track FB and Twitter updates as consumers - they get much higher quality of content AND interaction with online Forums.

Social via Forums as a Hub is where the most value is realized. All good things 'Social' flow from Forums, as it's a captive and engaged audience with repeat visits in short periods of time. Driving traffic to a controlled branded destination is the name of the game in web and e-commerce, and this is as good as it gets. In this regard, companies couldn't ask for a much better way to catch all of those people and keep them hooked in. Online 'culture' promoted and propogated by a host of Marketing weenies and would-be Ad execs is what prevents this from being a 'real strategy', among other things.

Any company who thinks that it is going to write a positive-ROI business case on Social as a program or technical implementation is in for some tough conversations. Here's why: As is the case with most IT projects and initiatives, the value is in the larger business case. If companies are capable of measuring things like brand strength, customer experience, customer loyalty, and customer satisfaction, then they can expect to be able to derive 'value' and a business case from Social. If they are not capable of doing this, they won't be able to qualify the opportunity that Social present, or quantify what it could mean in terms of 'hard dollars'.

Most companies have no interest in exploring 'soft dollar' recapture, which is why many companies struggle with digital experience and investments in brand, UI, UX, etc. Same problem, different application. If you don;t have the answers to measure soft-dollar web details, Social will be no different. SSDD.

Soft ROI is a return on investment that is not quantifiable or measurable in specific dollar amounts and does not show up as a bottom-line savings. Soft ROI manifests itself as an increase in intangible elements, including brand strength, customer experience, customer loyalty, and customer satisfaction.

For several years I've advised my own company that we can achieve better leverage of our online experience by promoting Forums as a cornerstone of the B2C web experience, cross-sell /upsell via Loyalty and Offers Management, and designing an integrated purchase path. The rest of the 'bling' and 'wow' is great, but if it's not functionally aligning to keeping customers engaged repetitively, it's not value based. It's an idea that's probably a bit ahead of its time.

Companies can (and will) stand up separate microsites to drive specific traffic. They'll spend millions of dollar overhauling their front ends for a 'fresh' look, but most have very weak presence in Forums and weaker still in Social.

All people know how to traverse a website to 'buy', and for the most part, there's a formula there that hasn't changed appreciably in a decade. Ask yourself this: what makes the best retail stores profitable? Let's take Costco as an example. How many times have you gone to Costco to buy X, and come out with X, Y and Z? If you're like me - probably quite a few. how do they do it? They create an experience that keeps you engaged and offers ridiculously good incentives to 'buy now'. Wow - novel idea, eh?

As companies become more advanced with integrating online channels under a consoldated platform, brand, etc. - what becomes evident is that they can roll up these types of programs under CRM, ERP, or similar 'big-bet' banners.

The concept of Social as a hub is one specific endpoint destination that many companies could strive to reach. It is a lofty goal. It will take the retirement of a generation of current business and technology leadership, as well as the emergence of Millenials as a primary consumer audience to really usher in this kind of change. ETA is probably about 10 years under current conditions, but I think there's a lot of market to be captured for those companies that are willing to take a calculated risk by designing for this experience as part of their online, digital experience and CRM strategies.

 -Chris

Thanks (0)
avatar
By Tibor Kazimir
31st Mar 2011 11:47

I agree with most of your thoughts Chris but am not sure about 'Social channels like Twitter, Facebook, MySpace - have no 'real' value unless taken within the context of Advertising and Public Relations.'

Surely there is customer service to be delivered and even if not that then there can be engagements that are not necessearily related to sales, marketing, customer service. Social channels aren't that cut and dry i don't think.

Thanks (0)