Karl Harvard at Econsultancy‘s Digital Marketing Blog asked for my comments on his post on ROI. I don’t like the debate about why (it’s a tedious debate). The debate about how is good. But there’s more why than how at the moment. So with gratitude to Karl for flushing me out on this, here’s my summaryview:
- Senior people in companies measure and are measured and the web makes almost everything measurable to companies – they’re swamped with ROI numbers from the internet so it’s only natural and right and proper for them to ask about Social Media ROI. Get on with it.
- Therefore every social media or conversational activity must have ROI of some sort. Get on with it.
- People who think conversational marketing is “above the law” in this regard, should be eaten by crocodiles with blunt teeth. Sooner rather than later.
- Every corporate activity has a cash consequence and if nothing less than the value of a firm (its share price) is the sum of its future cashflows then conversationalists need to get seriously real about showing the same for their activities. Get on with it.
- Let me offer “CNPV” as the measure which should apply to all activities – corporate financiers measure the “Net Present Value” of a project by adding incoming and subtracting outgoing cashflows and a “Conversation NPV” is no more than that methodology applied to conversational business. Get on with it.
- No, I don’t have a back of case studies on CNPV yet. So I’d better get on with it.
- That’s why I started this blog. So I’d better get on with it.
January 4, 2009 at 1:53 pm
I needed to add….
The brilliant (BRILLIANT) thing about CNPV is that you need to consider various routes to achieve an outcome, calculate cashflows, compare and rank alternative approaches and end up with one number. If it is greater than zero, then the job is worth doing. If it isn’t, it isn’t. The end.
January 4, 2009 at 1:54 pm
Just indulge me on this for a moment – I’m really angry at the escapists who want to avoid measurement. I’m not going to name them – you know who you are – but here’s a flavour of the sentiment drawn from some high-profile blogs:
“The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable”
“you don’t get money out of a conversation”
“I understand that businesses make decisions based on the bottom line, but isn’t social media engagement all about humanizing organizations?”
“figuring out ROI…is an intellectually bankrupt exercise.”
“(Until) we can measure the impact of a conversation between an employee and a prospect at a coffee shop, it (will be) difficult to measure social media…”
January 4, 2009 at 7:08 pm
Thanks for the review and your feedback. CNPV sounds an interesting concept and I’d be extremely keen to find out how a case study will take shape.
“Conversation” wherever it takes place (coffee shop, blog, meeting room, email, seminar etc etc) is an interactive dialogue and social media has allowed for this dialogue to easily take place between brand and consumer and vice versa.
The important element of the conversation, for me, is the content. If it is associated with brand engagement, what stage is the conversation at? Is it awareness creation; gaining interest; persuasion to commit; building brand relationship/loyaly; transmitting advocacy or something less positive such as brand opponency?
Conversation content could be categorised into one of the above and complimented by reach, authority, impact, number conversing. Potentially a score could then be placed upon this….it still doesn’t offer a bottom line figure though.
So, as I said, I’d be really keen to see the results of a real life CNPV and continue the dialogue.
Thanks again. Karl.
March 12, 2010 at 8:01 am
I needex to add….
The brilliant (BRILLIANT) thing about CNPV is that you need to consider various routes to achieve an outcome, calculate cashflows, compare and rank alternative approaches and end up with one number. If it is greater than zero, then the job is worth doing. If it isn't, it isn't. The end.;