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Social Enterprise ROI: Measuring the Immeasurable

Lavoy_April.jpg The world has been chapping our collective hides about metrics for social business. Customers want them, and not without reason. Our typical answers (ROI is irrelevant, What’s the ROI of your mother, it depends on the business problem) have some merit, but in the end, we still need to demonstrate the efficacy of social approaches to business challenges. Probably.
 


Photo courtesy of Stephen Harris (Flickr).

Social ROI: We’re Working on It

In reality we have very little to prove the worth of the Social Enterprise. We have some academic studies, we have some anecdotal evidence, a few (very few) published use cases where metrics are involved, and we have a whole lot of “it makes sense, just look at it.”

The reason adoption has gone as far as fast as it has is not about ROI. Rather, it's because of a) the extent to which the old models are failing and b) the extent to which many people deeply resonate with the new models.

Predicting the ROI of any enterprise investment can be tricky. At my company, we have a whole team of people called “Value Engineering” that dedicate their time to calculating these things. But when the topic is social business or enterprise 2.0, the challenge is much, much bigger.

The reason is that the objective is to qualitatively change how work is done — how we view challenges and how we make progress. We are rethinking how we structure organizations, projects, teams and work itself. Qualitative differences are tricky to measure.

Further complicating the issue, is that the outcomes of these changes emerge over time. Since these concepts have only been adopted slowly and over only the last 3 to 5 years, we lack experience in understanding what these emergent outcomes should be (though we have plenty of theories about it), how to detect these outcomes, what is essentially required to achieve them (though again, lots of theory), and, most importantly, what time frames we should expect to see these outcomes in.

My experience is that small changes can be seen almost immediately amongst small groups, but larger organization wide changes can take two years or more to mature and emerge.

Social Marketing ROI is Progressing

That said, we’re seeing significant progress on the marketing side. Marketing, of course, is one of the two or three oldest professions and it has been diligently measured for decades, especially in the last 2, as digital marketing became the norm.

You may recall that the first decade of digital marketing measurement came down to one key metric — page views. Ads were priced this way, much like magazine ads. You may also recall that this was not exactly the right metric, and did little to predict ROI. A decade later, we are somewhat better at measuring the impact of digital marketing, and have begun to treat social marketing as a special case thereof.

Case studies and ROI calculations are now popping up regularly for Social Marketing and Social Customer Service (which are now gorgeously converging into “Customer Experience," (can I get an “Amen”)). See this list, and this one and this.

Brand value and perception are more elusive, and impact of social on same are measured by opinion surveys where cause and effect can each be quite hard to determine. And still, most businesses still look at “followers” and “likes” and similar metrics. Why? First and foremost, because they can. Second of course is because even the unsophisticated understand what those metrics mean. They may not understand how important or not they are, but people “get” them.

Even now that we have nearly 100% adoption of digital marketing (at minimum a website), we can attribute this less to our improved ability to calculate its ROI, and more because it is now so much the norm that having a website is now a defining characteristic of having a business.

We may yet see this happen in social. In fact it’s likely that we will — in 5 or 10 years or so, but until that point is reached, metrics and ROI will play an important role in the adoption curve. And time is of the essence for many companies these days, where five years can chart both the apex and the nadir of major companies.

 

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