Social Media Scalability, the new ROI question

For the past two years, the Sphinx Riddle for social media proponents has been ROI. Despite whatever compelling arguments we had for social media in the enterprise, failure to answer this question in a way that satisfied the cross-armed skeptic was pretty destructive to our cases.

Back in 2005, I used to reply with glib answers like, "the same as the ROI on a press release or a telephone line or an email account." This pleased those who already agreed with me on social media. But it did little to persuade the doubters. I knew that but it was the best I could do.

But the answer started getting better in the last year. Monitor and measurement tools ranging from Google Analytics to Radian6 came in to being and started providing relevant and accurate data. ROI thinkers came to realize that the ROI would vary from one social media project to the next. Peter Reiser architect of SunSpace a behind-the-firewall social network for 15,000 Sun engineers said the ROI was in the shared knowledge that eliminated the technologist's compunction to reinvent wheels with every new project. The reduced time to market delivered to the bottom line. Kami Huyse determined that an old-fashioned exit poll could determine increased revenues and reduced cost to realize that revenue for a new ride at SeaWorld.

ROI is not a resolved issue, but, in more and more cases. I think that is a big part f the heartening results to a new Awareness Study that says 69 % of businesses now allow social media projects compared with 37% a year ago.

Business decision makers are more prone than ever to use social media for conversations with constituents. I think this will accelerate during the troubled economic times that are blowing in on us very much like Ike did to Houston--relentlessly and unavoidably. Social Media is low cost and it lets you engage customers in ways that you won't be able to do with advertising as budget after budget gets cut.

in my world, there's a new question that seems to be emerging. It is one that like ROI before it, seems simple but is in fact quite complex. I have been asked about scalability in at least a half dozen conversations in the past few weeks. The issue was amplified for me during my recent interview with Francois Gossieaux told me that the issue of scalability was his biggest surprise [go to his #3 answer] during his extensive research for his Tribalization of Business Report.

Scalability is an issue for anyone who introduces something new online and wants to grow. It was true for the pioneers who predate social media like ICQ [LINK], for the Stanford start up team for a search engine called Google. It was true for the college project that is now Facebook and so on. The technology that you start with may not be right for large scale. The people that begin it may not be the right people to run it on a large scale. The costs you start with may not fill the petty cash box a year hence.

I'm thinking about scalability today exclusively in the enterprise. As Francois, so adeptly pointed out, Most social networks and social media projects begin as enterprise skunkworks operation. A small band of zealots are awarded a small handful of chump change and are told to go ff somewhere and not bother anyone. But increasingly the skunkworks team comes back with something that smells like roses and grows like blackberry bushes. Roses are things of beauty, blackberries provide useful fruits, but they are prone to growing uncontrollably.

As enterprise social networks grow, they gain significant value to the enterprise--if the enterprise will allow it. This requires great resources than a company will allocate to a Throwaway project that does not fit into the corporate org chart, that does not have a fiscal line of reporting.

I'm basically a skunkworks kind of guy. I like to be outside of the corporate mainstream. But there is simply no way social networks, as they grow can stay far away from the center of the enterprise. Thousands upon thousands of a company's ecosystem and employees; customers and prospects, vendors and investors are spending more and more time in these social media outlets. Larger staffs and budgets are needed and with them come closer scrutiny and increased management controls.

Francois thinks that social media should fall under the realm of the chief marketing officer and that the CMO's title will change. Personally, I'm not so sure. I tend to see SM under the purview of the top communications officer.

In closer thinking, neither may be right for what is going to emerge as a larger and larger corporate role. The CMO's I know are interested in transactional marketing functionality--the number of clickthroughs in a banner ad, the number of leads at a trade show. My Communications officer is often from a PR background as I am. But all too often they see social media as a "hits" business, looking at visitors or comments the way they used to add up circulations from covering press.

In fact, scalability may not even be the right term for the emerging issue. KD Paine, one of my favorite thinkers on issues like these told me, "I think scalability is one thing and sustainability is the other side of the coin."

Scalability or sustainability. For me, at this time, the name of it is a whatever issue. But the issue itself may best define the most pressing pain point for enterprise social media thinkers.

If you have some insights or experiences on this issue, please continue this conversation. It is only just starting and I believe a lot more need be said before anyone feels we are close to resolution.

Comments

[Katie Paine]

I love the idea of social media being under a communications officer. The biggest problem with putting it under marketing, other than the fact that further defines it as a "hits" business, is that it totally ignores the role of the employee in the social network. CMOs are entirely outwardly focused on customers and markets and most are clueless about the role that individual employees and their corporate HR policies can play in social media. Having good HR policies and good rules for engagement is key to scalability or sustainability or whatever it is you want to call it. :)

[David Alston]

I think the role of CCO (Chief Community Officer) could end up being adopted in any one of a number of spots within an organization. I think it will gravitate towards the person who best understands that business is based on developing successful relationships and ideally helping those with a need at the point in which they want it fulfilled.

Unfortunately, a lot of the processes businesses have developed over time have been interuptive (mass marketing, outbound telemarketing etc...) which tend to only be a bit effective on a measurement side and not at all what customers are asking for. The advent of social media means that companies can do a better job of listening to the needs of their constituents and to reach out when they wish to be engaged.

So who will end up as champion of social media in an organization? It could be someone in the customer support, sales, marketing, HR, PR etc...departments but it will definitely be someone who understands the power of developing relationships.

Great post Shel.

[David Alston]

Oh yes, and thanks for the Radian6 mention too Shel. Always appreciated.

[Linda Margaret]

Social media is motivated by content, so I think it is very true that a communications officer oversee policies geared towards social media. Perhaps the CO should liason with a web content designer. Its interesting to see how different content appeals to different online communities dependent upon the template in which the content is presented. We're getting ready to make some changes to our blog platform, and in researching different ideas, I am constantly surprised at the variety of design decisions involved.

[Stan]

Good point about the ROI of social media and the scalability issue. The first one always comes up, but it's the second issue that should really be the focus of the discussion in the PR business.
I'm also a PR person by training, and social media professional by calling, and I truly believe PR, amidst all the communications disciplines, is the most obvious one when it comes to engaging and furthering the conversation with stakeholders, be it on or off the web.
Now, here's the rub: PR people are much more at ease than marketing and advertising people with interaction, two-way communication and thus social media work. No surprise there. However, PR people are used to working with a small crowd of influencers or contact points (be they analysts, journalists, etc.) A good PR person probably walks around with his entire contact list in his pocket and knowns them by name. That's not going to cut it when jumping in the big web 2.0 pond, because we're not just talking about a handful of key online reporters and bloggers, but pretty much every customer who wants to interact with the brand or the company via the corporate site, or God help us, Twitter.
In one of its "commandments", the Cluetrain manifesto stated "We want to get the same treatment as the journalist of the Wall Street Journal" : therein lies the scalability issue. You can't handle relationships on a many to many scale, as you would on a one-to-few scale.

So, PR is better than marketing and advertising at navigating web 2.0 communications, but PR is the worst of the three when it comes to addressing mass audiences. Who wins? Well, as Pete Blackshaw argues, maybe it's the customer service department...

[Rachel Happe]

Great post Shel - I see this as a much wider problem than pure ROI. Over the last couple of decades businesses have been so focused on measuring everything that they forget common sense and qualitative things like doing the right thing, helping employees work better, etc. some of which will never be easy to quantify. I am not against quantifying just think it often misses bigger, more important issues.

[James Cherkoff]

If I end up discussing scalability and ROI I know I'm not getting anywhere. I try and focus on finding the right job for social media in the enterprise. It's always a good moment if and when you find the right job because everyone relaxes and starts to enthuse. Then metrics and scalability look after themselves.

[robin seidner]

This is right on the money, which is why, I think, that the measurement aspects of social media seem to resonate more in PR departments. Measurement in PR has always been one of those "soft metrics" that the revenue side of the house love to rail at.

It's frankly difficult to put a hard metric on anything in marketing other than a direct response vehicle, which is why they are so popular. The idea that social media measurement will get to anywhere like click-through rates is almost besides the point. Finding the right metric is key, and, as I have said before, different for each situation.

[Kate Brodock]

Shel -

Great post. I wanted to point to one thing you mentioned (a rather small detail) about where social media would fall in the company. Francois had suggested marketing and you had suggested communications. There's a debate that's been brewing lately about the need to perhaps combine those two departments, and the argument is partially driven by the new influx of new media being used, and that it has such cross-overs into each realm, it really needs to be coordinated, especially if you want to effectively scale.

A good background discussion was in iMedia: http://www.imediaconnection.com/content/20444.asp

Thanks!
Kate

[shel israel]

KD Paine: You raise a great point that I overlooked. This past year, I've seen more activity behind the firewall than in front of it. This is not CMO terrain.

[shel israel]

David, While I like you guys at Radian6, I mention you for the benefit of my readers not your company. If something comes long that better suits their needs, I'll jump on that bandwagon.

[dominic]

I have a different opinion. I think that Social Media has already scaled for the enterprise.

Take any Large cie: 1000's of their employees are already in Facebook, LinkedIn, Twitter, answering questions, building blogs ...

Yes, a good chunk of this is personal but still a decent portion of it is work related/expertise related/ employer related.
(look at the LinkedIn Q&Q or professional blogs for example)

I think the real problem is that cies have seen this going on "grass root" and have not put in place any strategy to leverage their employee participation in communities.

Hence the huge debate on personal branding...

I'm not advocating cies becoming big brothers but there is room between this and chaos.

What I recommend for companies:

- Articulate what their target communities are (clients, investors...) along with what they bring to these different communities.
-Build real engagement strategies and share it with their people, provide them with resources (ceo and expert video, product samples, briefs, analyst reports...) so that employees are more efficient at engaging
- Equip TEAMS (and marketing teams to start with) to engage AS A TEAM with consistency and productivity. This means help them identify where it make the most sense for company to engage, make its people collaborate, with measurable objectives, tools for coordination and knowledge sharing.

What we see nowadays is that the first things cie do in social media is "monitoring"! or build internal communities.

Isn't that funny that both of these initial efforts are "conversationless ?"

Communities, blogs, social network are here to stay. Employees are and will continue to engage with customers, competitors, analyst ... It's up to companies to figure out whether to help them do it right :-)

[Marcel LeBrun]

Great post, Shel.

I hear the scalability question often as well. Most of the time, I hear the question when people look at some of the great examples of companies who are having success with listening, responding & engaging customers in social media. They see the success that Dell is having or they look at examples like Frank @Comcastcares and wonder if it scales (meaning is it affordable to provide this level of service). I like how Stan explained it in his comment above talking about PR people with high quality relationships, but with a focused/limited set of people (usually media or influencers).

However, as you point out in your post, the costs you start with are not necessarily the costs you end up with once processes mature and technology helps ensure quality and reduce cost. A lot of these early examples, Dell included, started with manual processes and high skilled employees who were exploring new ways of engaging customers. Once a winning formula gets worked out, technology deployed, etc. - it becomes more economical to provide this great service.

In comparison, the early corporate efforts at providing telephone support and email support didn't scale either, but they do now.

Dell talks about their journey in this post where I also talk about the needs of brands as they go beyond just monitoring to scaling out engagement.

With new social media interaction management features, we can now measure the quantity and types of interactions that company representatives have online in addition to automating the assignment of posts, tracking of comments, etc. From a measurement perspective, a company can compare their costs to their traditional channels and see how their costs per online interaction match their cost per call in their call center, for example.

My last thought on the "does it scale" question is this: it simply has to. If a company doesn't answer their phone or their email, they won't be in business very long. The "social phone", as I call it, is no different. In fact, it is even more critical that online questions, complaints, suggestions, etc., get addressed because the social phone is a party line and everyone else is listening too.

[Kami Huyse]

Shel; I am a little late to this thread, but I have been a little busy with a bad boy named Ike.

I am really glad you are addressing this. I have also started to move in this direction and put up a post in early September about scaling through social media. I linked to it in my contact info.

I think you also hit on it here and that is that it is about community, or looking at it from a community perspective. The secret to successfully scale lies in a brand's ability to become a contributing part of the communities it serves. This builds relationships, but not with each individual person, though some of that will also naturally occur.

You can't approach these more two-dimensional "relationships" of common interest in the same way that you approach those with a sister, brother, or those in your closest circle. There should be some different understandings of relationship.

I am still noodling on this and will be writing and experimenting much more with this concept over the coming months.

[Katie Paine]

The interesting thing about the "behind the firewall" aspect of communities -- which is truly where some great ROI and cool stuff is happening, is that most common tools like Radian 6 don't really apply. So you need to develop a whole new way to look at measurement. just thinkin...

[Kami Huyse]

I agree with Katie that theses relational measures are much tougher to get your hands around, but I think it is where we need to go next. I can't wait to see how it evolves.

[robin seidner]

Katie and Kami,

I know of at least one company -Leximancer- that is thinking about these measurements because they are data-feed agnostic - you input your own feeds (which, if you've got a behind the firewall community, you can easily get). So, there are people already thinking about this. I would also think that Nielsen and possibly Cymphony can do that as well.

[dominic]

Kathie and Kami,

The solution we (ecairn) have developed also starts with you selecting your own feeds (that can be internal blogs, forums or external like blogs, tweets..) and streamlines the social media engagement process for a TEAM.

I think it is where you can tackle the scalability issue, acknowledging that there is already a huge effort that people inside corporation spend in social media and helping them engaging TOGATHER as a team with company defined objective that you can measure.

[frank]

great food for thought.

as my org. is working through implementing some sort of SM effort i'm finding that it's really a grass roots type of thing. what i mean by that is ... the people that 'understand the tools' and have some sort of affinity to being a part of the social world online are the ones who are on board with the plan.

the upper management level is definitely behind the curve and those that have adopted it and understand social medias importance are now in the position to 'prove' that it can help/work/return something of value.

if anything, it's exciting to try new things, push the envelope, explore and see where it takes us.

in my mind adopting some sort of social media presence is going to be vital to every or of the future. some will pick it up faster than others, but all will be forced to do something.

---
http://twitter.com/franswaa

[Morgan]

Very interesting post. Different social media outlets require different levels of input from marketing and communications. Given a solid branding strategy and a team that sticks to that strategy, communications is the area for most social media. Things like webcasts, podcasts, blogs, and facebook business pages can be run by a communications team, but decisions on which types of social media to employ may be best determined by a CMO with a good feel for ROI.

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