Wednesday, December 21, 2011

Investment or Influence? It's Not That Simple


I know most blogs focus on providing a solution with a viewpoint that backs that up, but I've come to realize that one person's solution can be another person's headache and that, like social media platforms, there is no such thing as a one-size-fits-all answer. Nor is the world easily divided into this versus that.

Let's look at ROI, for example.

Return on Investment/Influence

Here's the thing: I read a blog post by someone who had read a blog post about how businesses using social media should be measuring influence rather than investment. The author had a problem with that because he felt that, ultimately, what businesses want to know is: 'will this post lead to a sale?'.

An Aside

One of the things I appreciate most about social media is that I perceive a sea change around how businesses do business and social media was the catalyst. As another article I read pointed out, salespeople used to be the gatekeepers between people and products/services. They had competitive knowledge about features and were always ready to tell you why their brand was better than the other guy's. This is no longer true: with the internet and social media, we can research on our own and then crowd-source opinions (friends, family, and strangers) to get a clearer perspective on the strengths and weaknesses of the items we're considering.  The ol' razzle-dazzle doesn't work on us much any more and - as multiple examples have shown - beating a bad vendor publicly with a stick is a lot easier these days.

No one wants to deal with a fake smile or shake the hand of someone whose other hand is trying to pick your pocket, so borderline flim-flam artists in business are becoming extinct. The emphasis is on authenticity and the best way to be authentic is to have a good product; one that doesn't require excuses.

Because business must focus on, well, business, and social media is where the business is, companies have had to learn to embrace it. Nonprofits were some of the first entities to use social media to advantage and business has been a little slow to catch up, probably because they depend heavily on conversion, which leads us back to ROI measurements.

Investment or Influence - What's the Difference?

Investment = money. We put out an ad or started a campaign which cost us $X and netted us $Y. If $Y is greater than $X, the investment was more or less a success, depending on the rate of conversion.

Influence = engagement. We put out an ad or started a campaign which cost us $X and netted us: Y, where Y = participation, loyalty, prestige, advocacy.* These are considered soft values because they can't be easily translated into monetary figures. Therefore, measurements have to be taken by other means like monitoring channels for comments or counting up how many people responded to a post and how they responded.

My Thinking

There used to be more controversy about measuring Investment versus Influence, especially when businesses were just beginning to enter social media. A lot of that seems to have died down, but there is still the idea that Investment and Influence are apples and oranges. I don't see it that way. Investment might be a Jonagold and Influence might be a Fuji, but to me they are both apples.

Regardless of whether you are a for-profit or a not-for-profit, you need both measurements. The hard values affect the soft values and vice-versa. No one lives in a world where they can ignore how much money they spend for what they get back or how much effort they expend in return for new/lifelong customers/volunteers, advocates, and donors.

For-profits and not-for-profits can learn a lot from each other, especially in this (relatively) new world of social media. Neither should assume they live in such different worlds, because they don't.

What are you measuring and how do you measure it? Tell me by leaving a contribution in the comment box.


*based on Social Media Today, Return on Influence


Quote:

"Don't follow trends; follow results." Brian Solis

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