No ROI on social media? Here’s why
March 2, 2010
Banks and credit unions seem to feel such tremendous pressure to “do something” in social media that they often launch Facebook pages and Twitter accounts before they know why or what they hope to accomplish.
Why did you create that Facebook fan page?
Why did you launch a Twitter account?
What were you out to accomplish?
People often talk about using social media to “join the conversation,” “create engagement,” “foster dialogue,” “connect with people,” “reveal real personalities behind the brand,” and “show their authenticity and transparency.”
Reality Check: Besides being nearly impossible to quantify, these aren’t real business goals. They may be viable marketing strategies to achieve something else — something greater — but they aren’t business objectives by themselves.
You never hear any CEOs, CFOs or shareholders demanding their company be “more engaging” or “conversational.” They want growth. They want sales. They want ROI. And yet financial marketers keep diving into social media without attempting to create any deliberate or direct link to their organizations’ bottom lines.
Social media authorities frequently talk about monitoring the number of Facebook fans, Twitter followers, RSS subscribers, retweets, @replies, blog comments, video views, etc. You may be able to calculate engagement by measuring these things (in reality, these stats are usually dismal for most financial institutions), but what does this engagement lead to? What are the results? What about sales? Revenue? Customer acquisition? Even if you claim “customer retention” is the goal, how are you measuring and quantifying it?
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Social media is cool. It’s in. It’s sexy. Financial marketing, on the other hand, can be somewhat dull. Bank and credit union marketers are bombarded with articles and blog posts reminding them how awesome financial institutions that use social media are. Financial marketers see their peers celebrated and respected for being innovative, so it’s no wonder they feel the temptation to “do something” (anything!) with social media too.
Unfortunately, this means most financial marketers start with the tool, then look for some way to use it. “We’ve got to incorporate social media into our next campaign.” Why??? Isn’t this putting the cart before the horse? Or like the tail wagging the dog? Or a dozen other corporate cliches?
Reality Check: You don’t walk into your garage, pick up a hammer and then roam through your house looking for something to fix. You only use certain tools in your toolbox when you need to accomplish very specific tasks and solve very specific problems.
Bottom Line: If you don’t know what problem you’re trying to solve, you can’t measure success, hence, there can be no ROI. Without clearly defined, measurable business objectives, you’re just spinning your wheels and wasting your time.
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Previous related stories from The Financial Brand:
- Results 2.0: Social media for financial institutions
- Compliance crack down on social media coming?
- Why social media is a fulltime job
- Sustaining social media success with marketing muscle
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Filed Under: Social Media
Tags: ROI
March 2nd, 2010 at 6:16 am
Great relevant post asking the right questions.
I get the whole “conversation/engagement/dialogue” aspect of social media and for a certain growing segment of consumers, SM is a great supplemental “tool” as you’ve described.
However, the number of eyeballs delivered is minuscule. Give me an efficient mix of traditional media combined with a relevant and differentiating message and I’ll drive traffic and increase wallet share. Can’t even come close to making the same statement about SM.
John Mathes
March 2nd, 2010 at 8:18 am
Something I’ve been preaching for quite some time. So-called gurus are preaching the importance of listening, yet they wonder why the results aren’t there. Listening is passive. Yes, you need to listen to your customers and being aware of their issues/concerns/compliments will help grow and sustain business; the real factor is money.
We need to stop focusing on the intangibles that are simply “feel good” words and focus on what drives business (especially financial institutions) – sales.
March 2nd, 2010 at 8:31 am
True, its not about the technology, it is indeed about the communication and sought after goal when using Social Media. I’d have to differ slightly when it comes to ‘Engagement’ and ‘connection’ “…being nearly impossible to quantify,” though using Dell Computers as an example. There are many different ways to measure a foray into social media, but you are right to state that organizations need to know what they want to measure before engaging in procuring use of social media tools. They should define a goal as something they want to change, to improve, to incite or accomplish and tie them directly to sales and/or registrations, increased traffic, votes, leads/conversion, etc…
March 2nd, 2010 at 9:04 am
@jp – Great article and thoughts to share. Can’t tell you how many times that we have talked to cus wanting to get into social media w/o a plan and no set goals. One credit union wanted to use a blog to share political action, a president’s message and marketing and promotional material. WTF! That’s not the point here.
@jm – We have had great success using social media to complement traditional marketing efforts. It adds an additional level.
One of the things I say over and over again is that traditional marketing builds the brand while social media helps to reinforce it.
I am all about combining the two (traditional and non-traditional) to really rock it out. No one is going to friend you up on FB if you are not doing anything. No one is going to follow you on Twitter if you are not doing anything.
But… if you start to merge social media into traditional campaigns, you can start to measure items and track successes.
Thx for writing JP.
March 2nd, 2010 at 9:08 am
@kasey – Good points you share. However, with social media too many times I have seen FIs and others turn SM into another broadcasting channel. This is where I think that the following is needed: Listen, Learn and Engage.
People will not want to get involved with an organization socially if all they are doing is shouting and talking about themselves.
Right now one of our credit unions is running a campaign that uses both traditional and non-traditional channels. The traditional channels drives traffic to the non-traditional channel that focuses on sales through building relationships and listening. So far it has been very successful since launching in the past month.
March 2nd, 2010 at 9:22 am
@ John Mathes – 100% of my business comes from some form of word-of-mouth. Isn’t that the real definition of Social Media? I started my blog three years ago. No, I should really say I started writing stuff people would care about a year ago. Last month I had 10,163. Up from 400 a month when I started. It’s the only “advertising” I do for my business, besides public speaking, a fairly benign website and a book on Amazon.com.
So what’s MY ROI? It only costs my time. The tools are free. And I make enough money to have to pay taxes regularly. So I guess I’m a Capitalist and a social media maven.
So…..should I ADD direct mail to my SM?
March 2nd, 2010 at 9:24 am
Oops – I meant to say in previous comment but got excited in the edit process…I had 10,163 visitors to my blog in the (short) month of February. That’s up from roughly 400 when I started. Eyeballs? Lurkers? Stalkers? I don’t know. But I have charts and graphs….
March 2nd, 2010 at 9:29 am
@denise – you make a very good point as you and I have discussed. The greatest fallacy of social media for any business is that they think that it is “free” advertising which as you know it is not.
Social media is an investment just as any other venture. The more you put into it, with a strategy of course, the more you will get out of it.
Too many times, FIs (or any business), get a blog, Twitter, Facebook, etc. and realize WTF… I don’t know what to do next. Content is king for these channels and frequent, relevant posts, etc. are what makes it work. See above note.
March 2nd, 2010 at 9:40 am
Thanks for the comments and feedback everyone.
March 2nd, 2010 at 9:42 am
Think about this. If there were a ton of social media projects in the financial industry with a huge ROI, The Financial Brand’s readers would have definitely heard about them. Between all the conferences, webinars, trade media, bloggers and Twitterers out there, there are very few truly successful ideas that escape mainstreamification. Look around the web and you’ll see that whenever anyone has cracked the social media ROI problem, they’ve shared their results loud and proud. No one can keep a secret, especially when they’ve been successful + innovative (in a socially/wired space!). Social media ROI is like marketing’s Holy Grail right now. People are falling over themselves to solve the mystery and claim immortality.
March 2nd, 2010 at 11:44 am
This presentation by Olivier Blanchard validates the importance of ROI in social media and discuses how to achieve that goal.
The number one reasons Credit Union’s fail in delivering ROI in social media is because of not investing enough resources to be successful.
http://www.slideshare.net/thebrandbuilder/olivier-blanchard-basics-of-social-media-roi
P.S. Highly suggest reading the Brand Builder Blog!
March 2nd, 2010 at 12:01 pm
Mikal, you’re talking about pumping up the “Investment” (the “I” in “ROI”). There still needs to be an “R” — “return.”
March 2nd, 2010 at 12:04 pm
The trick isn’t to find some fancy formula or calculation based on new metrics. The solution is simple: integrate offers, promotions and products into your social media programs.
March 2nd, 2010 at 3:06 pm
We need to do a better job of talking to the C level guys about UNDERSTANDING SM and its many uses. Some are not quaifiable (read: ROI). Some are yet another channel for comunication and BRAND flow. Sometimes its for cusotmer service. Sometimes its a Brand monitor and Yes, sometimes its good for integrate offers and promotions.
March 3rd, 2010 at 3:55 am
[...] • The Financial Brand » No ROI on social media? Here’s why [...]
March 3rd, 2010 at 6:47 am
Denise Wymore — congrats on the blog traffic. Some businesses or services are naturally going to do better with SM than others. As everyone has stated, it takes a mix and an assortment of tools to market effectively. Not sure why you singled out direct mail as your “add on” question… but yes, I believe direct marketing (not necessarily direct mail) would boost your business. It all depends on the accuracy of your contact database coupled with the predisposed awareness and understanding of your brand that the recipient has for your services.
March 3rd, 2010 at 7:46 am
As some of you know eloquent online began as a “shadow” CUSO for Chetco FCU in 2007 to study the viability of social media. I have to agree that even at Chetco where we stay on the cutting edge we have not seen any dramatic results from our social media sites. I think SM is for us, the vendors and non-industrial CU types that are out there shaking things up. For all the gee wiz stuff about Twitter and Facebook, Chetco FCU is looking at the use of traditional media this year; radio, TV and though it hurts me to say it….newspaper. We are however going to meet today to explore the idea of sponsoring a musician who in turn will allow us to put a 2 dimensional bar code inside the CD cover which when photographed with a smart phone will take that person directly to our site. Not sure what kind of media that is, but this article was the first one I have printed out since 2001. Bravo.
March 3rd, 2010 at 8:20 am
Thanks for the comment Jason.
March 3rd, 2010 at 8:23 am
Besides Currency’s “Young & Free” program, can anyone name a social media project from a bank or credit union that has brought in 1,000 new customers/members? Or resulted in 1,000 new checking accounts?
Currency’s “Young & Free” program is successful because (1) they integrate products, services and offers — despite how many social media experts say this is a major no-no, and, to DallasAdMan’s point, (2) they use as much (if not more) traditional media to support the program as they do social media.
March 4th, 2010 at 8:07 am
Love the post Jeff. It will fit well with the one I’m working on now about content marketing. The simple fact of the matter is that people don’t want to just follow anyone on social media. They want to follow those who will entertain them and provide them with something of interest based on their stage in life. If bankers just start using social media to spout messages about their branch hours, open houses, parties, and other little things nobody really cares about then they’re missing the whole point of social media. But as you stated, social media alone isn’t the answer. It’s a combination of traditional with social that can help you achieve your goals. And hopefully those goals are to sell more of your products and services, not just to talk online.