The Business Case for Social Media

Your Guide to Social Media Success©

7Summits

July 3rd, 2009 1

“The Business Case for Social Media”. There is a wide range of discussion on this topic going on right now. On one end of the spectrum, we see simple approaches showing adoption rates of social media and describing that as business case. On the other end of the spectrum are those hard-core pragmatists searching for what they refer to as the holy grail of social media – an actual ROI! 7Summits is interested in this latter end of the spectrum. We are exploring specific business imperatives that every organization invests in and works to drive tangible results from. We know that there are specific levers that affect these imperatives and either directly or indirectly drive revenue or help to remove cost from an organization. We know that Social Media can have an impact on many of these.
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This material is meant to establish a few major concepts: 1) what do we mean when we say social media? 2) what do we mean by “Applied Social Media”? 3) can a business case be formulated here? 4) and what exactly are we measuring?
This is not a perfect conversation. However, it is a conversation and we welcome your feedback, insights and opinions as we learn together, refine this message and hopefully help some companies realize some of the many benefits that applied social media has to offer.

Social Media Defined Applied Social Media The Business Case for Social Media Measurement
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Social Media Defined
“Social Media” is a phrase that has been over-hyped, obscuring its definition and confusing its meaning with many other terms.

Web 2.0

Online Marketing

Enterprise2.0

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CloudComputing

Social Networks

SocialCommerce

Social Media Mobile NewMediaMarketing Semantic Web SocialBusinessDesign

MySpace

Facebook Mash-ups

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Social Media Defined
Social Media‟s more precise definition can be found by looking more closely at the original definition of is root words:

Social
Relating to human society and its members1; of and pertaining to the life, welfare and relations of human beings in a community2

Media
(singular medium) The storage and transmission tools used to accumulate and distribute information, or data1

Therefore Social Media is a set of technologies being used to accumulate and distribute information or data (content) to members of a community that have congealed around a common purpose.
1 en.wikipedia.org/wiki/Media_(communication) 2

http://dictionary.reference.com/browse/social
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Social Media Defined
So what are the predominant media that we are talking about?
There are a lot of categories of social media: Social Networks, RSS Feeds, Blogs, Wikis, Podcasting, Widgets & Gadgets. These are some of the more well known ones. The list goes on: Search Engines; Social Book Marking Sites; Micro-blogging; texting is social; video sites; photo sites; travel sites; and now B2B networks are forming; mashups – a good example being display of flickr images over the top of Google maps.
We‟ll take a quick look at the most often used media just to give everyone a good baseline of what they are and how businesses are starting to apply them. If you get all of this, just skip ahead.

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Social Media Defined
Social Networks focus on building online communities of people who have come together for a common purpose.

Social Networks started out as a means to share personal news, photos and status and are now moving on to become a preferred way for connecting a global workforce. Many companies are creating brand-centered communities and actively participating in media where consumers spend time to help better understand their perspectives and needs.

Examples: Facebook, MySpace, LinkedIn, and myPath

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Social Media Defined
RSS - most commonly translated as "Really Simple Syndication“ or „Rich Site Summary” – it actually consists of formats used to publish frequently updated information . Information like blog entries, news headlines, audio, and video. The idea here is that these formats are somewhat standardized making is easy for them to be consumed in many places as well. This syndication aspect of the delivery is what differentiates RSS from other ways of sending and accessing this information. Imagine a feed like this providing updated company news and information – internal or external.

Business are using RSS to do everything from consumer research sources to make sure that their information can be reached by others using this medium.

Examples: favorite blogs, CNN News, BBC, Mashable.com (very useful social media blog), Social Blizzard (coming soon)
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Social Media Defined
A blog – is a type of website that is really like a personal journal that gets frequently updated and is intended for the general public. Businesses are using blogs to better establish their identity, engage consumers and do so in their preferred media: a lot of people are reading blogs!

Examples: Mashable, TechCrunch, Wifli.Wordpress.com

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Social Media Defined

A wiki is a collection of Web pages designed to enable anyone who accesses it to contribute or modify content, using a simplified markup language.
Business as using these to create collaborative websites, share best practices and as an important component of a community website.

Examples: Wikipedia; many topical wikis covering anything from art tutorials to adoption.
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Social Media Defined

A podcast is kind of like a blog, but the content s made up of a series of digital files, mostly audio or video. Like blogs, these are released periodically and made available for download so that they can be listened to or watched on your computer, your phone or your iPod.

Examples: Audio Books, Learn A New Language, “Hidden Yellowstone”

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Social Media Defined
Gadgets originated from a term referring to “desk toys” like stress balls, puzzles and those little perpetual motion gizmos. So a widget or gadget is a small web component that has a particular function – many are fun – and these now live on our computer desktop or inside our web browser.

Gadgets and widgets have made many of the platforms that we are used to using (like facebook) more fun and usable. Businesses are just starting to use gadgets to create persistent business monitors; to create directories of information that can be embedded in other sites thus increasing brand awareness; to provide updates on key data, news or events.

Examples: countdown timers, weather forecast, word of the day, guitar chord explorer, RSS News Reader, and so much more.
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Social Media Defined

The categories of social media and the named media themselves continue to expand at an alarming rate.
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Social Media Defined
This tends to raise a lot of questions:
What should we be doing on Facebook? We only have seven people in Marketing – which sites and tools should we be using?

How do I use Twitter?
Do we need to be on Twitter and Friendfeed? What is the role of PR is Social Media?

These are the wrong questions

Businesses are compelled to apply these technologies with a focus driven far too much by “how” and not by “why.”
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Social Media Defined
The questions that should be asked:
How do we increase sales and market share? How can we better align innovation with market demand? How do we providing a consistent customer support experience at a reduced cost? How do we establish and maintain a positive online reputation? How do we improve time-to-productivity for new employees? How can we increase customer retention? What audience are we trying to reach and what are our objectives with that audience?

These questions focus on applying social media to drive some level of measurable business value
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Social Media Defined Applied Social Media The Business Case for Social Media Measurement
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Applied Social Media
Consider this. Your business is comprised of several key stakeholders: customers, employees, partners, and investors. Relationships with those stakeholders are affected by various parts of your organization: marketing, sales, customer service, human resources, public relations, logistics, procurement, product development, and more. Social Media can add value to those relationships. Measureable Value. Client Stakeholders

Relationships

Entities Involved In Those Relationships

Your objectives for using social media should be grounded with this in mind to set a solid foundation. Social Media can add measureable value to these relationships.
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Applied Social Media
Groundswell
Many companies approach social computing as a list of technologies to be deployed as needed – a blog here, a podcast there – to achieve a marketing goal. But a more coherent approach is to start with your target audience and determine what kind of relationship you want to build with them, based on what they are ready for. Forrester categorizes social computing behaviors into a ladder with six levels of participation; we use the term "Social Technographics" to describe analyzing a population according to its participation in these levels. Brands, Web sites, and any other company pursuing social technologies should analyze their customers' Social Technographics first, and then create a social strategy based on that profile.

Groundswell taught us to apply media based on the audience, the objectives with that audience and the supporting strategies.
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Applied Social Media
Social Media is incorporated into strategies for the full spectrum of customer engagement from Awareness to Ongoing Engagement.

Offline media, traditional online media, and social media all come together to affect how we engage prospects and customers.
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Applied Social Media

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Applied Social Media
So, this is what we mean by “Applied Social Media”

Client Stakeholders Relationships

Entities Involved In Those Relationships

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Social Media Defined Applied Social Media The Business Case for Social Media Measurement
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The Business Case for Social Media
Now extend the idea of “Applied Social Media” by taking a closer look at several business imperatives along with some specific value levers that move the needle when social media is applied.
Marketing
Market Intelligence Customer Awareness & Attraction Multiplying Effectiveness of Campaigns Building Brand-Centered Community Accelerate Time-to-Revenue Customer-Driven Product Innovation
Knowledge Retention

Business Imperatives

Increasing Customer Loyalty

Providing Identifying Market Trends Consistent Support Reducing Call Volume Improving Self Service Building Customer Loyalty

Reputation Management Monitoring & Engaging
Public Messaging

Company Generation Lead
Locating Expertise

More Efficient Internal Comms

Pipeline Workforce Attraction Development Time to Productivity Training and Education Connecting & Engaging Workforce Improving Generational Workforce Performance Empowering Individual Productivity Improving Retention Rates

Value Levers

HR

The results can be measured in terms of either clearly moving key operation metrics or delivering a hard ROI calculation.
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The Business Case for Social Media
Marketing
Market Intelligence Customer Awareness & Attraction Multiplying Effectiveness of Campaigns Building Brand-Centered Community Accelerate Time-to-Revenue Customer-Driven Product Innovation
Knowledge Retention

Business Imperatives

Increasing Customer Loyalty

Providing Identifying Market Trends Consistent Support Reducing Call Volume Improving Self Service Building Customer Loyalty
Lead Generation

Reputation Management Monitoring & Engaging
Public Messaging

Company

Locating Expertise

Pipeline Workforce Attraction More Efficient Development Time to Productivity Internal Training and Education Comms Connecting & Engaging Workforce Improving Generational Workforce Performance Empowering Individual Productivity Improving Retention Rates

Value Levers

HR
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The Business Case for Social Media
Where Can Business Value be Most Affected by Social Media?
Marketing Imperative:
Increase Brand Awareness, Grown Sales and Take Market Share – Market Intelligence – Identifying Market Trends – Multiplying the effectiveness of Campaigns – Increase Customer Loyalty – Building Brand-Centered Community

Sales Imperative:
– – –

Sales Growth

Lead Generation Expertise Location Pipeline Development

Product Development Imperative:

PR Imperative:

Establish & Maintain a Positive

Online Reputation – Monitoring & Engaging – Online Reputation Management – Public Messaging through topics of interest

Align Innovation with Market Demands – Customer Driven Product Innovation (Aligning Innovation with Market Demands) – Accelerate time-to -Revenue – Driving Better Results from R&D Investments – Knowledge Retention

HR Imperative:

Customer Service Imperative:

Providing consistent customer support at a reduced cost – Providing Consistent Support (re-use knowledge) – Reducing Incoming Call Volume – Lowering Support Costs – Building Customer Trust & Loyalty

Attraction, Engagement & Retention of Workforce – Employee Awareness / Workforce Attraction – Employee On-boarding / Time to Productivity – Training and Education – Connecting & Engaging Workforce – Improving Generational Workforce Performance – Empowering Individual Productivity

These are the imperatives behind the behaviors that company‟s are trying to drive toward. This is where social media can help.
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The Business Case for Social Media
Examples of Value Levers in Social Media
Lowering Support Costs and Incoming Call Volume. Live support
is often the most expensive support activity companies provide. By providing an open environment in which support problems are exposed to other customers of your product or service, Social Business Software can dramatically improve your customer support team‟s productivity. Because support requests are directed to a community and not an individual, a partner or another customer can often handle them, plus the resolution will be available to all other customers for reuse.

Each Value Lever states a specific case for how value can be delivered, and can be supported by case studies and a business case.
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The Business Case for Social Media
Examples of Value Drivers in Social Media
Empower Individual Productivity. Too often,
employees can‟t access key resources when they need them, be they people or documents. Social Media can be leveraged to provide employees with a 360-degree view of conversations and activities across previously isolated information silos. As a result, they can easily access the right people and information to generate better results in less time.

Each Value Lever states a specific case for how value can be delivered, and can be supported by case studies and a business case.
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The Business Case for Social Media
Formal Business Cases
Impact of Value Levers

Many business cases are still very anecdotal, however formal rigor and financial acumen are being applied to harden these.
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The Business Case for Social Media
Twitter ROI Case Study: Dell Generates $3 Million in Sales Utilizing Twitter
First adopters of social media networks like Twitter, Facebook, LinkedIn, and blogging understand that their success can be measured and based on audience engagement, recognition, and involvement. Yet, Social Media’s Achilles heel, in the eyes of corporate decision makers who still utilize Web 1.0 analytics and measurement for their marketing, sales, and promotion efforts, is the lack of compelling ROI case studies: until now. Dell’s Twitter Strategy: ROI of Engagement The Washington Post reported on Claire Baldwin’s article in Reuters “Twitter helps Dell rake in sales“:

Even this popularized example is viewed as anecdotal. Did economy, seasonality or other factors beyond social media come into play here?
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Social Media Defined Applied Social Media The Business Case for Social Media Measurement
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Measurement
Test, Measure, Learn
Measurement & Insights is core to a business-focused Social Media investment. Models that connect both conversations and activity on the web to your business performance are the fundamental tools that must be worked with. Baseline measures, along with agile test-measure-learn cycles allow you to adapt, grow, and improve.

Measurement should be setup with the idea of watching as your investment delivers tangible results.
Tools in this space have evolved beyond traditional web analytics to Listening Platforms that look for patterns in the conversations, identify emerging themes and identify the information that should be treated with the most importance.

Social Media is becoming easier to measure with a host of tools available for both transactional measures and key insights.
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Measurement
ROI Modeling
Breakeven should be in months, not years. You input cost, baseline measures and related assumptions into the activity-dependency models. Sensitivity-type analysis around the behaviors you are changing flows through the model and drives value calculations. Update your model as you evolve and continue to measure. You should be able to track your investment in a more meaningful way and understand what you get in return.

Web Performance & Analytics
Most companies have the basics down: traffic and transaction measures but those leave out the best parts of the story. These ensure that the right data is collected and analyzed to provide insights on the value of your content and applications as well as your products and brand. You will learn what and how to measure, where your brand is being talked about, and the sentiment of those conversations (positive, negative, or neutral). You can also see how your competitors‟ fair in those same conversations. With this information, you can create a social business strategy that really means something.

The ROI is what we are after. That takes time and some solid work up front. Web performance and analytics are arguably not enough, but they are a needed component. And the tools here are really evolving.
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Measurement
Behavior and Conversion Tracking
Your content, your apps, your ads, your conversations: it‟s all about changing or enabling consumer behavior. With the business-focused models presented here, you should be able to connect those behaviors to desired business value. These powerful stories are written in activitydependency models. With those models, you‟ll know what you need to measure to “see” how your investment changes consumer behaviors. Then, watching those behaviors, you can adjust your measures and improve your model to deliver more value from the channels and social venues that are working for you.

Optimization Strategies
The social web is a fluid, dynamic environment that eschews outside control. Your best strategy is on-going measurement and adjustment. It is important to stay abreast of insights around new trends, new technologies, and new participation approaches that help you focus your investment on those behaviors that truly bring value. Test & learn will become a part of your vocabulary (perhaps your new mantra), and will transform your strategies to keep pace with social change.

Changing and enabling consumer behavior is what we are after and so behavior tracking, and ultimately conversion, are needed. This goes back to the Strategic Framework for Applied Social Media that we looked at earlier.
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The Business Case For Social Media
So, a business case for social media in general is conceptual. However, you can now see how social media can be applied to your business and that it can be measured. And if you have a clear mapping between your business objectives, KPIs, and performance objectives to those value levers that we discussed here – those clearly influencing revenue, costs and profitability – then you‟ll have your business case for social media.

The Business Case for Social Media

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In the

Vast Expanse

of Newly Evolving

Social Media, What Should You

Focus on First?

Your Guide to Social Media Success©
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