Mythology - The Meaning Behind the Marketing

How's Your Business Social Life?

Almost every organization large and small is experimenting with social network initiatives of some sort. Some are taking logical, well-planned and thought out approaches. Others are doing it because everyone else is and they feel left out.

To help shift more of us into the prior category, we thought it would be a good idea to explore how to measure social networking return on investment (ROI). After all, if you don't have a reasonable expectation of ROI, you are most likely just reacting to a trend than making a good decision.

ROI at its most basic is a very simple formula: realized benefits - expenses = ROI. The trick is realistically identifying which benefits to measure and how to measure them, and to ensure that all expenses - including hidden ones - are factored in. Here are some thoughts on each category:

Objectives - What Type of Benefits Are You Chasing?

Most organizations struggle with measuring their marketing efforts regardless of medium. But taking a few moments to chart out what you expect to gain from a marketing investment can help build a foundation for success.

One way to think about benefits is to assess your benefits along the customer purchase funnel. You may see different versions of this funnel, but they almost always demonstrate the steps a typical customer takes from awareness-interest-action-purchase-repeat purchase-loyalty-advocacy. Setting specific goals across each of these funnel milestones can help you develop an ROI model.

This ClickZ article outlines a good way to think about how your web site and social networking content can influence the consumer at each step.

Ultimately, you want to make sure that you measure your social networking efforts (and all marketing efforts) against the bottom line. How much are you influencing revenue, both net new and repeat/retained?

Tracking Expenses

Next, what will it cost your organization to launch and manage your social networking campaign? There may be expenses in the following categories:

• Technical - Blog hosting, site development, database development, graphics development
• Content - How much content will it require? Who will deliver it? How much will that cost per content unit?
• Editorial - Who will decide what should go on the site? Who will edit and approve?
• Interaction - Who will monitor the social network conversations? How much time will that take? What is the cost/hour?
• Training - Do you need to invest in training those involved with the project?
• Tracking - How will you measure engagement? ROI? How much will that cost?

Remember that many costs are hidden. For example, if you pull a marketing manager off of one project to spend time on the social networking project, how much will you lose on the old projects that aren't getting done anymore? Lost opportunity costs are highly under-measured.

One of the most complete social networking ROI calculatorsI've seen on the web is provided by Frogloop. It's in the context of a non-profit scenario, but it provides a very in-depth example of how your own calculations might look.

When Pigs Fly: Building a Boutique Brand

Have you heard of the new Flat Earth healthy snack chips, the ones created by a "passionate group of women [who] challenged beliefs that 'tasty snacks are bad for you' and 'nutritious snacks are boring'"?

The brand has adopted a flying pig as their logo because of the belief that we would enjoy a tasty chip that was good for you when pigs fly. Flat Earth has a compelling mythology behind it, one that conjures up images of entrepreneurial women banding together to bring the world a healthier snack. The brand is quirky, upbeat, independent.

Oh, did I mention it's from Frito-Lay?

These days, major consumer goods companies are recognizing the power of an independent, story-driven brand vs. the old conventional practice of brand extension. The trend built its momentum with major brewers who wanted in on micro-brew mania in the Nineties. Frito-Lay's Baked Veggie Crisps just doesn't have the same brand impact compared to that flying pig and independent-minded group of women, does it?

Frito-Lay doesn't try to hide the fact that Flat Earth is one of their products, but the packaging is clearly designed not as an extension, but a standalone brand. When is it appropriate to live off the awareness and brand equity of a mother-ship brand vs. launch a boutique, independent brand? Here are a few scenarios:

• When the mother brand holds certain images that would be difficult if not impossible to shed- Frito-Lay = world's largest snack provider, and while they have worked mightily to introduce healthier versions of Lay's and Dorito's, the public's perception is that they just don't taste nearly as good.
• When the market is rooting for an independent voice- Sometimes, no matter how good a product a dominant brand delivers, it won't be accepted as well as a new voice. Microsoft has often suffered this fate, especially in the realm of online services.
• When a rogue innovation team produces a better chance of succes - In some cases, a skunk works-style product development team can compete with the dominant brand to the point where it just makes sense to set them apart in the actual marketing of the product, lest it be smothered by the mother ship. Microsoft took this strategy with the launch of X Box, and again with the Zune music player, although the jury is still out on the latter.

Working Harder, Not Smarter

You're familiar with the old marketing chestnut that it's five times more expensive to acquire a new customer than it is to retain a current one, right? Apparently few others have. According to the Council:

• Nearly 67 percent of companies surveyed say they have no system for re-activating dormant or lost customers.
• Only 50 percent of global marketers report having a strategy for further monetizing key account relationships.
• 45 percent rate the effectiveness of CRM systems as deficient or needing more work, with only 15 percent of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

Why do we all work so hard to chase the birds in the bush and neglect the ones in the hand? Perhaps it's the thrill of the hunt; it's more fun to capture a new customer. More likely it has to do with incentives. Incentive theory states that organizations should structure employee compensation in such a way that the employees' goals are aligned with owners' goals. 

Many organizations discount a salesperson's commission - or pay none at all - if additional business comes from a client that has already been "won." (Never mind that customers need re-won over and over.) How many marketing campaigns have been targeted primarily at existing customers vs. "lead generation" from new prospects? Who in your company gets an internal high-five for mining current relationships?

We like the Peppers & Rogers concept of treating customers as investments. With a "return on customer" approach, the entire organization looks at customers as a portfolio of investments with the goal of gaining the highest yield. If incentives within your organization are tuned into that mindset, chances are behavior will change and your marketing and sales organization will start working much smarter to yield more from those birds in hand.