In this special feature of 'Ask Entrepreneur,' Facebook fan Robert Oliveira from Newport, R.I., asks: What is the ROI of social media? If it exists, how can you track it? Instead, consultants will talk about "building your brand." It feels like snake oil.
Be sure to tune into our Google Hangout with Jason Falls tomorrow at 2 p.m. EST. We'll be discussing all things social media and business.
Return on investment (ROI) is something every businessperson should ask about the various aspects of their business, from accounting to legal and customer service to marketing. Marketing consultants or agencies should be prepared to answer the question, even if the actual, numerical answer is not easily predictable.
When your consultant is instead talking about "building your brand" and seems to avoid the ROI question -- remember, you may have to ask -- he or she likely doesn't have the requisite experience in working with businesses and brands that are bottom-line focused. Social media offers volumes of intangible or intrinsic value such as brand building, reputation protection and strong customer service. When used strategically and with business goals in mind it can be used for extrinsic value, too.
Your Chance to 'Ask Entrepreneur' We enlisted our Facebook fans to ask their most pressing questions about starting and running a business. Over the next several weeks, our special panel of experts will offer their answers and discuss more in online chats. Mark your calendar and stay tuned for details on these future events:
- Nov. 20: Jason Falls on Social Media
- Dec. 5:Grant Cardone on Sales
- Dec. 19:Angela Jia Kim on Growing a Business
The main problem most businesses have is that they don't approach social media strategically. If you want it to drive sales, you should dictate to your partners, "We want a strategic plan that leverages social channels to drive sales." Then find one that can deliver on that promise.
But getting an answer to, "What's the ROI here?" before you implement a strategy is like saying, "How many grandkids will I have?" on your daughter's wedding day. The results depend on the plan and the work you put in.
There are other factors that come into play, of course. Social channels aren't where consumers say they want to interact with brands. According to Indianapolis-based email marketing provider Exact Target's " Subscribers, Fans and Followers " research, consumers want to receive marketing messages from brands over email (77 percent of respondents), not Facebook or Twitter (5 percent).
So, selling via social channels for many brands may not be easy. This is where the brand-building, engagement, service and responsiveness comes into play for your company. You may need to invest time and resources into the soft benefits in order to get the hard ones.
Blaming the consultant or lumping all of them into one bucket of "snake-oil" salesmen is a mistake as well. Some consultants focus on bottom-line metrics from the get-go. Many are experienced marketers who understand the questions and expectations of business owners.
But, more importantly, you and your business should be driving the activity -- not waiting on someone to deliver it for you. Demand bottom-line focus from all your vendors. You'll be much happier.