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March 29, 2017

Happy Chrismahanukwanzakah – I got you “How to Measure Social Media ROI”

By michaelpace on November 20, 2013

How to Measure Social Media ROI

My friends and family think I am a bit “Grinchy” when it comes to the holidays.  I say “Bah Humbug” to that.  Today, I give you the best present I can possibly give someone working with social media tools and their senior management who want to understand if they are providing actual business value – The How to Measure Your Social Media ROI “guide”.

A few notes to start:

  • I don’t believe Engagement is a metric – it is a combination of metrics that may or may not tie back to an actual business goal.  I’m not a big fan of using squishy metrics and buzz words.
  • This methodology does not show or provide you the value of using social tools within your business. It may, but was not specifically designed to do so.  However, there is plenty of juice here.
  • There are a ton of non-quantifiable benefits of using social network tools for your business; it will still be up to you to show the value of those benefits.  Story-telling does work well here.
  • Quantifiable numbers, in context, make the basis for a fantastic story to tell.  Your need to create the storyline, tone, and its beginning, middle, and end.  Also, remember, story-telling is just another way to influence others.
  • If you don’t know the value of other more important or relevant business activities, such as your retention efforts or acquisition, STOP HERE and go figure that stuff out first.
  • Making progress on Learning Agendas is more important that ROI.  Learning Agenda items may include things such as: content management, scale, hiring/development, infrastructure needs.
  • Lastly, and maybe most importantly – If you cannot link social profiles to your customer database, you will never actually answer the question of ROI. 

Ok, now you may unwrap your gift.

Part 1: As just previously mentioned, it is imperative you can link your customers’ social profiles to a customer database.  To gather a somewhat accurate ROI, you need to be able to identify which of your customers are active on social media.  If you then can link them back to a customer database, you can then index or compare them against your non-social customer data set.  From there you will be able to see how they perform on the metrics below.

I realize in many industries and companies, you may not sell directly to the consumer (think home products, Coca Cola, trash bags, bacon, Smuckers, etc…), but you can still use the following information to develop your ROI.

Part 2:  I am going to assume you are in business to acquire customers, retain customers, grow their usage, and do it profitably (if you are a for-profit company).  All of the other stuff is how you get there.  Traditional business models have brainwashed the simplicity out of getting actual results done.  In other words, if you keep focusing on the pine needles, you are going to miss the forest. 

Acquiring Customers:

Whether they admit it outright, most marketers are focused on acquiring customers.  “Likes” and “Shares” are pine needles, they need to lead to something bigger.  Context and content would be the trees in this metaphor.  Social media used well can be an incredibly effective way in acquiring customers; I love the concept of Inbound Marketing made popular by folks like Hubspot.  The four metrics I find most beneficial to look at are:

  • Marketing Qualified Leads
  • Sales Qualified Leads
  • Referrals
  • Cost per Acquisition

Some may feel “Likes” and “Shares” should be considered MQL’s or SQL’s, and I do too if, and only if, you are able to reconnect beyond just possibly being visible in Facebook (or other stream).  I feel more strongly that content that leads to action (like email capture) is worth considerably more.  If you context and content creation are strong, you should also be able to lower your paid search costs.

Everyone who works in social knows that content shared by a connection is more trusted than a commercial or direct mailer.  The trick is now to track that referral.  Isn’t that a big reason why we collect NPS (Net Promoter Score), to see if you would refer a family member, friend, or colleague? If social media is about connections and relationships, the referral is the ultimate, tangible result.

Of course, the easier you collect MQL’s, SQL’s, and referrals you lower one of your most important acquisition metrics – Cost of Acquisition.  I’m not sure why cost of acquisition doesn’t get the attention it deserves, but all profitability starts with how much it costs to gain a customer.  Lowering your cost of acquisition impacts how you look at retention, average usage, and general customer profitability. 

Retention:

While studies may vary, it is widely known that acquiring a customer is between 5-8 times more costly than to retain a current customer.  In really simple terms, if it cost you $100 to acquire a customer, every customer you retain saves you between $80-$87.50.  I love how David Skok illustrates this in the SaaS world with his article “Why Churn is SO critical to success in SaaS”. 

Impact of Churn

During my tenure, at fast growing SaaS company, we saw customers, who were active in our community and social network platforms, attrite at half the rate of non-engaged customers.  If you had no other metrics to prove the value of your social program, this one will typically turn a CEO on their head.  Also, if your company employs a customer success program, you will want to see where and when social fits in.

Average Usage or Average Revenue per User

When I have consulted and spoken at conferences, I will usually refer to education and coaching as social’s best driver of average usage or average revenue per user (ARPU). Gaining more revenue from your customer is a no brainer, but how you do it is critical.  Social networks, in tandem with strong context and content, are an incredible way to showcase how your product or service can better the lives of your customers.   I highlight “better the lives” because there is a very real distinction between education/coaching and the cross sell.  Cross selling for the sake of revenue will increase attrition rates eventually.  You would need a very considerable amount of ARPU to overcome loss of customers.  Education and coaching help your customer accomplish their goals.  They chose your product or service for a reason, help them get the most out of it.  Again another great illustration on the financial impact of increased ARPU or what David Skok refers to as Negative Churn.

Churn / Negative Churn

Customer Profitability

Obviously, all of the metrics above can increase or decrease profitability depending on how well you execute on the initiatives and programs that drive those results.  When I say profitability, I am specifically talking about how much does it cost you to serve your customer.  Social networks, specifically community platforms, can serve your customers at far less expensive cost than your traditional networks like phone and email.  Again, during my tenure with the SaaS company, we saw handling issues over Twitter costing about 1/6th the cost of a phone call. 

Twitter cost per customer

Community platforms (such as Jive and Lithium) can deliver even better results, much better.  A strong community manager can support tens of thousands of customers helping customers.  Community platforms that have an easy to use search functionality are especially effective in lower your cost per customer. 

Part 3: Now it is time to calculate, yay for math.  I’d advise pulling in someone from your Finance or Analysis team to assist, specifically on how to best influence and showcase your data.  However, if you need some assistance on calculators, here are a few helpful sites:

This may be my longest post ever; now you definitely cannot say that I didn’t give you anything for Chrismahanukwanzakah.  Happy Holidays.

Live Google+ Debate: Will Technology Kill the Call Center?

By michaelpace on October 15, 2012

Contact Center DebateRecently, I participated in an live Google+ debate hosted by Software Advice that asked, “Will Technology Kill the Call Center?” The research firm basically wanted to investigate trends in consumer contact channel utilization, technology and the impact of these trends on the future call center.

The event featured a panel of experts that answered scripted questions, before the discussion was opened to the audience. The prepared queries included:

1.    How have you seen consumer contact channel utilization change in the last decade?
2.    What role has technology played in this change?
3.    How do you see technology impacting the way customers contact a company in the future, and the kind of service they receive?
4.    Will technology eventually render call centers irrelevant?

Click on the video below to watch the entire recorded debate hosted by the talented Ashley Furniss.

I was able to send comments directly to the panel during the live event. One of the speakers, IntelliResponse Vice President of Marketing Mike Hennessy, made a statement that questioned the value of social media for customer service. He argued that according to analysis he’s seen about social customer service, the return on investment for time spent is not there. I disagreed:

Here are some other key takeaways from the responses.

Become Truly Multi Channel
All of the speakers agreed that consumers are embracing newer contact channels, such as virtual agents and self service, at a pace never seen before in the contact center world.

This doesn’t mean customers are choosing these new channels instead of voice. Rather, they are using self service, FAQs, mobile and other channels in addition to the telephone.

In response, companies need to do more than just make these channels available. They should leverage each to better serve the customer. For example, can you tell what a customer was looking at in your FAQs before they called your 1-800 number? Do you know if they interacted with a virtual agent? Having these answers can bring context and personalization to the live response experience. This increases efficiency and customer satisfaction.

Accommodate the Customer’s Contact Channel Choice
Technology advancements have had a huge impact on the way organizations interact with customers. Advancements such as intelligent virtual agents and self service can finally devlier on the promises from five and six years ago.

These contact channel improvements have leveled the playing field as far as user experience. The customer is now empowered to choose the communication channel they want, when they want. It’s up to the company to “right channel” their business–to determine which channels are most important to its customers and invest in those technologies.

Ready Your Agents for the Reborn Contact Center
All of the speakers agreed that customer contact preference is shifting away from voice. But this won’t kill the call center because it’s already dead.

The concept of a call center comprising phone agents has evolved into a contact center comprising ”command teams” who manage customer interactions through multiple channels. That’s because today’s consumer demands instant gratification, and the reborn center is expected to support those demands, whether they come through Twitter, live chat or a phone call.

 

I discovered my Social Media ROI? Or How much is your personal development worth?

By michaelpace on March 30, 2012

Einstein quote

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I am not that big of a fan of the term “Social Business”. I love the broader concept of using social tools and networks to more effectively and efficiently achieve business goals. For a more complete understanding of social business, I recommend two sources: SideraWorks from Amber Naslund and Matt Ridings and The Community Roundtable’s State of Community Management Report from Rachel Happe and Jim Storer. However, I worry that the term “Social Business” leaves the act of working this way to the current few in a company “who do Social Media”. I prefer the term “Social Organization”, as I wrote about a couple months back. The “Social Organization” implies that is more about the people in the organization, all the people, using relationships, process and tools to accomplish broad business goals.

If your company’s broad business goals include the personal development of your associates, becoming a social organization should be one of your key strategic imperatives. One of my favorite quotes is from the book The Power of Pull by John Hagel, he said, “There are a lot more smarter people outside of your company, than in it”. This quote has nothing to do with the intelligence of the people in your company; it’s just that there are so many subject matter experts, students, and geniuses in any field you can imagine. Social networks are fantastic way to listen, connect and build relationships with the smartest people in the world. Encouraging your associates to seek knowledge about their passions (both professional and non) and use social tools to aide in their personal development can be a powerful way for them to improve. If you don’t mind, I will use myself as a case study in this matter.

When I started becoming interested in social media in 2009, I had a Facebook account to keep track of folks from high school (mostly who I didn’t like back then either) and a LinkedIn account (mostly to help in a job search I had just completed). My professional development, at that time, centered around three areas: Understanding Social Media for Customer Service, Community Management, and public speaking. Historically, I read a lot of books to gain access to information of bright minds. I still do, but as a compliment to other forms of media. I quickly began to understand the power of an RSS feeder. Twitter was next. I fell in love with Twitter, and still love it today as a professional development tool. Twitter, if used for no other purpose, is an amazing way to pull the world’s smartest people content into a simple and digestible form. Over time, I began to build amazing relationships, some digital and some in person, and conversations from these relationships have added incredibly towards my personal development along all three areas. Today, I speak regularly at Customer Service, Social Media and Community Management conferences about how to build scalable social media customer service teams, revitalizing fading communities, inspiring cultural evolutions in your organization, new ways to measure customer retention, and how to leverage the power of the social organization. You can see some of the presentations here.

So what is the ROI of social media to me or what is the value of my personal development?

The answer is simple, priceless.

How to Set Up a Social Customer Service Team

By michaelpace on January 25, 2012

Again this week I am attending and speaking at a Customer Service / Contact Center conference, and I am seeing lots of talk of companies interested in social media, but very few acting on it.  I can understand the trepidation to jump in, and I am concerned for my horizontal (customer service).  The value of a social organization is so incredibly powerful, and by not participating you are missing more than just a new channel.  Over the last year and a half, I have presented the following presentation to help get folks started using social for Customer Service.

 

The Five Steps to Set Up a Social Customer Service Team

Now you don’t get the benefit of my performance, but I will try to provide a high level summary.

Starting with WHY:

  • Its how people are talking and sharing
  • Peer sharing is overwhelming more trusted than traditional marketing
  • Don’t believe me, go watch your kids

5 Steps to Success

  1. Get Yourself Involved
  • Get to know LinkedIn, Facebook (for business), Twitter, Blogs & other resources
  • Its like learning to ride a bike, you cannot do it by reading a book or watching

2.  Know Your Business

  • Overall strategy and objectives (social media is not an objective, its a tool)
  • Know your customers – what’s important, where are they, industry best practices
  • Get others involved

3.  Listen to your customers

  • Monitoring
  • Understand their language

4.  The Customer Conversation

  • Service Level Agreements for great social support
  • Know the voice of your brand
  • A conversation is two way, build a relationship rather than complete a transaction

5.  Capture Info and Catalog

  • Keep it simple at first
  • Don’t worry about operational metrics yet

Objectives and Metrics

  • Depending on your social maturity, balance business metrics and your learning agenda
  • Engagement = Customer Acquisition x Retention x Average Revenue x Profitability
  • Positive and negative sentiment impact customer acquisition and retention
  • Educate your customers – the more they trust and understand, the more they will spend
  • Social costs per channel can be 1/6 of other channels (phone)

Hiring and People

  • You need a different type of agent to handle social media conversations
  • Basic qualifications and responsibilities

If you have questions or would like to talk more about the presentation, comment or send me a note on LinkedIn, Twitter or email.

Presented at:

IQPC‘s Call Center Summit (Orlando) – January 2011

ICMI‘s ACCE(New Orleans) – June 2011

Contact Center Association Fall Event (Phoenix) – October 2011

ICMI‘s Call Center Demo (Dallas) – October 2011

TSIA’s Technology Services World (Las Vegas) – October 2011 *voted Top 10 presentations by attendees*

How to Set Up a Social Customer Service Team - The Customer Conversation

 

Social Star Wars Saga Episode I: The Phantom Menace

By michaelpace on November 7, 2011

Pre-prequel: With the recent release of the Star Wars saga on Blu-ray, I feel compelled to finally put together my official Social Star Wars Blog Saga. Enjoy all you fantastic nerds.

As I mentioned in my last video post, one of the most popular questions asked of me by customer service leaders and people interested in social business is “What’s the ROI (Return on Investment) you are seeing with social media for customer service?” I love that question.  Folks seem to need to know that answer to move from social paralysis to engagement.

When asked here’s my first reply, ”Have you figured out the ROI of your bathroom?” (not sure where I got that from, but would love to give credit one day).  I reply with that rhetorical response for two reasons

1.) it breaks their conditioning and makes them stop

2.) the answer to that question is the same as the previous

I will usually ask them if they know the ROI of their broader Customer Service Department; which again usually provides the same answer.  It is really no different than if your customers were calling you and you didn’t pick up the phone, except they are also telling everyone who follows their messages.  It is becoming a business necessity.  The primary goal of customer service is customer retention, avoiding their contacts will not serve your retention goals.  As for actionable advice I give to customer service leaders, I provide two thoughts.

Focus on ROO (Return on Objectives) not ROI

Social business practices are still in their infancy, focus should be balanced between broader business goals, your learning agenda and metrics.  I like the way Jason Falls explains it in his new book No Bullshit Social Media.  Look at how social media helps your broader business goals:

  • Enhance branding and awareness
  • Protect brand reputation
  • Enhance public relations
  • Build community
  • Enhance customer service (VOC and general service)
  • Facilitate research and development
  • Drive leads and sales

Your learning agenda should include:

  • How to scale this operation
  • Cross department interactions
  • What kind of people are right for this role
  • What is needed from a content management standpoint
  • What infrastructure is needed to support

If social media is about Engagement, measure Customer Lifetime Value

I am sure there are lots of ways to measure CLV, here’s how I do:

Acquisition: What was the cost of acquisition? Is this customer referring others?

Retention: You need to have them as a customer gain value (duh)

Average Spend/Time period: How much and often do they spend money with your business

Profitability: Is this customer costing you too much to keep or are they efficient for your business (uses self service and community platforms for service)

I understand many business leaders want to understand how much allocating resources to social customer service will cost them and what will they get in return.  If you need to create a business case, I would use all of the above information (both soft and hard numbers) to make your case.  But the best way you can make the case is find out what your customers are saying to and about you and tell the story of why you need to play here.

May the force be with you, always.

Episode II: Attack of the Clones

Episode III: Revenge of the Sith

Star Wars Crawl Creator

Phantom Menace - Social Star Wars

 

4 Fast Social Customer Service Answers to Big Questions

By michaelpace on October 31, 2011

I am finally settled in after a whirlwind conference tour talking with lots of Contact Center, Technology and Customer Service leaders.  Over the course of the last month, a few common questions kept popping up:

  • Is there positive ROI in Social Customer Service?
  • Who should own Social Media?
  • How to use for B2B’s?
  • We’re terrified of the negative responses, what should we do?

I hope to provide you a perspective on Social Customer Service.  I may not be right, but we are all learning together.

How do you answer the ROI question?  Do you think a specific department owns social media?  B2B is tough, if you were just getting started, what would you do first?  Is the fear of negative comments stopping you from jumping into the social pool?

Quick reference from video:

BTW – filming yourself on video is a lot harder than speaking in front of hundreds of people – whewww!