An article on the Harvard Business Review site presents a limited, shortsighted perspective on the business value of social media and makes incorrect recommendations to readers. The author suggests social media is a waste of resources when the opposite is true.
The article’s title asks, “Is Social Media Actually Helping Your Company’s Bottom Line?” and offers a graphic, saying #NOPE, in response. It’s a great social media tactic that will certainly capture page views.
Image created by Michael Krigsman
To answer the title question, the article makes this argument:
- “Likes,” retweets, follower counts and similar vanity metrics do not translate directly into sales. In other words, it is hard to correlate positive sentiment on social media with sales results.
- Most brands reach a tiny percentage of their customers on social media, making the investment virtually a waste of time.
- Email is more effective than social media in helping brands close sales.
- Evaluating social media in terms of brand awareness creates a “metric without tangible marketplace outcomes.”
In summary, the article argues that social media does not contribute to sales in a measurable way and, therefore, is a hype-ridden waste of time.
Unfortunately, by defining the value of social media purely in terms of sales, the author ignores the value of social media in building relationships with customers, offering responsive technical support, and engaging efforts to establish a sustainable base of consumer advocates.
As an academic, the author has impeccable and impressive credentials. However, this is one of those times we must ask people working in the field for their comment. Therefore, I invited top several marketing and analyst practitioners to share their thoughts.
Mike Fauscette is Group Vice President at analyst firm IDC and one of the most respected thinkers about enterprise social media in the world. He offers specific examples that can produce ROI for brands using social media:
There are clear use cases for both social media and social networks that produce measurable results, but you must define the use case, metric and expected outcome in each instance. For example, here’s a simple one:
People share personal and behavioral data on social networks, and via social media, every second; businesses use tools to “listen” and collect this data. Some businesses buy this data aggregated and enriched by third-party providers (like the Oracle data cloud, for example). They place the data in context and use it for many things, including:
- Building interaction models that identify prospect behavior that shows interest in a product; then interacting to educate, influence and attract the prospect to their product
- Listening for product issues that lead to fixing problems proactively before they affect many customers
- Finding interaction points that let the company push relevant content to customers or prospects to help educate and fill a need
- Providing sales intelligence that help increase sales productivity, by pushing real-time data to the rep at the time of need (on a sales call, for example)
There are many use cases that can produce measurable results.
Tara Sporrer is CMO for Moxie Software, which makes tools that large companies use to interact with customers online. She elaborates on the importance of social media in building customer relationships:
It is shortsighted to neglect any medium that helps build relationships with customers. Social media outlets, though not always correlated with immediate sales, help companies establish and build a meaningful community rapport through open dialog.
Onlookers who tunnel their vision on social metrics neglect the greater context of long-term relationship building and brand recognition. Similarly, with the rapid growth of mobile usage, it is critical for brands to meet customers on their preferred platforms. This means being proactive and engaging regardless of where the customer is, social media sites or websites, in-app or on the mobile device.
Human beings are emotional and make decisions based on trust, need, and likeability. Social media gives brands the opportunity to connect and converse with relevant communities, providing education and building trust — the foundational must-have for revenue generation.
Further, smart companies tap into social listening to gauge their brand sentiment (vs. competitors) through the eyes of in-control consumers. In addition, social media is the modern day focus group/market research, PR channel, community engagement vehicle, and content amplifier.
Steve Mann is former CMO for LexisNexis and currently a marketing strategist who works with a range of large organizations. He discusses social media, intangible value, and brands:
Brands derive both tangible and intangible benefits from social media, with the intangible eventually leading to tangible results.
As individuals connect with brands on social channels, they develop relationships with the employees representing those brands. Because consumers ascribe value to those relationships, as the relationship grows so does affinity for the brand. The point at which someone has developed brand affinity through social channels is the point where they are highly likely to buy from that brand. Intangible relationships drive tangible value.
It is ironic that sales of the author’s most recent book, which was released less than six months ago, will likely benefit from social media mentions associated with his HBR piece. Indeed, the headline of the HBR article seems designed to attract attention and increase page views.
Although pages views (or popularity) are a vanity metric, they are a necessary ingredient in influencer marketing campaigns. In a time when many publishers struggle, social marketing is an author’s best friend, even one who protests against the value of social media. The same goes for brands, both big and small.
(Cross-posted @ ZDNet | Beyond IT Failure Blog)