SXSW: Brands – The Cost of Being Human

I’m excited to give this talk at SXSW 2012 – see you there.

Why do brands resist being human? Understanding the question, and its answer, reveals much as to the reasons why companies continue to struggle with the adoption of social business practices. Fear not! You can do something to make your company more connected, more human, and you can do it now. This seminar is for all you enlightened brand strategists, hard working late night community managers, and social business practitioners. We will show you: how to build the business case for being human; how to properly measure the ROI and engagement value of each conversation; how to convince senior managers to give you more headcount; and how to prove that people can scale. At a more macro level, you will understand hidden fears of CMOs, and how to speak their language. You will walk away with real life examples, measurement models, and a plan of action. Let the humanizing begin!

What Counts When Counting Fans

Posting this morning on the Dachis Group Collaboratory. Inspired by my colleagues’ fierce and firey prose, it’s time to start blogging again.

Social thought leaders have formed a consensus around fan counting: don’t do it. The argument: if you measure what you manage, and you are only measuring fan counts, then you might rely on short term acquisition tactics that fail to result in long term engagement.

And yet we hear every day that while a Social Strategy Director is focused on engagement, the Senior VP or CMO and even members of the board want to understand the plan to reach higher fan and follower acquisition benchmarks.

But maybe that Senior VP, CMO, and board member is responding intuitively to the what fan counts mean for a brand. They are after all trained to look at a brand compared to a competitive set. Senior executives think about the metric of market share a great deal, both share of revenue, and share of profit. When a CMO sees an emergent competitor outflank her own brand on Facebook by a large order of magnitude, she knows something is wrong. After all, that competitor brand actually has more friends.

Old school metric: brand relevance

When fan counts across a competitive set differ wildly from market share rankings, this is a potential signal that leading brands are suffering a relevance gap. Brand relevance is an old school metric employed by large scale brand managers. Typically measured as a tracking study through survey methods over time, brand relevance determines whether the existence of a brand predisposes someone to pay a higher price, and become loyal, repeat customers. If a brand is relevant, the investment in brand building will have a commercial impact by affecting the customer’s buying decision.

David Aaker, one of the greatest brand thinkers of our time, came up with these simple conditions for creating brand relevance:

1. A product or service category (or subcategory) exists
2. A customer segment has a perceived need or desire for that category
3. The segment sees a particular brand as being material to that category

For example, a market share leader of dish washing fluid might be alarmed if survey results revealed increased consideration and willingness to purchase an upstart dish washing fluid competitor. Now, with the public focus group that is social, and you have a proxy for brand relevancy. If that upstart dish washing competitor now has three times the fan base as the dominant market share leader, then fan count is a signal of decreasing brand relevancy in a category.

So, what do you do if you are a social strategist sitting on a brand that is a market share leader, but whose presence on the Facebook and Twitter leaderboard is not dominating the category? Senior execs are pressuring you to do something, anything to have the size of your social tribe reflect your position in the marketplace.

When you are finally given that multi million dollar budget, but only have 10,000 followers across all of your social channels, don’t be afraid to plan a fan acquisition effort as one of your first projects. Couple acquisition with a deep listening strategy to diagnose why your brand is lagging in social, and determine which tactics, content, and programs succeed in attracting a likeminded fan base of loyalists and advocates. Count your fans, count them every day, but get to know who they are, and how the actions you take in your company affect the quantity and quality of the conversation.

Learning: ROI and Customer Lifetime Value

Audience at SXSW:

Here are books and links that will give any marketer or techie a basic framework for how to truly measure financial value.

Valuation – Measuring and Managing the Value of Companies

The classic MBA book – still focused on “the primary goal of a company is to return value to shareholders” – but the math and financial framework provides one of the more accessible lessons on how to value a company.

Measuring Customer Lifetime Value

A tool provided by Harvard Business School Press. It includes the discounted cash flow time value of money within the tool. No algebra needed.

Managing Customers for Profit

Professor V. Kumar explains how Customer Referral Value is more useful and relevant than Customer Lifetime Value, and explains the difference, constraints, and limitations of our more traditional world view.

His site is filled with additional research, calculators, and links.

 

SXSW: The ROI of Relationships

Here is the presentation:

 

I’ll be speaking and teaching geeks and marketers how to actually measure the ROI of relationships, during a time when ROI is completely under criticism, and attack. ROI fans, unite!

From the Dachis Group social business summit:

“What’s missing in most #social business attempts is a systematic link to metrics that matter.” @jbernoff

“We are at an inflection point, a social generation replaces spreadsheet generation.” @jobsworth

“ROI analysis for social software is a ‘fool’s errand’ – John Hagel

 

From SXSWi Conversations:

“All of you who just worry about metrics, numbers, roi, you’re going to die” @garyvee

The value is not inamassing Facebook fansits what you do with them.” – Forrester

All those who say, ROI measurement, yes we can, come join me tomorrow at 3:30.

Ballroom F, Austin Convention Center.

 

 

Measuring the Water Crisis – Blog Action Day

We tend to tell the story of developing world crisis in numbers:

  •  Almost 1 billion people on the planet don’t have access to clean, safe drinking water.
  • That’s one in eight of us.
  • Every day more than 4,000 children around the world die from diseases caused by poor water sanitation
  • In Africa alone, people spend 40 billion hours every year just walking for water.

These statistics are abominable, shocking. But do they motivate us to act, or make the right decisions about what we can do about the water crisis?

Ned Breslin, CEO of the nonprofit Water For People, argues that this metrics-focused way we tell the water crisis story tends to result in inefficient and ineffective philanthropy. Western world foundations, NGOs, and government groups, and even private citizens get excited about raising money for a well or a number of handpumps. But Breslin points out a growing catastrophe of failed water implementation efforts. In his January 2010 essay “Rethinking Hydro-Philanthropy,” Breslin cites statistics of the long term failure of these efforts, and the key steps that donors, NGOs, local governments and communities should take to create long term change.

A typical story about the water crisis may also use the story one child that misses school to collect water for his family, or one mother who risks disease because her only available supply is a muddy ditch. Yet the truth is that this child and this mother are often walking by broken failed water infrastructure project attempts by government and aid agencies, poorly engineered solutions that solved an immediate need, but did not succeed in the long term. These numbers are what Breslin considers as more relevant: 50,000 rural water points broken in Africa, $215 – $360 MM of investment wasted because of poor programming and careless implementation.

Breslin proposes a shift in defining the metrics of success:

“Success will require less single-minded focus on the absolute number of people without access to water and sanitation facilities and more focus on the serious questions around long term impact and sustainability. So that years after the cameras have left, the donor reports have been filed, and the press release circulated, the community is not forgotten. A new partnership between philanthropists and development agencies would focus less on how much money the sector supposedly needs to solve the global water challenges and more on how creative philanthropic giving can be used as leverage to install financial responsibilities for improved water supply and sanitation on communities and governments in developing countries.”

 

So how to shift? Smart philanthropy means defining a long term, financially sustainable business model, looking at donations through the lens of long term outcomes. If you’ve ever been asked to give money to a water crisis project, it is often to cover the costs of an installation project, with money then transferred to an NGO the group themselves travels to the field to implement the project themselves. Ceremonies are launched, ribbons are cut, and the funders go home gratified. But the installation project may not last beyond six months without the proper long term model of maintenance and care.

Instead of approaching the water problem as welfare, and instead thinking of the crisis as an economic development issue, philanthropists and social entrepreneurs are likely to have a greater impact. “Paying 100% of the costs of project implementation establishes dependency from the start.” The underlying message of “free water systems” – communities are unable to organize to implement these projects themselves.

A more creative and financially sustainable approach is to co-invest with local communities and local government, focused on investment over time to match the true cost of maintaining water infrastructure systems. Funding works when used the way it is in the developed world – as leverlage for matching local investments, rather than patronizing and absolving local governments of their financial responsibilities. Projects are then owned by the local community, not branded by the NGO or philanthropist, and look to a wider range of long term transformative results.

So when sending a check to a water charity on Blog Action Day, check to see how your preferred fundraising group or NGO measures their success. What to look for:

  • How many people are helped in the years that follow the first implementation project (rather than “saved” on that first exciting day).
  • Does the quality and quality of water meet host country government standards over time (3 years, 6 years, 10 years out?
  • Is the system inoperable for no more than one day per month?
  • Does the number of users meet host country standards?
  • Most importantly: does the community have the ability to maintain and replace their water system without seeking significant additional charitable support?

The final metric is the “real measure of whether the water and sanitation poverty cycle is truly broken.”

SXSW 2011: The ROI of Relationships

You CAN measure the ROI of relationships – personally, and professionally, and this seminar will show you how. No spreadsheets needed for this lecture, and only minimal algebra. Bring a cocktail napkin, a flair ink pen, and learn how to calculate the net present value of your future mate, your pet, or the 8,299 followers of your company’s Twitter feed. Yet ROI alone will not tell you the ultimate value of your relationships. What other indicators do you need to be looking at to predict whether or not you, your future mate, your pet, or your followers will be happy with the relationship in the long run?

Strong relationships depend on other factors – connection, a sense of fairness, health, humor, fun, the ability to learn and evolve together, and a sense of overall engagement with each other, and with life. At a more macro level, communities need to understand the equity they are building not just economically, but socially and environmentally as well. As the social graph reveals a huge volume of data about our actual relational behavior, we have an opportunity to pause for a moment: to consider the value system reflected in how we measure each other, ourselves, our relationships in the world. Participants will walk away not just with a clear and precise method for how to measure ROI, but also a holistic framework for measuring return on social behavior.

Vote for this panel at the SXSW panel picker.

The GDP Killers

ROIEPS, and GDP are acronyms under attack.

From big picture to smaller picture, these acronyms all give order of magnitude value to the financial return of our efforts as humans on this earth.

I’m going to start with the big picture, GDP, and look at the developing alternatives to a one number view of a country’s well being.

GDP: Gross Domestic Product which is the value of private consumption, gross investment, government spending, and total exports minus total imports. Consumers drive this measure of global growth, with 60-70% of GDP in the US made up with purchases of things and services over the past 50 years. Recent reports on sluggish GDP lament slack consumer demand, and cross fingers and hope that resurgent future consumer behavior will “save everything.”

So why is such a number so hated? GDP is under suspicion for not measuring the true standard of living of an economy, leaving out relative shifts in worker income at home and abroad, the effects of all this spending on scarce environmental resources, not to mention the relative happiness of the citizens.

A number of replacement metrics have been set forth by government groups, activist organizations, countries, and economists looking recast what economic health really means. All of them seek to develop a new metric for economic vitality, translated into a squishy, hard-to-measure value like happiness, equity, and environmental health. Always interested in the efforts of those that wish to put numerical values on the most squishy parts of life, I’ll be investigating the following GDP alternatives:

Happy Planet Index (HPI)

Human Development Index (HDI)

Genuine Progress Indicator (GPI)

Gross National Happiness (GNH)

GINI Coefficient (Gini)

Which one will replace GDP headlines in the WSJ or in your future Flipbook Social News Feed?

The Measure of Us: Cluetrain vs. Ads 2.0

This is my third installment in a series I’m titling “The Measurement of Us” – measuring the impact of the time and attention we pay to social media in our lives, companies, and communities. In this post I dissect what is meant by “earned media.”

The social media sector is at a crossroads. Two competing mental models for what social networks can do for companies, brands and advertisers will shape how the social networks evolve, and how they will serve as a customers, socializers, and citizens.

The ClueTrainers – Building Social Selves

On the one hand is all of the social media gurus new and wizened who like to espouse the tenets of ClueTrain Manifesto (even if they weren’t born yet when the first edition was published 10 years ago) – markets are conversations. The ClueTrain philosophy for companies once corporate, monotone, and deadening – “1. Relax 2. Have a Sense of Humor 3. Find a Voice and Use It …” and the list goes on, sounding human, real, authentic. Social Media marketing and PR people talk about the ClueTrain strategy, which is to allow open access to everyone in your company who wants to use social media to do so, as long as they represent who they are and follow the policy. ClueTrain adopters are big believers in delivering excellent products and services, responsive customer service, and delightful customer experiences as a way to earn attention and respect.

Even though the original authors of ClueTrain have admitted that they were wrong about thesis number 74, “We are immune to advertising. Just forget it,” today’s ClueTrain adopters tend to be much more critical of advertising-led social media marketing, and suspicious of efforts organized around short term campaigns, rather than longer term relationships. They are more excited about the potential for social media channels to plug into customer experience, to inform a crowdsourced method of innovation, to serve as  a model for service delivery, or to change the way the whole company is organized.

The Advertising 2.0 Evangelists – Building Social Hooks

On the other hand is an emerging set of newcomers to the social sphere – marketers from traditional and digital advertising and PR who see a huge opportunity in gaining traction for their paid media campaigns. Ad 2.0 people include agency types in traditional media, client side on brand teams, and even in what is now traditional-digital media. Their intention is often genuine – to connect authentically with consumers – but the difference is that the Ad 2.0 crowd sees their purpose as spreading messages (primarily). For these marketers, social is exciting because of the potential to launch campaigns, and have people talk about them in their own social networks. I’m lumping in some of the PR social people into this camp who orchestrate buzz campaigns around product launches and company stories – in the form of tweets, youtube video views and followers. It’s the campaign that defines the efforts of the Ad 2.0 Evangelists.

It is called getting “social traction” and success is measured in the ability of a paid ad to go viral, be seeded successfully with influencers, get talked about in social media, and have a life of its own beyond paid media insertion orders. Case in point – the Whoopi Goldberg ad from Kimberly Clark, which “earned” an SNL skit and over 200 MM PR impressions for a talkative take on female incontinence. While ClueTrainers may laugh at this kind of commercial-generated buzz, the ad 2.0 crowd often succeeds where the ClueTrainers fail – in reaching a critical mass-sized audience needed to promote and sustain big brands. The less than 1% of marketing dollars siphoned off for social media are not likely to grow if the audience sizes remain too small (3k twitter followers, 8k Facebook likers) to be considered credible.

Earned Media is a Messy Metrics Problem

You start to see these two worlds collide in the messy space of earned media metrics if you spend time on the popular listening platforms like ScoutLabs or Radian6 The graphs look clean, but look closer and you will see one blip caused by a twitter contest, another from a successful PR-led product seeding effort, and yet another from a company product recall scandal, and this is all in the same month. Scale your view to a full year, and you’ll notice that people that talk about brands are not always customers, are not always positive, and are not easily classifiable as prospects or potential leads.

Some brands have started to employ their web analytics tools to the challenge of tracking earned media – tagging links and social ads with code to understand the click attribution model. Facebook has launched the beta version of their Conversion Tracking system which connects on-Facebook behavior like viewing ads, and forwarding to friends, to e-commerce shopping cart results. This method works for the ad 2.0 view of the world, but you will miss all of the company trust and reputation conversations if you only track messages and shopping cart orders (per my last post).

But Earned Media is Where We Can Move the Needle

Both ClueTrainers and Ad 2.0 social media practitioners will likely stick with their messy listening platforms. They will sift through all of the noise in order to find the signals. Because the most interesting part of social media is how the adoption of technology is shaping our culture, shifting our patterns of consumption, and changing our mindsets. We can only get to move the needle ideas if we’re quiet enough to hear what’s really going on.

The Measure of Us: Cost Per Order

This is my second installment in a series I’m titling “The Measurement of Us” – measuring the impact of the time and attention we pay to social media in our lives, companies, and communities. First I’ll take a look at the easiest things to measure – financial ROI.

 

Of course you can measure the ROI of any relationship. And you don’t have to change the acronym to stand for some weak sounding thing like “return on influence” or morph it into “return on relationships.” You simply measure the costs in, the return out, and do some algebra 101 with a discount factor to know if you’re winning or losing on your social media marketing investment, or if you should marry your future spouse.

Which gets to my main point – measuring ROI in transactional costs is possible, but does not tell you the whole story of value that you get from a relationship.

Relationships Measured in Cost Per Order

In starting this investigation, I have the luxury of looking at the many ways the 60+ clients at my company Drillteam and our parent and sister companies Powered,crayon, and StepChange. Most new clients show up with no measurement plans in place, and no effective way to track ROI. A few, however, have shared with us a metric that is popular in web 1.0 digital media marketing – using a last click method, or attribution model, to determine the cost per order.

What it is: A familiar metric for search engine and digital marketers, cost per order determines the cost of ads that lead to a completed sale.

There are two basic forms – last click, and cost per attribution.

Last click looks at the last site clicked that led to a sale, and assumes that the cost of the ad placed is the cost per order. Last click is worth looking at, however, because your customer may not have clicked an ad on a social net, they may have seen something in the friend’s or followers info stream, or may have been on a web 2.0 site that has no ad placement, like a user-generated community forum.

Cost per attribution was invented to overcome the inherent flaw in measuring the last ad clicked, whether that ad was a display ad, a social ad, or a keyword buy. Cost attribution technology has been developed to track beyond the last ad clicked in order to assign a percentage to the “team of ads” that results in a conversion. Innovative ad tracking providers have been testing methods that track not just ads, but potentially URLs and other forms of social media. ROI data then can show up as a cost per attribution (what did each ad cost, in relationship to the final action) and therefore a cost per order for each conversion.

Note you can use both of these methods to track cost per lead, or cost per action, not just what goes in the shopping cart, but I have only seen it used in companies with a major ecommerce offer.

Who uses it: Digitally-strong marketers, particularly those that invest heavily in SEO, digital agencies, SEO agencies, SEO-focused social media marketers.

Benefits: I’ve seen the cost per order model lately used as a way to start measuring social media ads in side-by-side comparison with other forms of digital marketing – particularly display and search. Essentially, they are measuring the efforts of 1.0 web marketing vs. 2.0. It also quickly gives more credibility to social marketing, which appears to be able to be tracked and measured with the same rigor as the rest of digital.

Challenges: Cost per order sees people as online shopping carts, and not much else. What’s missing? Everything outside the commerce path – people who promote the company in their own social networks, both prompted and unprompted by the company, customers who are loyal in offline purchase paths, and the overall sentiment in content that shows up in search queries that positively or negatively impacts the brand.

When to Recommend: Use this method for companies that have a strong ecommerce is a primary business driver, and to compare ads placed on social networks like Facebook to ads on web 1.0 sites. But make sure you have more holistic measurement plan in place so that you can understand why cost per order numbers are increasing or decreasing. Stay tuned for more ways to measure in future posts.