See this chart?
This is the work of some brilliant people trying to tackle a big business question: does social marketing really work? And its corollaries: if it does, how does it work, how can I measure it, and how much time/talent/treasure should I spend on it?
Jeremiah Owyang, a good friend of mine who is now at Altimeter Group, and John Lovett, a former Forrester analyst who now co-owns Web Analytics Demystified, have come up with some business objectives to measure for:
· Dialog: involves starting a conversation and offering your audience something to talk about while allowing that conversation to take on a life of its own
· Advocacy: activation of evangelism, word of mouth, and the spread of information through social technologies
· Supporting: customers may self support each other, or companies may directly assist them using social technologies.
· Innovation: The business objective of innovation is an extraordinary byproduct of engaging in social marketing activity.
Jeremiah says his framework is only a common denominator, and if you’re already measuring converted leads, or actual sales that’s obviously best. However, the percentage of companies that can or do measure converted leads or actual sales is still small, smaller still in the world of startups and small businesses.
I would say more businesses could probably measure customer satisfaction and customer retention, because social media is now used so often for customer support and service. And if you know how much it costs you to get a customer, then you know how much it brings to the bottom line to keep one. right?.
The problem I have is that most of the small businesses I deal with don’t know how much it costs to get a customer, and only measure their marketing with a single business objective: does this help me get customers? Most of them don’t even get to the next layer of analysis: does this customer this help me make money?
Those are the fundamental questions the 95% of businesses classified as "small" ask. The Kauffman Foundation, by the way, has research to prove that 95% of businesses ARE small. The other 5% are "brands" that pay the fees of analysts. Brands are concerned with engagement and advocacy and second order terms that have been manufactured by marketing departments. Few small businesses know what a brand is all about, and fewer still can claim to have developed one. I know analysts have to do what they are paid to do, and that making money is understood as a given in the enterprise– but it isn't that way for smaller companies. I’m frustrated when I see Altimeter and Web Analytics Demystified help the brands that can afford to make a few mistakes with such deep thinking about measurement and results.
We marketing consultants at startups and smaller companies know intuitively that it is better to be "out there," but out where? How many people do we need to do this? How much does it cost? What budget does it come from? How do we explain this to a CEO who doesn’t have an MBA and wouldn't know a brand from a bag of potato chips? In a world of scarce resources, what else do we give up in our current marketing plans to do this? How quickly will it work for us?
I try to answer these kinds of questions every day, often for businesses with marketing budgets of under $25,000 a year. Should THOSE businesses be developing a social media strategy? How many hours are there in the day of a man who owns a pool cleaning business?
Until we can answer more fundamental questions, marketing of any kind, especially for small business, will continue to be the first item cut in the next recession and social media marketers will be the first marketers to be let go. Engagement and advocacy are nice but not necessary; however sales are nice AND necessary.
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