While getting a tour of USAA HQ from Chris Sandoval and Christina Nickel, the topic of discussion turned to PFM, and I asked them, “how did you justify the investment in PFM to senior management?”
What Christina said stopped me in my tracks: “We told them stories.”
OK, I’m being a little melodramatic. We really didn’t stop walking, and the roof of the building didn’t magically open letting in a ray of bright sunshine (like it did on that Southwest Airlines flight, which, thankfully, I was not on).
But this did strike me as exactly what’s needed to justify — not to mention explain and educate — a lot of investments in technology, social media being pretty close to the top of the list (if not the top).
In a recent blog post about The Path To Social Media Success, Brett King included a couple of quotes from various folks on social media ROI:
“The ROI of Social Media is that your business will still exist in 5 years.” (Erik Qualman, Socialnomics)
“Hakan Aldrin, MD of the Benche at SEB when asked if he has numbers to prove the value of his social media community platform he replied, “No. That’s not what it’s for.”
With all due respect to Mr. Qualman, his comment is a load of crap. Senior execs have heard for the past 30 years how they won’t be business in five years if they don’t invest in [fill-in-the-blank] technology.
Yes, it’s true that many firms have faltered, failed, and disappeared because they didn’t anticipate or respond to technology changes. But many firms didn’t throw money at knowledge management or spend millions of dollars on business process redesign projects that did nothing more than tweak some back office functions like some of the firms that did make those investments.
And many others were slower to make investments in PCs, the Internet, eCommerce, etc. and are still doing very well, thank you very much. You could argue — and be right — that had they made those investments earlier that they would have made more money. But that would be mean that they would have seen a real ROI on their investment and that’s counter to the “do it or die” argument.
Mr. Aldrin’s comment simply makes no sense. If the purpose of the social media community isn’t to somehow materially improve business performance and the bottom line, then why would any firm do it?
It’s OK if you can’t accurately forecast the impact of your social media (or other type of technology) initiative. It’s OK if the connection between investment and return on investment is a couple of steps down the line. IT has been making those investments forever, and while it took senior execs about 20 years to get, they now realize that investments in things like servers, routers, data centers, databases, etc. won’t produce a direct return on investment. They realize that these things are part of an infrastructure necessary to do things that will produce a return on investment.
But even if the ROI is a couple of steps down the line, you have to make that connection to senior management. You have to tell them the stories about what will be done with the infrastructure.
The key point: Having “blind faith” in social media is fine, but it is simply no basis on which to make smart business decisions.
I have a client who, for the past 15 months, has been trying to get me to write a report on the ROI of PFM. They’re actually willing to pay my company to write the report, and I steadfastly refuse to do it.
Why? First of all, I’m not confident that there’s a firm out that can really prove the ROI from their PFM investment (just yet). And second, even if there was one, just because they got an ROI from PFM doesn’t mean your firm is going to get an ROI from it, let alone the same ROI. (Side note: When you see a webinar titled “Get Up To A 300% ROI From Your Investment In Blepfard”, run away!).
Instead, what I do in my PFM presentations is try to tell a story about how PFM could be used. Used to interact with customers, gather data from customers, market to customers, and to drive choice of payment cards. Because I know it’s the latter that senior execs are concerned with — steering customers to use the payment mechanisms that will be most profitable to their firm.
If your justification of social media is based on fear of extinction, good luck. You might be right (and in a very small percentage of the time, you will be). It might sell books, but it won’t persuade senior execs to invest.
And if your stance is that your preferred initiative is somehow exempt from the requirements of showing an ROI, then not only are you unlikely to get the funds, but I’d go as far as to say that you’re hurting your career path at your firm.
What great persuaders and influencers do is tell stories. You need to learn how to tell stoROIes.