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Our research into midsized companies has found that while many nearly doubled their investments in social media in the last two years, most experienced no return on their investments. How can your business reap a return on investment from its forays into Twitter, Facebook, and the like?
The Corporate Executive Board's Marketing Leadership Roundtable created the Social Media Opportunity Diagnostic survey and administered it to marketers at some 100 midsized companies to help marketers focus their investments in social media activities.
The results showed that only 8 percent of those surveyed said their social media efforts actually drove business results. We call those 8 percent of marketers "social media exemplars." (In case you're curious about how social media is manifesting itself in midsized companies: Twitter topped the list of social media outlets, with 74 percent of companies using the microblogging site, followed by Facebook at 71 percent, Youtube at 53 percent, and various types of company blogs at 36 percent.)
So what separates these social media exemplars from the rest of the pack? The Marketing Leadership Roundtable has identified the three common elements in successful social media approaches. The survey results suggest that companies should do the following three things.
1. Develop social media listening abilities. Listening is the gateway to all other social media activities. It enables a deep understanding of social media dynamics and the needs of target audiences. For example, Southwest Airlines (LUV) monitors Twitter, blogs, and online communities to sense and respond to customer sentiment. Yet diagnostic results on our survey showed that one-third of marketers do not currently monitor social media.
2. Approach social media measurement with the goal of reducing ambiguity via a two-step process:
Disaggregate sources of social media value into component parts that contribute to desired business outcomes. Social relationship assets spin off a variety of different value streams. For example, social media can add value through efficiency by reducing (or preempting) the cost of delivering an outcome: displacing paid media and traditional consumer research, preempting or displacing service cost, and even preempting negative influence spread.
Second, apply a combination of relative measurement and return-on-objectives to value these component parts. For example, instead of tracking only the number of Facebook "friends," track Facebook click-throughs by friends in your company's target audience.
3. Widen your gaze. Exemplars treat social media as more than just a marketing or public relations channel. They view it as a way to enhance the brand's competitive position by creating new in-kind value for customers. Best Buy's (BBY) development of twelpforce (twitter-based help-force) leveraged an existing differentiator (a retail staff fluent at helping with consumer electronic questions) to create a category value-proposition shift. By approaching social media as more than just "another communications channel," Best Buy shifted consumer expectations about the electronics experience to a practice competitors can't emulate.
Social media provides a new vehicle for collaborating with your customers. As you enter this channel, listen before you speak. Don't forget your allegiance to commercial outcomes and challenge yourself to explore how social media can change your overall strategy.
What the Best Companies Do™