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The Social Media ROI Cycle

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In this week’s post, i am going to share with you an article by Jamie Turner on social media ROI. Most companies today have difficulty in understanding return of investment (ROI) of a well-run social media campaign. In order to do that, you need to know the math and this is entirely against the myth that social media was only about getting more followers on Twitter and accumulating more “Likes” on Facebook.

According to a survey by Econsultancy in 2010, 47% of the companies surveyed were “not able to measure” the value of their social media campaign and “the jury is still out” on the value of ROI for their social media campaign.

The reality is that the future of social media revolves around math, metrics and monetization. So if your company has not been evaluating its ROI for social media, the campaign doesn’t bode well for the long term . In Jamie’s article, he analysed how businesses are setting up, launching and running their social media campaigns and concluded that there are 3 main stages to this process which he called the Social Media ROI Cycle.

3 stages of Social Media ROI Cycle

At the Launch stage, a company is 100% focus is on setting up accounts for the big four (LinkedInFacebookTwitter and YouTube). Some companies focus on the big four plus others such as Flickr, e-newsletters, blogs, SlideShare and other social media platforms. But most companies get off the mark very quickly by venturing into the big four networks purely and simply to create their social media presence. The primary objective is simply to get started.

The approach at this stage is very executional without much planning for the long-term. The campaign is at an infant state therefore the results are negligible. Obviously the company can now claim to have a social media campaign but you will not really see much traction until the next stage.

At this stage, approximately 60% of a campaign is focused on the big four (or the big four plus others). Roughly 10% of the focus is on creative and offer development, 20% on tracking quantitative metrics such as traffic, inbound links, Facebook “Likes,” etc., and another 10% on qualitative metrics such as the brand’s sentiment analysis, survey results and customer polls.

The approach during the Management stage is still very tactical with the focus on mid-term results which is an improvement over Stage 1. The whole idea at this stage is to engage prospects and customers in one way or another to connect with the brand. Ideally, this would mean buying one of your products, but it could also mean downloading a file, “Like” a Facebook page or any other quantifiable evidence showing that they are connecting with your brand.

Stage 2 is where many of the big companies find themselves at right now. They are  in the process of managing their social presence, testing new ideas, tracking quantitative metrics and analyzing qualitative data to see how the campaign has been faring.

In the final stage, about 25% of the focus is on the big four and about 30% is evenly split among creative and offer development, quantitative metrics and qualitative metrics. Another 25% of a company’s focus is on improving conversion and optimization of the campaign.

It’s all about tracking inbound leads and traffic across social media platforms, using tools such as Google AnalyticsALTASand DARTS to track those statistics and watch those leads turn into your customers. It also means testing your way to success with social media campaigns: e.g. comparing 2 different landing pages to see which one drives more clicks.

The final 20% of a company’s efforts in Stage 3 includes measuring of ROI for the social media campaign. This process requires an understanding of your Customer Lifetime Value (CLV) – “the amount of revenue a customer will bring to your company over the course of their lifetime with your brand” and comparing it to the results generated by your social media campaign.

For example, if a typical customer spends $5 per month with your company and remains loyal to your brand for an average of 2 years, your CLV is $120 (24 months x $5). Most companies are happy to part with 10% of their CLV to obtain a new customer.

This means that they’ll spend $12 to acquire a new customer who will spend $120 during his or her engagement period with the brand. If your social media campaign’s expenditure costs $12,000 annually and its capable of  generating 1,000 new customers each year, you know you’ve got an ace up your sleeves.

Final thoughts

As Jamie said:

In the end, all roads should lead to social media ROI. After all, businesses don’t do social media to be social, they do social media to grow sales and revenues.

If you carefully navigate your way through Stage 1, Stage 2 and Stage 3, you’ll eventually be able to go up to your CFO and say, “Hey, Chief Financial Dude, remember when you told me we wouldn’t be able to measure the ROI of our social media campaigns? Well, we’re already doing it, and we’re making a profit, you knucklehead. So there!”

It is a daunting to task to put a dollar figure on your social media campaign. You can find many different ways of calculating ROI on the internet and most of them require a considerable amount of effort to collect data and statistics to measure the success of your social media campaign.

Today’s post presents a perspective on the monetary side of things. Early adaptations of social media ROI included terms such as Return on Engagement and Return on Participation that addresses the socialization of media, marketing, and the resulting dynamics of engagement. There are times where it “ain’t all about the money”.

Collaboration among your employees facilitate knowledge sharing and retention. It can improve the way they work and improve your day-day business processes and generate new innovative ideas for problem solving but the big question mark still remains: how do you put a price tag on something that is as intangible as this?

Here are some links and references:

I will end today’s post with a video on social media ROI. Til next week people! 🙂


Enterprise 2.0 Risks & Benefits

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Enterprise 2.0 is all about empowering employees the ability to work more effectively to achieve their business objectives. This new shift in paradigm is built around the use of more flexible, collaborative tools that extend community knowledge – which in most cases is most effective if the organisation’s culture is more transparent and less hierarchical. Implementing Enterprise 2.0 has been rewarding for most organisations and these benefits include:

  • Greater ability to share ideas
  • Improve accessibility to knowledge expertise
  • Reduce cost of communication, travel and operations
  • Improve overall employee satisfaction

On the flip side, it can become a double-edged sword as increased transparency has to be moderated with regulatory and other legal requirements. Some of the issues that an organisation risk for not implementing Enterprise 2.0 include:

  • Unauthorized usage of web tools – employees many use unauthorized external tools to get their work done, this can lead to IT security risks due to the lack of integration with existing systems
  • Retaining your best talents – can impact organisation’s ability to attract and retain young talented people if they are perceived as “not an attractive and technological advance company”
  • Reduced competitiveness – competitors will have the edge by getting a head start from using Web 2.0 technologies, and it can become extremely difficult to overcome

Initial resistance can be expected for people to accept the Enterprise 2.0 working culture. They are not convinced by the new way of working and it is entirely understandable that one is not willing to change for something that they are not comfortable with. According to Ajay from Oracle, here are some of the best practices that an organisation can adopt to overcome this organisational resistance to change and eventually, realizing the benefits of Enterprise 2.0:

  • Gradually integrate the use of Enterprise 2.0 technologies into the employee’s day-to-day activities
  • Provide informal incentives (e.g. expertise rating/recognition) for meaningful contributions
  • Integrate Enterprise 2.0 approaches with other modes of customer/partner interaction

Motorola IT department’s Enterprise 2.0 initiative to encourage collaboration within the organisation was a huge success. With approximately 70,000 people using it every day including business partners, the company now has 4,400 blogs and 4,200 wiki pages in use, among other web tools include social bookmarking and tagging by Scuttle and social networking by Visible Path.

Intranet 2.0 started slowly but grew organically by word-of-the-mouth and the use of 250 “knowledge champions” strategically allocated within the organisation to evangelize the self-serve collaboration platform. Motorola VP Toby Redshaw made it a point to the keep the platform simple to use so that it is easier for employees to embrace the new way of working, decreasing barriers to adoption.

E-mail used to have a lock on the company and Redshaw observed that there has been a significant drop in e-mail usage and more use of technologies like wikis and blogs to share information to wider audiences. On the topic of ROI, Redshaw admitted that it was always going to be complicated to put a figure on how much profit Enterprise 2.0 technologies brought to Motorola. Instead, he talked about how exactly work has changed since the implementation of Intranet 2.0. Within the IT organization:

  • Product development times were significantly reduced
  • Instead of developing a different pitch for every client, salespeople can now reuse information that might be posted on a wiki
  • In Motorola’s Dallas distribution centre, employees clicking on mobile alerts that come to their smart phones are sent directly to a wiki to troubleshoot problems

Motorola VP, Toby Redshaw on the intangible benefits of speedy collaboration:

“I don’t beat Nokia or Cisco or Siemens by having better buildings or shinier cafeterias,” he said. “Companies are human beings solving problems or responding to crises by working with each other. If you can make your company less of a top-down company at a higher speed than your competition, you have just kicked their butts.”

Another challenge Redshaw noted was controlling and regulating proper usage of social media within the organisation. The locked-down approach has worked for Motorola so far because while Enterprise 2.0 technologies might start small, they can quickly become unwieldy therefore there must be a plan (e.g. social media policy) to keep the use of Enterprise 2.0 technologies within the organisation in-check. He said:

“If you let people build this in pockets, when it gets big, you will have this enterprise layer of spaghetti that you will never align.”

Final thoughts

Motorola has shown the way forward on how to successfully integrate Enterprise 2.0 technologies within an organisation. Their “locked-down” approach presumably revolves around a specific social-media policy to protect the interests of the company and mitigate any potential risks. Its Enterprise 2.0 initiative started slowly, but gradually blossomed and this allowed time for the entire organisation to adapt to this new change in working culture. Before we end, I will leave you guys with a video on how to measure social media ROI.

Here are some useful links and references:

Enterprise 2.0 in action

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In this week’s post, i am going to talk about some real life examples of companies that have successfully embedded Enterprise 2.0 strategies into their organisation to improve business performance and harnessing collective intelligence internally for their own benefits.

Southwest Airlines

Southwest Airlines is renowned for its active involvement in social media networks (Twitter, Facebook and Flickr) among customers. Based in Dallas, it has more than 3,500 employees and serves more than 65 cities in America. With more than 3,000 departures daily, the company serves tens of thousands of people each day.

Social Media stats:

  • More than one million followers on Twitter
  • Voted top 40 best Twitter brands by Mashable in 2009
  • Almost 1.7 million likes on Facebook

As you can see from the statistics above, they have established a huge community on the Twitter. Since 2007, they have been engaging their followers (potential customers) directly for sales & advertising purposes but also respond to customer queries & complaints. The timeline column was used to track those complaints and mitigate the situation directly through Twitter.

Film maker Kevin Smith claimed that he was kicked off the flight when boarding the aircraft in February 2010. Understandably, he vented his frustrations on Twitter and here’s the script.

They also had a blog setup to encourage employees and customers in sharing stories about their travel experiences and travel related issues. By allowing customers to have control of their own contributions on the blog, Southwest was seen as a trustworthy brand.

Here’s a video on Southwest Airlines and social media in action!

General Electric (GE)

GE is an American multinational conglomerate in New Jersey and ranked the 6th largest firm in the U.S. SupportCentral, is a hugely sophisticated enterprise collaborative system that was custom-built for tailoring to the needs of its extremely huge organisational size and global operations.

Social media stats:

  • 400,000 global users in 6,000 over locations around world, all working via a web interface that is available in 20 languages.
  • The system gets more than 25 million web hits per day. (More than employee usage of Google and Yahoo combined together!)
  • Users have created over 50,000 communities with over 100,000 experts signed up to answer questions and manage information.

So what do all these stats mean for GE? SupportCentral offers a number of networking models (people, communities, documents and discussions). Depending on the nature of their work, users get to select which models suit them best. The system instills a unique organisational culture in terms of self-learning, networking and communication within GE’s large employee base.

On top of that, the system also reduces cost up to millions of dollars in annual savings.  This is largely due to the thousands of hours of time per day that employees will save as they are able to track down the information they need at their finger tip. It also has firewall ‘pinholes’ to external destinations that allow external vendors, suppliers and customers to participate on specific projects. About 30,000 external users access the system through the firewall pinholes to participate in specific communities.

We’ve gone out of our way to call it professional networking rather than social networking. We’ve been building a professional-networking capability that allows everybody to put in the organization directory the skills that they bring to bear. It’s very searchable, so if someone is looking for a particular skill, they can go to that site. That gets about 25 million hits a day, so it really is becoming sort of a heartbeat of the company. – GE’s CIO, Gary Reiner

Looking through the lenses of Wikinomics business model,

Peering – Twitter was leveraged by Southwest to harness collective intelligence from their followers to get real-time information on issues and potential problems of the airline. In the case of GE, they had an internal enterprise social networking system that encourages sharing and collaboration between employees.

Being Open – Dealing with complaints as openly as on Twitter demonstrated the airline’s approach of being transparent in customer service management . Blogging was used as the platform for collaboration and related issues or messages could be conveyed easily between both parties. They had nothing to hide and the customers appreciate that. Access to SupportCentral is not only restricted to internal GE staff. External vendors can collaborate with GE for certain projects when required.

Sharing – Information could be exchanged easily between Southwest and their customers through blogging and other social media platforms. GE staffs or external parties have access to documents and other communities easily within SupportCentral.

Acting global – The use of social media platforms allows Southwest to globalize their business by engaging people from all around the world while SupportCentral links all the GE staff to an integrated enterprise collaborative system that are distributed around the world globally – no geographical constraints to restrict sharing and collaboration.

Final thoughts

This brings me to the end of this week’s post. Hope you people will see the dynamics of running an enterprise in a different light. Both organisations mentioned in this post encourages a high degree of collaboration internally and externally but the type of tools used: free to use social media tools vs. custom social networking tools opens up another area for debate as to which is better than the other.

Enterprise 2.0 is the next step forward and it will be interesting to see a shift in working culture with social media and other networking tools at the centre of an organisation for years to come.

Here are some useful links and references:

Blogging 101 for dummies

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Welcome to my first blog post on Enterprise 2.0. Today, i will be introducing some of my strategies to be successful in blogging.

Why i blog?

Apart from fulfilling my assignment requirements, i would like to establish myself as an Enterprise 2.0 consultant (wannabe) to help organisations improve their business. Blogging is a great way to help market yourself or for any organisation to gain online recognition and at the same time, build their digital reputation.

1) Investing time and commitment

It is always going to take a fair amount of time to write something that will capture the imagination of your readers. Doing your own research on something that you have no prior knowledge on is of utmost importance to your preparation before writing, therefore one must be willing to fork out a period of uninterrupted personal time to just sit down and focus on the task at hand.

What this means is that it will potentially require you to sacrifice a couple of hours of your own personal time (family? TV? napping?) to write this one single blog post. It is a trade-off often required to produce quality work and it will mean taking time away from something else. It is not enough to just post regularly for a couple of days and then totally stop posting  for a month. How fast would you stop visiting that blog if all of a sudden the author stopped posting for a couple of weeks?

The reality of being a successful blogger is to write regularly and consistently, therefore one must find the time to do it. They deserve your best and it takes ample time to create your best. Finding the perfect balance between time and consistency is a huge challenge most bloggers will face.

Bottom line: Time and effort is required to produce a smashing piece of work!

2) Marketing your blog

Search engines will still be able to locate your blog but to make it highly accessible to the entire audience out there on the internet, you have to put in the effort to make sure that people know about the existence of your blog. It is pointless to have built a great blog but no one comes knocking on your doors. Leverage social book marking tools such as “Digg“, StumbleUpon and Blog Carnival as part of your marketing strategies. Link your blog to other social networking tools that you use normally such as Facebook and Twitter!

A simple way to engage more readers out there is by commenting. Readers can potentially be bloggers themselves. It’s almost like having a conversation so as much as possible, try to be actively involved in commenting on other blogs. Link your blog to other blogs and be part of the blogging community! Ask good questions and give them a run for their money. This way, a discussion can be initiated between one party to another.

Bottom line: Don’t hide your blog. Let the world know of its existence!

3) First impression counts!

A boring headline will not attract people to start clicking and reading but an interesting one will. Here are some articles from Copyblogger on how to create better headlines, 10 sure-fire headline formulas that work and How to write magnetic headlines. Another important aspect of creating a good first impression are the opening sentences that you use to get your reader’s attention. Here’s an article from Copyblogger about 5 good ways to start your blog post with a bang.

A neat and organised layout for your blog helps a lot. Present your article in a way that is easy to read and navigate. I have encountered blog posts that were too “colorful” for my liking and it was difficult to read. Spend quality time on formatting and make it presentable.

Bottom line: Do not turn off your readers at the first time!

4) The reader-centred approach

The most important factor is to provide value to your readers. This value could be in the form of articles that provide practical tips to improve your daily life. It could also be recipe guides for house wives who want to cook a healthy meal for the family with cost-cutting ingredients or in-depth movie reviews to help movie goers make up their mind before hitting the cinema.

The more value your post can provide to your readers, the more likely they are going to revisit your blog or recommend it to friends, leading to increased readership and online recognition. I’m an avid reader of tech-blogs like Engadget and Gizmodo. I always feel that i learned something new each time i visit one of those blogs and that’s the value they provided me: more knowledge and insights on the latest mobile gadgets and technologies.

Bottom line: Post something that will benefit your readers!

5) Learn from others

Learn the good things, dump the bad things. There are a thousand and one examples on the internet on how to create a good blog. As mentioned in the above points, there are websites that provide useful tips on how to be successful in blogging. Taking these tips on board will shorten your learning curve on blogging the right way. Positivity blogProblogger and Copyblogger are 3 excellent resources. On the flip side, here are 5 bad examples that you should NEVER follow!

Bottom line: Don’t learn it the hard way! Try to get it right the first time!

Here are some useful links and references:

Hope you’ve learned something new from me today and I’m looking forward to my next post. But before you leave, here’s an interesting video on how you can increase traffic for your blog! Till next week people, cheers!