The new ROI of social: Risk of Irrelevancy

By Chris Bucholtz

Social CRM, or at least the business use of social media, is by now accepted by virtually every organization – even by those who aren’t yet actively engaging in social activities. Social is a given by now, if only because it’s a crucial tool that’s being used by the vast majority of customers to connect – and, if you disagree, I have to ask: who showed you how to use the computer on which you’re reading this?

Still, there’s a persistent argument over the topic of return on investment: how do you calculate the ROI of engaging in social media, or of building a social CRM strategy? Why, it must be nigh on impossible if you ask some business leaders! Of course, if you ask smart people like Kathy Herrmann or Dr. Natalie Petouhoff  they’ll demonstrate that it’s not only possible to compute ROI – they’ll also show there are businesses already doing it on a regular basis, and doing so successfully.

Still, ROI is often used as an excuse to slow or halt the movement of businesses toward a more social way of working. I say that ROI should be used as the motivation to get social.

But, to be honest, my acronym no longer stands for return on investment. When it comes to foot-dragging on social, ROI really stands for “risk of irrelevancy.”

It’s really as plain as that: if you decide that keeping up with customers as they evolve is too much work, you’re bound to go extinct. Think of it this way: imagine that most of your existing customers suddenly began speaking a new language. What would you do? Would you insist they revert back to English in order to do business with you, or would you learn that new language?

Let’s put it another way: your business, if it’s been around long enough, has already handled other technology-enabled changes and survived – like the acceptance of credit cards (which was a fairly big leap into the future at the time), or the addition of a website or e-commerce. You got past the issues involved in implementing these things because you understood the benefits they provided your business. Now, imagine you’d decided to sit out the advent of credit cards, or the dawn of the Internet age. Boom – up goes your ROI (new-style). You’d be irrelevant to a vast swath of your customers.

You probably get the point. So how do you deal with it?

At a certain point, you need to think about the original definition of ROI, especially the last letter. You have finite resources and as much as you might like to, it’s probably not a wise investment to hire a 4000-person army of social media workers. Similarly, it’s not a smart move to buy a massive pile of social media software and try to master social through brute technical force.

Instead, it’s a situation very much like the implementation of CRM: figure out your pain points or potential pain points, develop some goals, and find solutions that meet those goals. You don’t need every piece of technology under the sun – you need the technology that does what you need it to do right now. Likewise, you don’t need a lot of employees taking care of social – you only need enough to achieve the goals you’ve set out to accomplish.

That eliminates what fuels the ROI (old-style) excuse: the fear of what seems both impossibly immense and revolutionary to a degree that’s unmanageable. To be sure the change to a more social world is indeed immense and revolutionary, but if you can break the transition into small pieces it won’t be as daunting, both psychologically and technologically.

One thought on “The new ROI of social: Risk of Irrelevancy

  1. Hi Chris:
    you say:
    “Social is a given by now, ”

    mmm…
    - we have always been social. social is not new.
    - its how we communicate is new. so business need to EXTEND their existing channels (email, web contact forms) and include the
    newer channels (twitter, facebook presence etc.. )

    fyi – above is not my insight, it is from Paul Greenberg in his sugarcon’s keynote “era of customer engagement”. its a fabulous insight.

    it would be great if all this hoo-haa about social would get focused on the real change to consumerism… how we are consuming products and services differently.. rather than hoo-haa that is being pumped thru the “echo-chamber” of the internet.

    —-
    its not about irrelevancy. that is not new either. all business at been at risk of irrelevancy. just they will find out more quickly these days.. their services or products or way they do business… is now deemed irrelevant.

    what is new.. is the speed organisation’s will receive the feedback.
    arrhh.. like they are now. less sales. or less profit. these are lag indicators. if you want lead indicators (early indicators), you will monitor the engagement levels
    e.g. is it active dialogue, are you being asked, are people downloading what you publish, are you being conversed, where are you in comparative studies, its what being said about you the real reflection of what is going in the company etc…

    so for me.. what is new… is “change is changing”

    there will be less of the slow death frog syndrome…
    you know the story of frogs in boiling water.. and none jump.. as its slow and they acclimitise to the water…

    so there will be less of “not seeing it coming”
    sure there will be “who-cares, its another fad” or “i dont want to partake in it”. no worries. we all make choices.


    an alternative view :-)

    PS: why dont you have the wordpress checkbox available?
    other wordpress sites do
    eg. checkbox that says
    “notify me of new posts via email”

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