What is the monetary value of 1,000 Facebook Likes or 900 Twitter followers to a business? Nothing kills the social media love fest faster than the probing mind of a Wall Street fan.
As social media companies and practitioners strive to shed their awkward teenage years and emerge as adults worthy of a seat at the big table, this is a fundamental question that must be addressed.
How does one need to think about social media in a way that directly ties to the bottom line?
A company’s ability to build a social media engine, I believe, is one of the key areas of competitive advantage in the Digital Age. The problem is that many companies focus on the wrong goals.
Business Value is Built on Predictability
A fundamental truth of social media is that there is much a business can’t control. Social media’s greatest strength can also be its greatest challenge: the need for authentic actions and endorsements of people who feel passionate about you, your products and your services.
Spikes in the number of re-tweets, shares and trends can be extremely unpredictable.
Yet, businesses establish long-term value through predictability. Stocks that command premium prices show strong growth potential and high predictability of future earnings. Credit scores are merely an assessment of the predictability that someone will pay back on borrowed funds.
For social media to be a significant asset in organizations, it must become a predictable indicator of future earnings and potential growth. And for it to be a key element of sustained competitive differentiation, it must be something that can only build over time.
Don’t Confuse the Symptom with the System
As long as social media is measured by tweets and Likes, it will be nothing more than an interesting diversion in the marketing mix. CMOs will focus their attention on marketing spend that can lead to real revenue.
But tweets and Likes are only the symptoms.
The real business value of social is in helping to build sustained communities of passionate people like you and me, and a system that can amplify this to the edges of our digital universe.