Bob Warfield of HelpStream is really up to something. There is a lot of talk about ROI on Social Media efforts, but very little to show that makes any sense.

Process barfs on Social because most Business Process isn’t integrated with Social.  E2.0’s biggest problem is it lacks Business Process for the most part.  Too often it does get thrown out as the silver bullet.  Process insists on considering all aspects.  If you’ve left something out (like your E2.0 software), the Process is not well formed.  If there are ways of doing things outside the Process, that’s a bad thing, at least from the Process viewpoint.

What we’re lacking is simply a harmonious marriage of these two.  Social should be integrated into specific business processes, perhaps many if not most specific business processes.
When it isn’t, what we have is ad hoc.  We lose the advantages of process in terms of measurability, repeatability, and consistency.  We lose the support of those who cannot see value in anything but process.  In the worst case, it sounds to them like we’re just arguing to hold hands and sing “Kumbaya”.

This is a matter of where we are in the evolution of Social Business Software.  The 1.0 E2.0 products are tools, in some cases they want to be dignified as platforms, but they lack that process component, so they really shouldn’t  be dignified as platforms because they are too incomplete.

We see this evolution over and over in Enterprise Software.  First we get the tools.  This is the Silver Bullet stage.  Everyone expects magic.  But the tools lack specific process.  They do not solve specific problems.  They are not solutions, in short.  As such, the results one sees from them vary wildly.  Nobody seems to be able to put their finger on why things work sometimes and not others.  The answer is that without Process, they haven’t factored people properly into the equation.  Ironic when this happens to software whose whole purpose is to be Social!

The formalization of “process” implies that there is a beginning, an end and most importantly – a purpose of repetitively doing something to achieve a specific result. The language of Social is extremely ambiguous, the current practitioners are still trying to figure out what exactly to expect, how realistic the expectations are and whether or not a  good experience can be consistently replicated.

“We are what we repeatedly do. Excellence, therefore, is not an act, but a habit.” — Aristotle

Just because some people are innately more social and enjoy “socializing” on-line, doesn’t mean that there is an ROI in it by default. Therefore it is critically important to ask and answer some of these simple questions:

1. What areas of my business could possibly benefit from a Social Media investment in time and/or money? Do you want to use SM for Marketing? To supplement Advertising campaigns? Do you expect to reduce your overall advertising budget as a result of these efforts? To learn about Customer Experiences with your product or service? Do you expect to decrease customer churning?
2. What existing processes and/or practices would be affected? Improved? Broken? Improved?
3. Would my Customers/Employees/Suppliers be affected by this investment?

I would suggest to drill into each one of them to evaluate any potential opportunities, size up potential investment and set very specific, and realistic expectations. The search for ROI too often starts well after the proverbial “horse is out of the barn”.

Customer Satisfaction is usually considered to fall into a domain of Market Research, to me however it is one of the most critical traits of CRM universe. After all Customer Relationship Management systems suppose to help you to know how your customers feel about your company, your service and your product at any given time. Therefore it is critically important to enable and optimize two ways communication channels for capturing and analyzing the resulting information flow.

“Unless the source of the statement (or comments) has extremely high qualifications, the statement will be more revealing of the author than the information intended by him. This applies, of course to matters of judgment. A book review, good or bad, can be far more descriptive of the reviewer than informational about the book itself. This (probabilistic) mechanism I also call Wittgenstein’s ruler: Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table you may also be using the table to measure the rule.”

The underscored words are mine.

“The information from an anonymous reader on Amazon.com is all about the person, while that of a qualified person, is going to be all about the book”

“Fooled by randomness – The hidden Role of Chance in Life and in the Markets” – Nassim Nicholas Taleb

While completely agree with Mr. Taleb, I would like to pose that this is mostly accurate statement about general sentiment of liking or not liking a book or a product. The reference to disagreement of accuracy of specific fact stated in the book and questioned by the commenter, assumes certain expertise and therefore is about the book and not about the writer of the comment. The reference to specifics of the customer experience with a product also provides more practical information than reflection of commenter’s personality or expertise, and if it is consistent with experience of other customers , warrants further analysis, and perhaps corrective action.

Based on Wittgenstein’s ruler approach I would suggest that CSI (Customer Satisfaction Index) is a relatively low value instrument which is like a thermometer, can point to the fact that your body is not well, but to none of potential reasons for that condition.

I just re-read an excellent post by Jeremiah Owyang, Partner, Customer Strategy, Altimeter Group. Jeremiah used to work for Forrester Research and just recently joined Altimeter.

There are a couple of quotes that got me going:

Beyond monitoring, insight from the social sphere is untapped. Social media monitoring is just the first baby step, most companies haven’t tapped into what the data actually means.

We all, more or less, know what monitoring is. Here is an example of a definition that come reasonably close to the marketing context once you replace the word “enemy” with something more appropriate, like “customer” or “consumer”, depending on the group one monitors.

The act of listening, carrying out surveillance on, and/or recording of enemy emissions for intelligence purposes.

So presumably obtaining “the insight” and/or “intelligence” is the purpose of the exercise. The most interesting question for me is – what are we going to do with this precious intelligence when we get it?

The second quote from this post, used here out of sequence, is

… marketers were used to ‘Bowling’, where marketers could easily throw a message down the aisle and hit the pins with great confidence. Now, he eloquently describes, it was more like ‘Pinball’ where a marketer could load the message up, shoot it out, but have no idea where it will end up.

It seems to me that despite all the talk by the “enlightened” marketers, by “listening” they still try to figure how to control the flow of messaging, rather than to “hear” and engage into conversation. “Listening” without a deep desire to “hear” cannot yield any insight or “Aha!” moments, and these are the ones that lead to meaningful and measurable actions. No wonder there is so much yearning for a magic ROI formula for Social Media investments. It is very difficult to figure a return on knowledge you didn’t bother to learn yet.

Learning is not compulsory. Neither is survival.

I have encountered some mixed emotions among some Market Research and Customer Experience Management practitioners about the usefulness of Customers Reviews as a source of real business intelligence, as opposed to their use as marketing gimmicks. I do not fancy myself as a true professional in these fields as I lack true hands-on, hard core operational experience; however, I doubt these mixed emotions and remain determined to develop technology that “listens” to the stories of customers to “learn” and measure how a product experience meets customer’s expectations.  I ran across this post today from ClearAction that clarifies some of these doubts:

What’s the difference between the way customers volunteer feedback versus the way they’re requested to give feedback? One revolves around outcomes in the customer’s world, whereas the other revolves around customer satisfaction enablers in the company’s world. True customer-centricity requires primary focus and decision motivations be centered on the customer’s world, rather than the company’s.

It is easy to imagine that politics, real or perceived loyalties and conflicts of interest can easily skew the results of customer satisfaction research. However biases, mistakes and algorithmic-imperfections can also result in low quality output. The method is less important than the intent.

customers “hire” a product or service to get something done for them. When we understand the circumstances motivating the customer to hire a product or service, then we gain insight into the customer’s jobs-to-be-done. A great way to identify customers’ desired outcomes throughout the customer experience is to scan customer-generated inputs on your brand category. Good sources of customer-generated inputs include contact center and sales call logs and social media.

Ethnography, or observation research, is also instrumental in understanding outcomes in the customer’s world. What value does your organization place on these customer outcomes sources relative to your formal research that is typically organized from a customer satisfaction enabler viewpoint? Why not consider revising formal research to focus on customer outcomes rather than enablers?By really understanding customers’ jobs-to-be done, constraints, work-arounds, hassles, and other elements of their world, new insights emerge for superior alignment with customers. Adopt the customers’ jargon — don’t make them adopt yours. Cater to the customers’ world — don’t make them cater to yours. Your jargon and world are customer satisfaction enablers, or a means-to-an-end toward customers’ desired outcomes. The outcomes are the direct link to re-purchase behavior and propensity to recommend a brand. In the end, it’s only the outcomes that matter.

The important point is that no single source of data, or method by which such data is acquired, produces viable knowledge. At this point I need to channel Chance, “The Gardener” from “Being There” by relying on my sailing experience – you cannot navigate by less than 3 points of reference; that is why the word “triangulation” was introduced. Our technological approach does not change this any more than the invention of GPS.

Very interesting results of the survey:

A Social Media Survey conducted on behalf of PRWeek and MS&L by PRWeek and CA Walker found that marketers don’t make changes to their products based on customer feedback, despite monitoring feedback being one of the most common business uses of social media in the first place.

The survey found that 70% of marketers say they’ve never made a change to a product or marketing efforts based on feedback from consumers on social media sites.

I have to second Larry Malloy’s comment.

I believe there’s two reasons for this.First, we are still in the early stages of social media as a marketing tool. I believe as the technology matures, potentials are stretched, metrics are determined, and processes are developed this will change.

Second, there could be a disconnect between marketing and product management (you said the survey polled senior level marketers). As a product manager, I often used social media throughout the product lifecycle, and the executives I reported to often did not know where the new product ideas came from. And, what I learned through social media, I often further tested through more traditional marketing technologies like surveys, customer visits, interviews, etc.

Most Product Management and Marketing executives I have talked to are interested in listening, but have no strategy, processes, methodologies or best practices to act on customer feedback. Most tools available today are not providing particularly actionable data either. I am not sure what would or should come first, but without these elements you cannot produce any ROI. I attempted to come up with a “calculator” to measure an impact of customer feedback on product profitability, but it is just a rudimentary attempt for discussion and anybody who wants a copy can find it here.

This great question was posed by Jason Breed’s #socialmedia and moderated by Social Marketer Aaron Strout. The post raised some very good and specific questions, but the comments got me really thinking.  Particularly this one from Paul Greenberg:

The social CRM strategy needs to be consistently based on the best means to engage the customer, rather than just manage them. But it doesn’t mean DON’T manage the processes and data. It means use them differently to help you deal with this newly empowered customer.

I always had a problem with interpreting CrM as managing customers, as opposed to managing relationships (cRM), but in practice a lot of strategies were built on that unfortunate approach and Paul is right on the money again, as he usually is. Attempts to utilize existing (legacy) business processes to manage social customer engagements will be ineffective and uneconomical.

A more fundamental change may come from re-evaluating the reasons for engaging the customer – companies have always wanted to market to and to sell to, which both represent a push engagement model,  more effectively and to service (push/pull engagement) more efficiently. These are already being explored by a number of vendors and companies, with varying degrees of success.

The evolution of the customer’s role in a Social Media context also offers an opportunity to engage customers as  co-creators of value in product or service development and management processes on a larger and more meaningful scale than traditional Market Research and Competitive Intelligence practices.  There are a number of vendors offering tools for “listening” to Social Media, but I would like to learn more about methodologies, best practices and business processes, that show real returns on “hearing” what is said.

I read a very interesting post on the Wikinomics blog today called “A future vision of CRM”

I’ve heard the argument that traditional CRM “is dead,” but this is far from the truth. In fact, as Brian notes, Social CRM does not replace transactional CRM systems, rather it augments them. What CRM is in desperate need of is new data sources and tools that help integrate and analyze this data. The future vision of CRM also requires that companies get involved in new channels and cede a certain amount of control to the customer – it’s less about management and more about engagement.

and left a comment I hope you find interesting:

One of the challenges for Social Media channels and CRM integration, is the fact that they “speak” different languages – SM is mostly communicates in unstructured text, while CRM is using formalized data structures.

There is a potential for tremendous benefits and cost savings for Marketing, but scalability, transformation of data into knowledge, and new processes for translating this knowledge into measurable actions, still need to take place.
Your examples of corporations adopting SM channels, while sexy and newsworthy, may prove to be uneconomical in the long run as a Customer Service operation mechanism, unless the automation of these processes and work-flows, can be automated.

Let me know if you agree.

I’ve been following a good number of discussions, on blogs and Twitter, about ROI in Social Media. While many of them are debating issues of advertising, public relations and marketing, the most interesting to me are those of Social CRM, or extension of CRM functionality into Social Media.

Within that area, I find the most exciting discussions to be those surrounding Customer Loyalty value, because it is so hard to define and to measure. While some CRM thought leaders, like Esteban Kolsky (@ekolsky) have flat-out declared that Customer Loyalty does not exist, others, like Kevin Stirtz of the AmazingServiceGuy.com attempt to come with methodology to estimate it.

Customer Loyalty Value Calculator does not provide ultimate answer for every business, but it does identify factors and logic that allows to illustrate the impact customer loyalty makes on bottom line.

“For any business, Top line is vanity, Bottom line is sanity, Cash flow is reality”

Product Reputation is another term which is difficult to define, measure and manage. It is often misunderstood as measure of Customer Satisfaction with a product, and both are certainly related, however the methodologies around measuring them are quite different and that makes measure such as CSI (Customer Satisfaction Index) or NPS (Net Promoter Score) results not as actionable, in my opinion, as Product Reputation scores. However all of these do, arguably, influence financial results, and overall brand value of the associated products.

I define a Brand Reputation as an aggregation of Reputations, Products associated with the Brand, enjoy with their Customers. Deterioration of Product Reputation can eventually erode the value of the Brand. We see Product Reputation as the delta between customer expectations and actual experiences, and this delta can be measured using semantic analysis and opinion mining tools.

Inspired by Kevin, I decided to build a similar simple calculator, which I called Product Reputation Impact calculator.

While it is a simplistic and rudimentary model, but it is useful for understanding how even small declines in the Product Reputation can result in sizable financial shortfall. The good news is that it also shows that there are opportunities to defend your Product Reputation, if you know what is (are) the cause(s) of the problem. In the above example the Product Functionality Reputation is under pressure and Customer Feedback verbatim analysis may indicate that modification of the marketing messages, that are creating these inflated expectations, can easily be adjusted to bring the Product Reputation into balance.

I would love to receive your feedback about this approach and if you would like to take a closer look at the Calculator, I will happily send you this spreadsheet.