Traditional marketing training, public relations and communications philosophy have proven that part of any effective business strategy is to circle back around and evaluate its success.
It’s a continuous improvement process and part of the evaluation phase is an assessment of the program’s return on investment. ROI is often considered in the financial realm in reference to the profit or loss of an investment and whether the result is worth the cost. In other areas, businesses often speak of ROI as a system or technology. They evaluate the time and cost it takes to implement ROI versus how long it will take to recoup those expenses and begin seeing net benefits.
What’s old is new again
For years, creative thinkers and leaders said that in order to get ahead, we needed to think outside of box. In 1996, when I first began working at ACORD, the annual conference theme was “outside of the box” thinking, at the time a cutting edge concept. It dealt with asking people to change perspective and not be confined by artificial boundaries.
Now that approach seems trite. Experts have referred to the complete opposite of leveraging the confines of the “box” to stimulate creative thinking.
Thinking and doing the opposite of what others think and do is a key element to Daniel Burrus’ “Flash Foresight” notion of how to become a visionary. In his book of the same name, Burrus wrote:
The way to do something that is impossible is to see and look in places that you’ve never looked before and see solutions to problems or opportunities that were previously invisible to you.
Many people confuse cyclical change (the stock market) with linear change (population growth), and don’t know how to distinguish hard trends (baby boomers are aging) from soft trends (there won’t be enough doctors to treat aging baby boomers). However, by distinguishing what’s certain (future fact) from what’s uncertain (future maybe), you can make accurate predictions.
Look where no one else is looking to see what no one else is seeing and do what no one else is doing. When searching for the real problem you want to address, it’s not always easy to know where to look. One way to help tease that insight to the surface is to note what everyone else is thinking and doing—and then look in the opposite direction.
I propose that the same should be said about how we measure ROI. A recent survey conducted at the end of 2011, “Social Media and Online Marketing: What’s the Real Deal?” by Jason Hoeppner, CIC, an independent agency consultant at B. H. Burke & Co. Inc., analyzed what insurance agents are doing in the online world.
The results found:
- More than 60 percent of respondents are not measuring the return on investment of their current marketing efforts
- Close to half of respondents not using social media will start to do so within a year
- Of those who responded, a bit more than 60 percent do not have a coordinated marketing plan of any kind.
The study received responses from 293 agencies across 41 states and Canada, of which about 60 percent identified themselves as agency principals or management.
So why is this important? Well, as Hoeppner said, if the vast majority of agents are not measuring ROI on their marketing efforts, “why ask about social media?”
I’m a strong believer in less is more.You won’t find the right vehicle to reach the right market by determining which has the best ROI. Instead, find those that have the best ICR: investment on your customers’ return.
Because of the nature of social media engagement, it is difficult to measure its ROI. Much social media activity is free, with the exception of the cost of time. However, Facebook posting and Twitter tweeting, among other things, are not easily measurable. How long does it take to write 140 characters? How long does it take to come up with something to tweet about?
It’s not about the challenges behind affixing a traditional measurement to a non-traditional activity. Instead, it’s about what we are measuring and why.
The whole concept of determining the ROI is backward. It’s too insular and internally focused when it should be externally or customer focused. How we communicate with our clients and prospects and the success or failure of our choices rests not with ourselves, but with our customers.
We should measure the returns our customers find in their investment in us. Our customers determine the quality of our marketing and business decisions. Their perceptions of value—regarding their time, money, energy, and trust—determines the true ROI.
Knowing and understanding this distinction can help make effective decisions.
People tend to associate with others of similar beliefs. The same often is said about how the dynamics of organizations are propelled. How many times have you sat in a conference and heard a speaker say, “I know I’m speaking to the choir, but…”?
When it comes to business decisions, marketing choices and determining the value of social media, don’t look inside for the ROI. Rather, ask, “How will this decision impact the returns my customers receive from their investments in my business?”
It goes back to the descriptive phrase insurance companies strive for when seeking agents with whom to do business: “How do I make it easy for my clients to do business with my company?” It’s the difference between a company that thinks it knows what its customers want and one that listens to and answers its customers.
As you evaluate whether blogging, establishing a Facebook page or Twitter account is right for your agency, stop and turn the question around. Is blogging or having a Facebook page or a mobile app right for your agency’s customers?
Listen to what’s being said on the social web. Where are your customers currently getting information? Who are you marketing to? How do they communicate among themselves?