The Business Problems With Social Media ROI | Jacob Morgan | Best-Selling Author, Speaker, & Futurist | Leadership | Future of Work

I’d love to have a follow up post to this on the technical problems with measuring social media ROI, so if you’d like to somehow contribute to that please let me know (since I’m not a very technical person). I’m not going to go over every single business challenge, just the major ones that I believe I true obstacles for large organizations.

CMO Lifespan

The average lifespan of a CMO is around 2 years. This means that by the time a social media strategy is researched, developed, created, launched, and measured; that the CMO may not even be around to see results; therefore why fund it? Many CMOs would much rather focus on investing dollars where they can see a return while they are still employed at their company.

No Metrics

Lots of companies still don’t know what the average price per transaction is, what the customer purchase cycle is, how much time support people spend on the phone, etc. This means that for a lot of companies there is no place to start benchmarking from. So, before you can even start a social media strategy you have to worry about getting benchmark numbers and data. A lot of companies are lacking in the tools and approach to measuring ROI and any sort of impact from social media. This makes it virtually impossible for someone such as myself to come in and help an organization. Neither myself nor any other consultant or agency is going to be able to measure any type of ROI for you unless you know where you are starting from.

Corporate Culture

Some companies love social media and other companies fear it. A lot of companies want social media but they don’t know why they want it or what it will mean for their organization. Companies need to have realistic expectations and time frames for social media; companies also need to realize what social media means in terms of making their organization social, transparent, and authentic. Legal departments and many senior level executives fear social media because it means they are losing control of their brand and their image. Other senior level employees believe that social media is a waste of time and that their employees should not be spending their time on sites such as facebook or twitter. Addressing the issue of corporate culture means looking at all of these issues and more to see how the company views social media and what changes need to be made before the company can adopt it.

Focus on Social Media and not on the Product or Service

It doesn’t matter how much money you spend on marketing, if you don’t have a great product to market that people want then you’re just wasting your time and your money. I think at this point a lot of consultants are just taking on any and every project they can get their hands on, regardless of the quality of the product or service. This isn’t helping anyone. Companies have money to spend on marketing and many consultants have money they want to take regardless of the project; this is a lose lose situation for the company, the consultant, and the industry.

Corporate Fragmentation

Among executives and senior level employees there is still a very big gap in terms of understanding and expectations from social media. There is a lack of communication and collaboration for social media efforts. Ownership, budgeting, leadership, accountability, and data/metrics are things that a lot of execs and senior level folks can’t seem to agree on or talk about. Changing your company into a social organization is going to take time, I’m talking 1 year+ (if you’re lucky); you’re literally changing the way you do business and that’s not going to happen in a month or two.

Semantics

A big problem I see today is that we have way to many definitions, acronyms, and jargon to describe things in the social media space. We’ve all heard at least 3-4 definitions for ROI, and we keep making up more on a daily basis. We have influence scores, sentiment scores, indexes for influences and engagement; and a plethora of other things. The problem is that instead of us speaking in business terms we are speaking in social media terms (which are oftentimes made up) which don’t make sense to executives that are the ones funding these initiatives.

Tools

I think it’s great that we have a few tools out there such as Techrigy and Radian6 that are helping companies measure and monitor the social media space but they are still not near being able to show or understand how companies can measure ROI. Right now the focus is on sentiment, brand mentions, conversations, etc which is great; but we need to tie in all these things to a dollar amount at the end of the process.

These are some of the big business issues I see in the social media space that are really hindering our ability to understand and to measure social media ROI; I’m sure you can think of a few others out there so please share them in the comments!

Thanks for highlighting so many variables important to be aware of. Looking, researching, trying, listening, listening and listening on SM, I come to remember the Internet boom.
I wonder if all of the sudden there is a HUGE expectation that SM can be THE NEXT GREAT THING. Who knows the answer and hopefully it is.
What I also wonder if by any chance the SM phenomena does have life and characteristics of its own that we are not allowing it to mature trying to force other models into a new model that it wouldn’t fit.
Like in many technological, behavioral and innovative revolutions, it would affect many and each on its own term and its own pace. Obviously this is not “One Size fits all” and there is magic wand to make it work.
What I would recommend and you do is to be aware of the variables, open and honest of what can and can’t be done and to respect companies cultures, interest and goals with it’s customers. Like in any major technological of process change within a company: if it does not have the executive sponsorship and a true Change Management process is design and implemented in parallel to the project, there will be a high probability for failure.
We all have seen that SM is not accepted nor understood by everyone. Its instantaneous benefit for collaboration and communication might not be of interest or features that every company can benefit from because its model or because is not capable to fulfill and deliver. As you see, those are circumstances that have nothing to do with SM.
As for metrics: I will take samples on how easy will be to achieve instantaneous massive communication and collaboration with traditional media. Then compare it with SM tools. Beware the company is not using a 1,000 agent contact center in the middle of nowhere in which case, make the point that the same contact center might be replying to the SM activity.

laurenvargas

September 1, 2009 at 7:16 pm

First, thank you for the shout-out of Radian6 as a tool to assist companies in listening and engaging.

It is important to note that the tool is not going to be able to project ROI as dollars and cents in and out/people and time invested. I think, we in the social media space, are helping to facilitate the conversation of ROI and put social media outcomes in business terms the C-suite will understand and approve. Tools are just the platform for how communicators can execute strategy and gather data to understand what community wants and needs. We cannot forget the human element that ties all of the moving parts together.

Lauren Vargas
Community Manager at Radian6
@VargasL

isolution

September 2, 2009 at 12:19 pm

Stuart Foster

September 2, 2009 at 6:18 pm

CMO lifespan is the biggest one here for me. How can you create large changes in corporate culture and and improve the existing product base if you have a tenure that matches the head coach for the Detroit Lions?

Agencies tend to work because they've perfected a lot of the larger issues. In-house can largely be a cluster-f**k if you aren't careful.

jacobmorgan

September 2, 2009 at 8:14 pm

you're welcome 🙂

You make good points Lauren but I think the tools still have a long way to go in terms if improvement to help the C-suite see the value for their investment. That being said you are absolutely right in that we cannot forget the human side of things.

Thanks for the comment!