iMeansBusiness

It's My Birthday!

8 Sep 2009

Hi Everyone! Today is my birthday! Thanks to my family and friends, it's been a really great day. As it comes to a close, I have small request. I volunteer with a great non-profit, The Center for Victims of Torture. They are dedicated to addressing the physical and psychological needs of those who have suffered the worst kinds of political violence.

My request of you, is that if you are in a position to help, that you make a donation to this great organization. I turned 34 today, so $34 would be symbolic, but any amount that you can give would be most welcome. You can donate by following this link:

https://secure.ga3.org/03/Gifts_in_Honor_Memory

For more information about The Center for Victims of Torture and their work please visit their website at http://www.cvt.org/

Thank you in advance.

ROI of Social Media Example - Part I

31 Aug 2009

In my entry, "How Much Should You Invest in Social Media?" I addressed under what circumstances an organization should and should not invest in social media. A response I received via email asked, "What does, 'You have a quantitative, data-driven understanding of the internal mechanisms/business processes of the part of your business you wish to improve (ie. marketing, product development, customer service)' mean?"

Here is the relevant part of my response.

Let me try to explain with an example (and it will be very contrived, but I think illustrative nonetheless)

Ignoring the debate about whether social media is/can be a direct marketing channel for a moment, here is a straight-forward marketing example.

Let's say you are the owner of a company that sells yard services. You want to get the word out and run a promotion for a leaf cleanup package for the fall. Your team will go to a home, rake all of the leaves, bag them, and cart them away. Traditionally, you have used direct mail pieces to get out the word. You use a combination of customer/prospect database (you have individual's name, address, and phone number, and email address) to send out letters with a flyer to individuals. You also send out coupons for first time customers via those value-pack coupon envelopes. (If you are not familiar - Every few months we get an envelope in the mail from a direct marketing services company filled with coupons and advertisements for local businesses from plumbers, to mattresses, to lawn care, to snow removal, siding for your house, etc.)

One of your summer employees who just came back from his first year at college suggests that you should really think about using Facebook and maybe Twitter though that's for old people (I believe Twitter's dominant user group is aged 28-34). You can reach a lot of people that way. It's really cool, and because it's free there is really no good reason not to do it.

You stop and think about it.

Price for Service (Per Person) $250.00

Cost to Deliver Service (Per Person) $150.00

Profit from Serrvice (Per Person) $100.00

Assumptions:

You hate writing marketing collateral so you always get someone else to do it for you.

You are working with a full-service print shop to print, stuff, and mail your piece.

Here are the costs associated with your traditional direct marketing approach (maybe next time I'll put it in a spreadsheet).

Direct Marketing - 1000 pieces

Direct Marketing - Print Campaign

Item	Setup Fee	Run Rate	Total	Duration (days)

Design
Write Letter	$50.00	$0.00	$50.00	0.5
Flyer Design	$500.00	$0.00	$500.00	1
Design Subtotal			$550.00	1.5
Storage and Delivery (Mail)
Printed envelope	$0.00	$0.02	$20.00	3
Print material and stuff	$200.00	$0.08	$280.00	2
Postage	$0.00	$0.27	$270.00	0
Storage and Delivery Subtotal			$570.00	5

Direct Mail Campaign Grand Total			$1,120.00	6.5

E-mail Direct Marketing has a similar set of costs. The primary difference the cost and speed of storage and delivery. So it might look like this:

Direct Marketing - E-mail Campaign

Item Setup Fee Run Rate Total Duration (days)

Design

Write Copy $50.00 $0.00 $50.00 0.5

Landing Page Design $500.00 $0.00 $500.00 1.0

Design Subtotal $550.00 1.5

Direct Marketing - Email Storage and Delivery

Printed envelope $0.00 $0.00 $0.00 0.0

Print material and stuff $0.00 $0.00 $0.00 0.0

Delivery Fee $30.00 $0.00 $30.00 0.0

Upload & Send $0.00 $0.00 $0.00 0.25

Storage and Delivery Subtotal $30.00 0.25

Direct Marketing - E-Mail Campaign Grand Total $580.00 1.75

Ok. So as a direct market you also know that you can expect a conversion rate of X% which tells you how much revenue you can expect from this campaign. So if 10% of your recipients respond that's 100 orders.

So

Revenue $250 * 100 = $25,000

Cost to Deliver Service $150 * 100 = $15,000

Cost of Direct Marketing - Print Campaign $1,120

Total Cost $16,120

ROI for Print Direct Mail Campaign = ($25,000 = $16,120)/$16,120 = 55%

(Gee I hope none of my math is wrong.)

In a nutshell for our hypothetical lawn service above, there would be no point in pursuing social media with an eye towards figuring out if it did anything better for you if you don't have any idea as to your non-social media activities and associated costs. If you do go forward and social media drives an ROI of 15% (making it up), fine. Is that better or worse than what you were doing before? Unless you have done something like what I outlined above you will have no clue if 15% is good, bad, or indifferent.

I also argued that, contrary to what some may say, social media is not free. My explanation as to why I will save for part II.

Social Media Secrets Revealed...by Kane Consulting

24 Aug 2009

First, my apologies for the length of time since my last post. Other parts of my life intervened and stole my time and attention away. And now, having finally come back, I'm going to recommend you go read a new blog post at Kane Consulting "The Social Media Secrets That No One Wants to Tell You". I promise you will see my own secrets in this space later.

Who should go read this (in no particular order):

1) Social media "celebrities" - you know who you are :-)

2) Those interested in understanding how to productively think about social media efforts.

Takeaways:

1) Unless you are already famous or have an established brand, it's a long-term investment. Even then it may take a bit of time. (This is my wording.)

Enough said.

2) Social media does cost money (yes, despite what you may hear, it's true)

I've heard too many folks repeat ad nauseam that social media is free. It's not. If it were truly free I would likely have posted more between August 6th and today. And ROI would be incalculable for reasons not normally cited. (Division by zero anyone?)* What's "free" about social media is storage and distribution and even then, it's not really free. I have a blog post on this topic sitting in the corner, waiting it's turn to be polished. When it's out I'll have an active link here.

3) It builds social equity aka social capital (my words and term)

If you do it well you will build a set of relationships that will, as is well explained by KaneCo, save you time and accelerate opportunities down the road.

Go take a read.

*For you non-math people - division by zero is in most contexts, including this one, undefined. If social media were really free then the calculation would be (Profit)/0 which for our purposes cannot be calculated. For more explanations (from longest to shortest), see here, here, or here.

The Threat to Your Organization

6 Aug 2009

Much has been made about the "threat" that social media represents to organizations, especially those who may choose to not jump on the social media bandwagon. In order to be successful, a lot of the writing I see about social media emphasizes the need to be responsive, personal, relevant, and helpful. Really?

How many really good sales professionals, marketing professionals, customer service professionals shout at the people with whom they are speaking? How many good sales professionals deliver canned, scripted presentations over and over and over? When you get stuck on the phone with a customer service person who gives you pre scripted responses to everything you say, I'm sure you're thinking, "I am so happy I gave this company my money!"

If being responsive, personal, relevant, and helpful to your customers is news to you, the threat to your organization is not social media. It's you.

Using Social Media? You Need a Plan.

4 Aug 2009

Bob McClain has a brief post with a sound bit of advice. Social Media must have a purpose and a plan. It sounds obvious, but how many folks do it that way?

See his post here.

Social Media for Nonprofits

3 Aug 2009

For nonprofits interested in guidance on the use of social media, the 17th Social Media Breakfast Minneapolis (SMBMSP #17) event held last Friday (July 31, 2009) was a not to be missed event. The combined efforts of Rick Mahn, Mykl Roventine, and their many panelists created a great deal of useful, prescriptive content, even for those struggling with Social Media outside of the non-profit sector. I dare say, too, including those outside of the Minneapolis/St. Paul area.

I will post more about it in the next week or so, but in the interim I thought some of the material below would be of interest to you right now while it's still relatively new.

Social Media Breakfast Minneapolis Site

More information about both this past session as well as the SMBMSP at the SMBMSP site.

Pre Social Media Breakfast Podcast

The folks behind SMBMSP #17 released a podcast about social media use in the non-profit sector, with a particular Minnesota orientation, and commercial sector vs. nonprofit sector vs. government.

If you would like access information about other SMBMSP #17 podcast as well as information on a subscription to SMBMSP go here. For just the SMBMSP #17 podcast go here.

Social Media Breakfast Podcast

A streaming recording of of Social Media Breakfast #17 can be found here.

As mentioned above I will provide more commentary later, but for now I hope you find the above useful.

How Much Should You Invest in Social Media?

31 Jul 2009

Our Story

Yes you can! No you can't! Left. No, right! The debate about the value of social media continues.

Last week Altimeter Group and Wetpaint released a report that purports to show that companies with high levels of social media engagement also enjoy higher levels of financial performance. The top two examples in the report are Starbucks and Dell. Mark Walsh wrote an article found on Mediapost discussing this report. In it he pointed out that financially Starbucks has had far from a stellar year.

Additionally, I realized that if the preliminary Gartner numbers found at MacRumors are correct then from 2Q08 to 2Q09, of the top 5 world PC manufacturers only Dell has seen their marketshare drop (a whopping 18.7%) and during the same period their revenue (according to Edgar via Yahoo Financials) has been flat. My skepticism only increased.

However, when I first read Mark Walsh's article describing the report I did not have a copy of the actual report (I do now) so I did not investigate further (and obviously did not publish anything). However, Larry Dignan over at ZDNet does have a copy of the report (which you can download using a link from his post or acquire at www.engagementdb.com) and his concise articulation of his skepticism is well worth a read.

To make matters somewhat more interesting they same day also found on Mediapost was a study from Workplace media that questioned the ability of social media to deliver additional revenue. (The full report is free from the Complimentary research section at Workplace.) Yes. No. Left. Right. Executives and decision-makers can understandably feel as if they are on unsure ground. Now what?

What to Do

Organizations looking to make initial investments or further investments in social media should first precisely articulate the target audience for these efforts and establish clear objectives for the initiative before doing so.

If your target audience utilizes or is receptive to particular forms of social media and any of the following are true

You wish to get your proverbial organizational feet wet
You wish to build improved channels of communication with your clients and prospects
You wish to have a better qualitative understanding of your prospects and clients

devoting financial resources, time, and attention to social media may be well-advised.

If your target audience utilizes or is receptive to particular forms of social media, you are looking for a hard, direct financial return and the following are true:

You have a quantitative, data-driven understanding of the internal mechanisms/business processes of the part of your business you wish to improve (ie. marketing, product development, customer service)
You have a quantitative, data-driven understanding of your relationship with your prospects and/or clients (ie. level of engagement, conversion rate by channel, communications metrics)

devoting resources, time, and attention to social media may be well-advised. Having both 1 and 2 above does not mean you don't need a strategy, you're all set to go, and success is guaranteed, but if either 1 or 2 is not in place you are better advised to build those capabilities before investing in social media. In this situation, if you do invest in social media you may in fact achieve a positive ROI, but you will have no basis for knowing so.

Lastly, if your target audience and/or its influencers does not utilize, seem receptive to, nor is likely to utilize any social media within your planning horizon you will likely get as much if not more of an ROI by sending me a check for the amount of your planned social media initiative than actually executing the initiative. I, at least, promise to send you a thank-you note!

Facebook Advertisements Starring... You?!?

25 Jul 2009

This is not likely going to be my normal type of entry, but given the uproar and potential confusion I thought a quick note might be in order.

The Story

As you may have heard (first reported here) Mr. Smith logged into Facebook and saw a picture of his wife, Cheryl Smith, in the "hot singles" ad he was presented. This story and the supposed steps necessary to prevent this from occurring were picked up and spread like wildfire across the web. Facebook's Terms of Service (TOS) allowed this!?!? Even Cheryl Smith wrote about it in her blog. And I admit, when I first read the information I followed the steps and emailed my wife, suggesting she do the same.

But wait. Facebook chimed in yesterday and said in effect, the ads were the result of some misbehaving 3rd party advertisers. The ads have been removed and, "..we've recently prohibited two entire advertising networks from providing services to applications on Facebook Platform because they were not compliant with our policies and failed to correct their practices." Not mentioned in their post, but mentioned elsewhere is that the commonly recommended steps would not have stopped the ads from appearing because they were generated by the application installed by Mr. Smith and not by Facebook's advertising system.

As outlined in their response to the furor on their blog, Facebook has long (more than a year) used your profile photos on its own advertising system to promote products or services with which you are already directly connected (emphasis mine). And you know what? Some people just don't mind.

What to do now

If this use of your activity and content (including your profile photo) is news to you and/or you would prefer this not to occur in the future, you can follow my version of the handy, now-repeated ad-nauseam steps to disallow it.

To remove permission for Facebook to use your activity and content (including your profile photo) in promoting products and services to which you already have a direct connection you can change your requisite privacy settings by doing the following while logged into your Facebook account.

Under the Settings menu select Privacy Settings
Click on News Feed and Wall (3rd item down)
Click on the tab labeled Facebook Ads
In the select box next to Appearance in Facebook Ads select No one

Where do we go from here

This whole incident raises a whole host of issues and questions for organizations both using social media or not. Many of them are not new nor unique to social media, but it may be that the use of social media is bringing them to your full attention for the first time. They include:

Information and Content types:

What behavioral information are you going to collect from your users and/or customers?
What user provided personal information will you collect? (e.g. via registration forms)
Are you utilizing user contributed content?

For each category of information and/or content:

Who owns the information or content?
Who has access to the information or content?
Who has rights to its use? Under what terms and conditions? And for how long?
Can a user remove it? How?
Are your rights and/or license to use that content exclusive? Are they transferrable? Under what terms and conditions? And for how long?

From a process perspective

What do you do to protect customer data?
What and how do you share user and/or customer information with 3rd parties?
How do you notify users and/or customers that that use has or will change?
If users can remove their information or content, what steps do they need to do so? What steps internally must you do to successfully act on that request?

I suspect that these off the cuff questions only scratch the surface. If you think of any additional issues or questions let me know. I will address these questions and others in later posts.

Welcome to iMeansBusiness
(aka iMeansBiz)

18 Jul 2009

iMeansBusiness's primary focus will be the use of social media for business. There are a number of blogs and sites that discuss the latest twist on a technology or how to create or use a specific service. That will not be the focus here. iMeansBusiness will be looking at things you may be asking yourself along the lines of

In establishing a marketing strategy for my (organization, product, service, et al.) should I or should I not include a social media component?

How do I determine a reasonable ROI expectation for specific tactics within my marketing strategy or for the overall strategy itself?

Which social media capabilities will provide the best ROI for me?

What kind of investment should I expect to make in which social media capability?

What processes and capabilities does my organization need to have in place in order to maximize the benefit we derive from our marketing strategy?

What cultural adjustments (if any) will my organization need to make if our use of social media capabilities is to be successful?

To what extent can I use various social media capabilities in my customer support functions?

What are the product development implications of implementing <choose your social media capability>?

What are the risks associated with the use of specific social media capabilities?

What are the differences about which I need to be aware between using social media capabilities internal to my organization vs. using such capabilities in a public facing capacity?

To what degree can social media capabilities enhance existing marketing, support, and commerce functions?

Under what circumstances can social media capabilities replace existing marketing, support, and commerce functions?

I have also established this blog to test some thoughts I have on interactive marketing and social media. At this point I have very rough hypothesis to test. My intention is that over time (hopefully a short period of time) I will be able to tighten them up significantly and find out when the hypothesis holds and when it does not. Rather than wait for me to tighten them before initiating the blog, I decided to simply jump in and adjust as I go.

At this point they are as follows:

Hypothesis One: For organizations that serve <insert demographic(s)> with a measurably strong relationship with their customers and prospects and/or who have data driven business processes <insert social media capability(s)> (as presently defined) represents a significant opportunity drive revenue, expand marketshare, and establish a strong foundation for future growth.
Corollary One: For organizations that serve <insert demographic(s)> without a measurably strong relationship with their customers and prospects and/or who do not have data driven business processes, social media poses a threat to margins due to a very real risk of decreasing ROI in an organization's marketing, sales, product development, and customer service functions.

Corollary Two: For organizations who serve clientele outside <insert demographics> social media will have minimal to no impact for the <insert timeframe>.

Note that there are a number of placeholders in the statements above. This is why:

"Social Media" is not a monolithic entity. Social Media while often thought of and discussed as a monolithic entity is simply not one. It is at present, actually a catch-all term to describe a set of capabilities that permit many to many communication to occur over the internet. Please note that this definition does not require a particular type of media nor a particular type of communicator.

The only constraint is that it must be a capability delivered over an IP-network. I included that constraint, because there are a number of vehicles for many to many conversations which for a number of reasons are simply not part of the general use of the term.

"Social Media" capabilities are not universally adopted. Each capability is used by one or more definable sub-sets of the world's population. This holds equally true within the online population.

"Social Media" capabilities do not impact all aspects of an organization equally. In a given situation a particular social media capability may impact one part of the business, say product development. In that same situation however, a different social media capability, if used may have a larger or lesser effect. It depends upon the organization and the demographic it is targeting.

For now let me know what you think. It's still early and anything I can do to tighten the focus, strengthen or add appropriate nuance to the above is welcome. Also, if you think I'm completely off my rocker that would be good to know, too. Finally, if anything doesn't appear to work on the site or you have an idea for something to add, let me know.

Thanks,

Jonathan

Happy 4th of July!

4 Jul 2009

On the 233rd birthday of the USA I wanted to wish everyone a Happy 4th of July. Where ever and who ever you are with I hope you have a great day!

iMeansBusiness

The business of using interactive marketing, social media.