Searching for Social ROI? Talk to Ted
Just the other day a CEO said to me, "No worries Drew--even though you can't show a linear relationship between all of our social media activities and sales, I have faith that they are helping my business." And if you believe that, I've got this bridge to sell you. The truth is that CEO's are paid to find linear relationships between the actions they orchestrate and the results they acheive. This is one of the reasons most favor direct response marketing over the squishy world of brand building, made squishier still by the social media epidemic.
Enter author, speaker and social evangelist Ted Rubin. He believes that the impact of social media can be measured, if not in the linear fashion desired by CEOs, at least in a semi-linear manner using reasonable proxies like lifetime customer value and purchase frequency. Ted prefers the term RonR (Return on Relationship also the title of his book) over ROI since it puts the honus on the brand to cultivate customers and engage with them on a meaninful level at every possible touch point. I caught up with Ted to dig into the topic of Social ROI and not surprisingly, we had a spirited discussion.
Neisser: How is RonR different than a company's "goodwill" in accounting terms?
Rubin: Good will cannot be measured, but factors of RonR can. Lifetime Value of a Customer, Average Order Value, and Frequency of Purchase.
Neisser: How would a brand use ROI metrics to measure RonR? Are there any data trends that would indicate the brand relationships are taking a positive trajectory?
Rubin: At this time, looking at customer lifetime value is a really attractive way to measure both ROI and ROR when it comes to Social Media. Syncapse's recent study shows a significant and positive difference in customer value, when comparing non-followers vs followers in Social Media. Not only do they purchase more, but their advocacy creates new Word of Mouth value for the brand. An ongoing measurement comparing average non-connected customers to connected customers will help any brand gain a great understanding into just how valuable those online relationships are.
Neisser: Would you ever advocate for artificial intervention if the response to a campaign is lukewarm, even after a company takes the steps you recommend to build meaningful relationships (listening, making it "the channel of me," etc.). For example, buying Twitter followers or internally commissioning positive reviews/comments.
Rubin: Never, ever buy Twitter followers. They are worthless. Now... paying someone who knows how to properly aggressively grow your Twitter following, that is incredibly worthwhile if they know how to do it properly and add value at the same time. But that cannot happen overnight to jumpstart a campaign.
Neisser: What were some of the brand relationship issues you encountered at the companies you've managed, and how did you employ your theory of RonR to ameliorate them?
Rubin: For the most part it has been about the feeling that companies are not listen... so listen, and take actions that make it incredibly obvious you are doing so... then make sure that is easily shared. In addition the very best thing you can do to add RonR is bringing the marketing silo in line with the customer svc silo. Since it is incredibly rare that the CMO has jurisdiction over cust svc, important to reach out to person running it and work closely together. Amazing the RonR that is achieved by simply replacing product, and aligning the two. Also when a CMO actually interacts with with customers via social has an incredible impact in customer relations and with social that word is spread incredibly fast. Be real, authentic, and engaging and the results with affect your bottom line. Actively look for and engage critics. I LOVE critics... first if there is one there are hundreds more. Engage them publicly and you can resolve issues for many at once and show your willingness to do so. Most critics are incredibly easy to turn into Dynamic Advocates... simply BE NICE and replace their product.
Neisser: At what point do you think consumers "break up" with a brand, and, if possible, how do you build up a relationship with consumers who are on the brink of parting ways?
Rubin: Consumers break up when they are not being heard... simple. So... LISTEN, HEAR, and let then know you do. I know this seems like common sense, but unfortunately, or fortunately for those brands who DO get it, common sense (and using good Judgement) is not very common. Also the pervading fear of such interactions make them a goldmine for those who recognize the value.
Neisser: If a small company has managed to build a meaningful, loyal customer base but doesn't have the manpower to adequately handle these relationships at the same level over time, what are some effective steps the brand can take to prevent defection?
Rubin: Simple... empower your employees to do the work. Allow them to interact and engage... encourage it. Also encourage and empower them all to build their own personal brands and social media influence/connection/following. Especially in a small company, your employees should be your strongest and most valuable advocates.
Drew Neisser is CEO & Founder of Renegade the NYC-based social media and marketing agency that helps inspired clients cut through the nonsense to deliver genuine business growth. A frequent speaker at industry events, Drew’s been a featured expert on ABC’s Nightline and CNBC. In addition to blogging for SocialMediaToday, you can find Drew’s articles on FastCompany.com, ...
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