Social media ROI vs. Opportunity Cost

Cost_BenefitsTo successfully use social media in an enterprise often requires support from the C-Suite. However, when it comes to getting buy-in from the C-level execs, the argument is often "What's the Social Media ROI?" That's certainly a reasonable question but it should not be the only question that is asked. Here's why.

As Mark Senak of Fleishman-Hillard's Washington, D.C. office writes in his blog "Eye on the FDA," social media has become a utility. Just like electrical outlets in our walls, we expect to find social media built into the communication structures of our business enterprises. Don't believe me? Take a look at the lengths people go to get access to a power outlet and wifi at the next conference you attend. Aaron Strout, of the W2O Group, jokingly calls this "Maslow’s new hierarchy of need: wifi, power and, if possible, seating." We are social animals who need to stay connected, accessible and informed.

Some ROI arguments can be made (though not necessarily easily) and we should always strive to ensure we are not wasting our time or our money. However, to base a decision purely on the return on investment misses half the picture. We also need to be asking "what's the opportunity cost of not investing in social media?"

Using the utility analogy again, what is the ROI of having a phone? Can you quantify that investing X dollars now in a corporate phone service will return Y dollars in the future? Perhaps you can, if you compare the expense of a phone system to the cost of alternatives like driving or flying. However, what would the opportunity cost be if you didn't have one and you were unreachable by your customers, partners or suppliers when they wanted to call you? The question isn't whether to have your employees reachable by phone but which phone system to get and how to manage the cost of ownership and ensure your employees use it correctly (i.e., responsibly).

I would argue that social media isn't very different. It's not whether you should be investing in social media but how you should be investing your time and money. As an enterprise, you should be considering:

  • Corporate social governance policiesso employees understand the ground rules.
  • A social media discovery and inventory system – so you know where your brand is being represented.
  • A presence monitoring system – so you know how your brand is being represented.
  • The proper compliance tools – to limit the risks from employee activities on social, especially for regulated industries.
  • A good publishing platform – to coordinate what is said, where and by whom.
  • A reasonable listening and sentiment analysis system – so you can hear when someone talks at or about you.
  • Trainingso your employees are prepared to represent the enterprise and its brand(s) appropriately.

There are multiple options for nearly all of those categories above and selecting the right solution for your business will take some thought. However, this reminds me of the following joke

CFO: "What if we invest in training our employees and they leave?"
CEO: "What if we don't and they stay?"

So, the next time someone asks you "What the return on our investment for social media?" consider replying "What's our opportunity cost of not investing?" Then calmly add, "Our employees probably have created accounts for many of our brands, products, and stores anyway. Isn't it time to a get a handle on our brand?"

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