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Love Your Critics

The CMO Site likes to stir things up, so my posts there tend to be on the controversial side. In Why Brands Should Love Public Complaints, I make the case that your critics can be your strongest allies. Why? Because a little negativity reinforces the validity of the positive comments you publish.

The whole concept of enabling negativity to appear on your own website rubs a lot of marketers the wrong way, but I’d argue that it’s great for building integrity. The article notes that Epson reported that revenue per visitor nearly doubled after it started including customer reviews on its site. The fact that one out of 10 customers may displeased with product can be looked at another way: 90% are happy.

The right approach is not to deny that you have unhappy customers; everyone’s got a few. They’re going to vent their frustrations anyway, so encourage them to do it in a place where you can respond and juxtapose their opinions with the vast majority who are satisfied.

Read more and comment on The CMO Site.

Good Riddance to the Corporate Case Study

In this post I rant just a bit about corporate case studies, those pervasive and largely useless vessels of happy talk that no one really believes. Corporate case studies used to have a purpose in the days when customers couldn’t find each other, but today all it takes is a few searches or LinkedIn queries to identify experienced buyers.

It’s not the concept of the case study I don’t like; it’s the format. Once the legal department gets involved in approvals, most meaningful content gets sucked out of the article. Case studies also don’t answer the questions prospective buyers really have. That’s why prospects have always viewed case studies with suspicion. Today, they mainly ignore them.

So rather than investing time and dollars in paying writers for stories that no one believes, why not focus on greasing the skids between your happy customers and your prospects? Make it easy for the two parties to connect and then get out of the way.

Read more and comment on The CMO Site.

The Futility Of Whisper Campaigns

PR practitioners who undertake influencer relations programs often discover an odd disconnect between them and traditional media relations: Bloggers don’t operate by the same rules as reporters.

The recent example of this disparity ended up embarrassing a prominent PR firm, and I analyzed the story in BtoB magazine.

In case you missed it, early last month a pair of new employees at Burson Marsteller, both of them veteran journalists, contacted a security blogger and offered to help him write and place an op-ed piece that exposed “sweeping violations of user privacy” by Google.

It turns out the blogger was more interested in the motivations of the PR firm than in Google’s allegedly intrusive behavior. After he posted the e-mail exchange online, some USA Today reporters dug up the fact that Facebook was behind the whisper campaign.

Burson, which claims to be social media-savvy, did exactly the opposite of what it would counsel its crisis communications clients to do: It clammed up. The incident was a huge black eye for the agency and a lesson in how not to pitch a blogger.

Read more and comment on BtoBOnline.

Do You Need A Social Media Specialist? Yup.

My latest column in B2B was actually sparked by a conversation I overheard on a plane. A guy in the seat behind me was railing to his companion about the idiocy of hiring social media specialists. In his opinion, everyone in a company should learn to use the tools. Expertise shouldn’t be concentrated in one person or department.

I agree with his second point but I couldn’t endorse his overall premise. Nearly every company I’ve encountered that is succeeding in social media has a center of excellence. They are delegating social interactions to one person, but they’re shortcutting the learning process by hiring people who can train others. In this column, I explain why a social media expert can save you time, money and embarrassment (see Burson above).

What’s your approach? Read more and comment on BtoBOnline.

The ability to communicate well in any media demands a certain amount of innate ability and it’s a difficult skill to teach. The technology trade media learned this long ago, and that’s why they have hired professional journalists to fill their pages for the past 75 years. It’s a lot harder and costlier to train  technology experts to write than it is to teach writers what they need to know to about technology.

So if you’re going to create your own blogs, white papers, e-books and such, you should probably use professional communicators to help you do it. What’s that going to cost you? Like most things in life, it depends.

Media Dividend

The rapid decline of mainstream media (more than 45,000 journalists have been laid off in the last five years in the US) has put a lot of good communicators out of work, and many can be had today for pennies on the dollar compared to what they made a few years ago. I recently noticed a bylined article by a veteran Wall Street Journal reporter on a Cisco promotional website. And I’ll bet he was happy to have the work.

The cost variable is the level of technical skill you need. If you’re in a consumer industry where the necessary level of technical knowledge is quite low, decent freelancers can be hired for as little as 25 cents/word, although the norm is between 50 and 80 cents. Demand Media, whose formulaic, keyword-driven approach to topic selection enrages many journalists, is rumored to pay as little as $.10 per word.

A word on words: Freelancers are usually paid by the published word. It seems an odd metric, but it’s the one that’s been used for decades and will probably persist until somebody comes along with a better one. Payment is based upon the published word, not the number of words the writer submits. You should always specify an upper limit.

Many journalists who were making $60,000 to $80,000 salaries working for newspapers a few years ago are happy to work for $35,000-$40,000 today. Any journalism pro should be able to produce 2,500 words/week for you. Do the math to figure out if it makes more sense to hire or freelance, remembering that a full-time employee carries less administrative overhead – but more overhead cost – than a loose staff of contractors. If you’re negotiating for basic, off-the-shelf freelance help, start with a 30 cents/word offer and work from there.

The higher the level of technical expertise you need, the more it’s going to cost you. In the computer industry, which is what I know best, $1 to $1.50 is the going per-word rate for marketing-commissioned pieces these days. I imagine that in a highly technical field, like bio-engineering, the rate is even higher. The fewer options you have, the more you’re going to pay.

Where Writers Hang Out

“I once commissioned a story from a freelancer who had an impressive portfolio of published work, but who apparently had also worked with some outstanding editors. The piece she turned in was such a disaster that I almost cried.”If you’re looking to hire professional journalists, sites like JournalismJobs, WritersWrite and MediaBistro are good places where writers hang out and look for assignments. There are several large groups of freelancers on LinkedIn, including The Freelance Writers Connection with 5,600 members. Search for others.

If you’re more of a risk taker, sites like e-lance, Guru.com, Freelancer.com and iFreelance are places to fish for talent. Try posting your needs and what you’ll pay and see who responds. Be sure to ask any prospective writer for samples of his or her work in your field of expertise. You do not want to pay a freelancer to learn your business on the job.

Hiring freelance help blind is a risky affair. Published samples won’t do you any good. I once commissioned a story from a freelancer who had an impressive portfolio of published work, but who apparently had also worked with some outstanding editors. The piece she turned in was such a disaster that I almost cried. I spent more than four hours trying to turn it into something that was at least publishable, hoping that nobody would actually read it. Moral of the story: ask for raw copy, not clips.

Going the Full-Time Route

Cree Lighting blogger and former newspaper reporter Ginny Skalski

If you can afford to hire a full-timer, I highly recommend it. Journalists are quick learners by nature and their time to productivity is short. Staffers turn out more content per dollar than contractors, and you don’t have the overhead of legal documents, busted deadlines and flaky freelancers who simply disappear in the middle of the night

If you choose to hire a journalist as a corporate blogger, you’re in good company. Among the brands I know that do so are IBM, HubSpot, Eloqua, JetBlue, Cree Lighting and Sybase. I’m sure there are many more. Every single journalist-turned-corporate blogger I have met is happy to be out of the burning building that is mainstream media and into something with a manageable lifestyle and a boss who isn’t a screaming maniac.

If you prefer to go the freelance route, stick with a small group of reliable freelancers rather than playing the field. They’ll learn your business and require less hand-holding the longer you use them. They’ll also go the extra mile for you when you need them. Freelancers treasure steady work more than high pay. Most would rather work for a handful of reliable clients then constantly bid for the highest dollar. Paying within two weeks, rather than the corporate-mandated 60 days, will make you their best friend.

Final Note: Be Reasonable

I’ve been writing for BtoB magazine for nearly six years, some of it paid and some not. Like many media organizations, they pay less than any of my commercial clients, but I always put BtoB at the front of my priority list. Why? They’re just such damned reasonable people to work with.

Freelancers know that $2/word is no bargain if they need to produce 8,000 words and four rewrites over three months in order to get approved and paid. BtoB and I work so well together at this point that there is very little waste in our interaction. I actually make more money per hour working with them than I do with some corporate clients who pay considerably more.

The moral: The easier you are to deal with as a client, the better deals and favors freelancers will cut with you. This doesn’t mean dropping your standards, but the next time you’re ready to ship a draft back to the writer for a fourth revision in order to move two paragraphs around, you might consider just making the change yourself.

1. Write in Pictures. Former Wall Street Journal page one feature writer Bill Blundell used that phrase in a seminar some 15 years ago, and I’ve never forgotten it. It’s the single best piece of writing advice I’ve ever had.

Human beings think visually. The words we read continually conjure up images in our mind. So why settle for ordinary words when vivid images are available?

Consider this passage from a Journal story from two years ago about the declining popularity of Grape Nuts cereal. Describing the factory in which the century-old breakfast staple is made, reporter Barry Newman writes (emphasis added):

All day every day, objects with the proportions of hewn firewood and the heft of cinder blocks hurtle along a conveyor, dive into a steel chute, disappear down a black hole — and emit what sounds like a startled scream.

Each of the bolded terms creates a mental association that makes the scene come to life. Words like “hurtle” and “dive” are so much more descriptive than “travel” and “fall.” These are words everyone knows; we just don’t think to use them.

2. Tell stories. In writing The Joy of Geocaching with Dana two years ago, I had the chance to use one of the best opening sentence I’ve ever written: “In early 2003 Ed Manley decided to kill himself.”

The following paragraphs went on to tell about an injured and embittered veteran who discovered a game that gave his life new purpose. It was a powerful story that encapsulated the curious appeal of geocaching in a way that no statistics could have matched.

Storytelling is the oldest form of human communication and the most instinctively effective. They hit us in our gut. They are one of the most effective tools we have to grab a reader’s attention. Tell them whenever possible.

3. Get angry. Newspaper columnists use this trick all the time. We write best about topics that stir our passion. You may think your situation doesn’t lend itself to such emotion, but with a little imagination, you can get angry about even seemingly mundane things: the way people behave in meetings, the antics of an industry standards group or the way a company treats its customers.

Getting angry doesn’t mean going on a tirade or hurling insults. That’s embarrassing. Anger is better expressed with irony, sarcasm, counterpoint or wry condescension. The more eloquent your words, the more appealing your message. If you make people laugh, all the better.

One of my favorite angry writers is the Baltimore Sun‘s John McIntyre, whose You Don’t Say blog should be in every writer’s RSS feed. In a recent entry condemning restroom devices that periodically emit a spritz of perfume, he wrote,

“It does nothing to cancel out the underlying smell of the premises, merely adding one offensive aroma atop another. It’s rather as if someone went to the zoo and spritzed the bonobos with Dollar Store perfume.”

If you can send your readers scurrying to Google to look up “bonobo,” you’ve won.

4. Remove Unnecessary Words. Do you ever get memos about how someone “facilitated the process” instead of just “did?” Is there ever any reason to use the phrase, “We all know that…?” Have you received an e-mail stating that “Greater emphasis and guidance was placed on ensuring…” when it could have said, “We stressed…?”

Verbose writing and passive voice are drilled into us beginning in junior high school, and we suffer the consequences of this injustice every day. We don’t always have the time to tighten our messages, but it’s a service to readers when we do.

Try this with your next essay or staff memo: Re-read what you’ve written and remove every unnecessary term. Change passive voice to active: Instead of “succeeded in accomplishing,” try “did.” Substitute short words for long ones. See how many words you can remove without diluting the meaning. You’ll be surprised.

5. Surprise Your Reader. Writing coach Don Fry (right) calls these “gold coins.” They’re the little nuggets of information that delight and reward readers for staying with us. Or they may just make us laugh.

Consider this passage from The Rubber Room, a withering assault on the way the United Federation of Teachers protects some of New York City’s worst educators. Describing a competency hearing for fifth-grade teacher Lucienne Mohammed, Steven Brill writes that her case “is likely to take between forty and forty-five hearing days—eight times as long as the average criminal trial in the United States.” That little nugget of comparative data validates the point of the story more effectively than any quote from a frustrated administrator ever could. Brill did a little extra work to make his point a lot more powerful.

Or how about this gem from Why Craigslist Is Such a Mess, Gary Wolf’s wonderful exploration of the enigmatic classified ad site in the August, 2009 Wired:

“Jim Buckmaster is tall and thin, [Craig] Newmark is short and round, and when they stand together they look like a binary number.”

I laughed out loud at that. It was a reward for reading the 3,000 words that came before it (which were also very good).

The three feature articles I’ve cited above are fantastic examples of great writing. Here are a couple of others that I’ve used in recent classes:

Fatal Distraction: Forgetting a Child in the Backseat of a Car Is a Horrifying Mistake. Is It a Crime? This gut-wrenching 8,700-word feature story in the Washington Post won the Pulitzer Prize in 2009. Read it and you’ll see why. It will touch your soul.

The No-Stats All-Star – Michael Lewis’ profile of Shane Battier, a seemingly unremarkable NBA forward who raises every team he plays for to a higher level continually delights us with gold coins and features one of the best conclusions I’ve ever read.

What tricks have helped you become a better writer? Share them as comments.

Blogs may be declining in importance in the consumer realm as Facebook and Twitter grow in popularity, but they are still the most valued social platforms for B2B marketers as evidenced by recent research (see p. 27 of the PDF). It’s clear to me that the best B2B companies are taking their blogging to the next level.

In every one of the entries I reviewed, marketer had applied a disciplined approach to planning and execution, leveraging editorial calendars, careful topic selection and professional communicators to deliver the message. I was also struck by the attention they paid to avoiding the temptation to use blogs as a promotional channel. (For obvious reasons, I can’t identify the finalists).

“[The] mission was to shed the traditional corporate mantra of being a marketing page by providing compelling, journalistic pieces that encouraged visitors to be a part of the discussions,” read one finalist’s entry.

Another defined the blog’s mission as being “to provide actionable and thought-leadership content for customers and prospects on…topics the company’s product helps optimize.”

Two of the four finalists had hired professional journalists to oversee content. This is an excellent idea, especially given that devastation in traditional media has put a lot of fine talent on the streets at bargain prices. All were using Twitter and LinkedIn to amplify their messages and some had negotiated syndication deals through vertical websites devoted to their industry. That’s another great idea.

Another characteristic all finalists shared: editorial planning. One entry described the process:

A topical editorial calendar was created that assigned each day of the week to a different type of blog post and topic.

A monthly editorial meeting was scheduled to review blog topics and assign writers.

A blog post and a writer were assigned in advance to ensure the creation of the content.

Holy cow! What do these people think they are? Publishers?

Well, yes, and for good reason. The Internet has obliterated barriers to entry in publishing and smart marketers are realizing that, with persistence and a good keyword strategy, they can beat the top business publications in search results. Why spend time and money influencing the media if you can become the media instead?

This isn’t nearly as simple as it used to be, though. As I’ve pointed out here as well as in BtoB magazine, the social media space is getting mighty crowded. Just planting your flag isn’t enough anymore; you have to do something that your audience finds remarkable.

Which means that the old disciplines that have served publishers for many years suddenly have new relevance.

Alan Belniak is director of social media marketing at PTC, a very large software company. Last October, the company announced a major overhaul of its product line and its approach to software development. Instead of blitzing the market with press releases following the October 28 rollout, it focused its energies on a multi-author blog, Twitter account and YouTube channel to deliver a steady stream of updates on topics that address a variety of customers ranging from designers to purchasing VPs.

The program is backed by an editorial calendar and a roster of bloggers selected for their communication skills and ability to address different audience segments. The team posted 30 articles in February, along with 10 videos, giving both their audience and Google plenty of reason to come back. Results: “A near vertical rise in viewership,” Alan says, and a high quality of interaction with visitors. I’m sure there was arm-twisting involved in convincing traditionalists to discard multiple levels of approval in replying to a question, but PTC doesn’t seem to be any worse for wear.

The finalists in the BtoB awards have seen similar results, with total traffic in one case growing nearly 14,000% across its blog and syndication channels in a single year from a substantial base. In fact, the most difficult part of judging these awards was choosing a winner. It’s hard to anoint a champion when so many are competing so well.

IBM engineers celebrate Watson's victory (from an IBM YouTube video)

Earlier this week I wrote an article for SocialMediaB2B.com that made the case that last week’s IBM Watson Jeopardy challenge, in which an IBM computer thrashed the two greatest Jeopardy champions of all time, was the greatest B2B marketing campaign ever.

One reason I liked it so much is that IBM let scientists – instead of corporate suits – tell the story of their achievement. This was documented in more than 30 videos that IBM posted on YouTube as well as chat sessions and group Q&A interviews on the website reddit.com.

If you want to see the passion that the IBM scientists brought to this project, watch the 11-minute summary video that was posted shortly after the contest ended. It’s clear that Watson’s accomplishments were more than just a technology triumph. Researchers reacted as if their child had just graduated from Harvard. Their passion was contagious and genuine.

Why don’t more companies let the people who build and support their products come out of the shadows the way IBM did? In part, I believe it’s fear that people will do the wrong thing. It also reflects the time limitations that developers and engineers themselves often cite as a reason to stay in the shadows. Let’s look at each in order.

Tell Stories

B2B customers have intense information needs, and their questions are often best answered by the people who build and service the products they use. Some companies understand this. One of my favorite stories from Social Marketing to the Business Customer is Indium Corp., which built a constellation of search-optimized blogs that put their engineers directly in touch with the people who buy their highly specialized products. Result: 600% jump in leads in six months. Marcom Director Rick Short (left) says his job is to “get engineers talking to customers and then get out of the way.”

Do unofficial spokesmen sometimes say the wrong thing? Sure. Does it matter? Not really. Corporations are far too sensitive to the indiscretions of individuals, which usually can be sidestepped with an apology or explanation. A couple of hours of media training does wonders.

Blogs Are the New Trade Shows

The issue of time commitments and availability is valid, but usually overstated. Many engineers are only too happy to write papers and travel thousands of miles to deliver presentations, yet writing a 500-word blog entry or recording a how-to video is seen as overwhelming.

There’s a contradiction here. Engineers naturally like to share, and they know that conference presentations are good for their careers. Contributions to the company’s social media programs potentially reach a much larger audience than a presentation at a trade show. They go to the trade show because that’s what’s always been done.

I wish more corporate marketers would adopt Rick Short’s philosophy and see themselves as facilitators rather than spokesman. They should be the ones urging recalcitrant executives to draw contributors out from behind the curtain. They should have the statistics to demonstrate that the blog reaches a larger audience than the trade show. They should be the ones positioning customer communications as a privilege, not a chore.

The best way to encourage individual contributors to participate in your social media programs is to celebrate them. That doesn’t have to cost a lot of money. Recognize contributions to the corporate blog in your employee newsletter, or hand out awards for the most prolific or creative contributors every quarter along with a small gift certificate. When people see that their involvement is good for their careers, they quickly come on board.

Chapman and Handley start out with a list of terms that they would like to see banished from the marketing vocabulary, including “leverage,” “proactive,” ”solution,” “drill-down” and “drink the Kool-Aid.” They have good reasons for hating these buzzwords, and I winced to realize that several regularly turn up in my own writing. The authors practice what they preach, though. This book is written in clear, declarative and hype-free language. It bubbles with enthusiasm for the topic and its recommendations are the kind you can take to the bank (there goes another buzzword).

Chapman and Handley are clearly fans of great writing, and it shows in their use of simple language and playful asides that inject a human touch when the text strays into the realm of the academic. They even invented a few new words, such as “re-imagine” as an alternative to the more mechanical “re-purpose.” Early on, they pay homage to Strunk & White’s Elements of Style, prompting me to haul out that 105-page masterpiece and re-acquaint myself with the beauty of simple language.

Pages 157-168 lay out 25 rules for successful webinars. As a veteran of more online events than I can count, I found at least 10 great ideas here. For example, how about taking audience questions during the webinar rather than at the end? Or promoting the event with a short podcast? Follow up  with an e-mail inviting follow-up questions. Post the whole thing on SlideShare. Why didn’t I think of those?

Content Rules doesn’t pretend to be a visionary treatise on the future of social media. There are plenty of books out there that do that. This is a hands-on guide that’s meant to be marked up, so bring a  highlighter. The book includes practical tools like the worksheet that Kodak uses to stimulate ideas from prospective bloggers and tips on where to find free art to dress up blog posts. It will even help you decide when to use in-house content experts and when to contract for those services (though some payment guidelines would have been helpful there).

The authors tracked down many new case studies to provide a welcome break from the Zappos and Blendtec examples cited so frequently elsewhere. For example, there’s Sears Yard Guru, which helps potential buyers of lawnmowers choose equipment, and Army Strong Stories, which tells of military life in the words of soldiers in the field. There’s even a chapter devoted to B2B marketing, an often overlooked category that the authors assert can be just as innovative as the consumer marketing sector.

There’s even advice on how to write headlines that are catchy but not cliché. For example, compare “Insights from Social Media Research” to  “The Naked Truth: What’s Hype, What’s Not in Social Media.” Both can describe the same content, but which do you think is more likely to grab attention?

Throughout the book, Chapman and Handley encourage marketers to think big and take chances. Attracting attention on the crowded social Web isn’t about playing it safe, they say, so get comfortable with risk. “I’d worry less about shocking customers than I would about boring them,” says Jellyvision founder Harry Gottlieb in one notable quote.

Content Rules isn’t a book for corporate strategists or CEOs. It won’t give you great insight about what’s coming down the social media road. But it doesn’t pretend to do these things. This is a disarmingly informal, friendly and approachable book that you will want to keep on your desk and consult when the creative muse has fled you, as it does all of us at times. As a recipe for content, it would have made my mother proud.

Eloqua has just released an infographic depicting the social media landscape as a tree with expertise clustered on topical branches. This one has a twist. According to Eloqua content director Joe Chernov:

Our vision is to make this graphic as interactive as possible.  To that end, if you don’t agree with the placement of your “leaf” on the tree, just “Like” Eloqua on Facebook and tag yourself on the limb upon which you feel you belong.  (We are also urging bloggers who are not present on the “tree” to tag themselves as well.) We’ll revisit the image and make appropriate changes.

I’m flattered to be included on one of the branches, but there’s no reason you can’t add yourself. Just follow Joe’s directions and join the foliage!

The Oracle Social Media Participation Policy applies to

• All blogs, wikis, forums, and social networks hosted or sponsored by Oracle (e.g., blogs.oracle.com, wiki.oracle.com, mix.oracle.com, forums.oracle.com).
• Your personal blogs that contain postings about Oracle’s business, products, employees, customers, partners, or competitors.
• Your postings about Oracle’s business, products, employees, customers, partners, or competitors on external blogs, wikis, discussion forums, micro-blogs (e.g., Twitter, social networking sites).
• Your participation in any video related to Oracle’s business, products, employees, customers, partners, or competitors; whether you create a video to post or link to on your blog, you contribute content for a video, or you appear in a video created either by another Oracle employee or by a third party.
• Your participation in any virtual world activities related to Oracle’s business, products, employees, customers, partners, or competitors.

Since social media activities can impact your ability to do your job and Oracle’s business interests, it is extremely important to follow the requirements set forth below.

REQUIREMENTS

This section describes the requirements that are most relevant to Oracle employees participating in social media of various kinds (Oracle hosted and external).

Follow the Code

The Oracle Code of Ethics and Business Conduct and Oracle’s corporate policies–including the Acceptable Use Policy, Information Protection Policy, and Copyright Compliance Policy–apply to your online conduct (blogging or other online activities) just as much as they apply to your offline behavior. Make sure you’re familiar with them.

Make Sure Your Management Approves

Social media activities must not interfere with your workor productivity at Oracle, and your personal activities should take place outside of work. Your current management must approve your activities related to Oracle’s business. In addition, if you are VP-level or above, make sure to contact Carol Sato (carol.sato@oracle.com) of Oracle‘s Corporate Communications team to discuss work related blogs. Please be aware that Oracle may choose to restrict social media activities that relate to your employment or Oracle’s business.

Don’t Misuse Oracle Resources

Don’t use company resources to set-up your own blogging environment, even if you are blogging about matters related to Oracle. Oracle resources, including servers, may be used solely in connection with formally authorized blogging environments that have been established following consultation with Global IT, Global Information Security, Legal, and Oracle Brand and Creative. Please contact blogs_us@oracle.com if you have questions regarding setting-up authorized blogging environments.

Protect Confidential Information

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We’ve told you about a few companies that have achieved a notable return on investment (ROI) from their social marketing initiatives. They include Indium Corp., whose blog-driven search strategy yielded a six-fold increase in leads in just one quarter, and Clickable, whose Gurus drove a 400% one-year growth in billings.

These numbers are impressive, but in our experience, they’re more the exception than the rule. In conversations with hundreds of marketers over the last few years, we’ve observed that few of them closely track the ROI of their social marketing programs. In fact, many of the most successful marketers aren’t that concerned with ROI at all. Rather, they invest in social marketing because they believe that the benefits – customer engagement, market awareness, continuous feedback and professional development – are good for

any company, regardless of the financial impact. They measure like crazy, but they rarely translate the benefits of engagement into hard dollar figures.

Most of these early adopters work for companies with adaptive, change-oriented management. That’s good if you can get it, but the reality is that most top executives are still wary about social marketing. ROI is typically the number one or two most cited concern we hear from the people who work for these companies.

We’re conflicted about the whole ROI debate. On the one hand, we believe that businesses should make decisions based on sound reasoning rather than vague promises or impulse. ROI analysis enforces rigor that leads to better decisions. On the other hand, we believe ROI objections are often used to avoid decisions that executives don’t want to make for other reasons, such as fear of losing control. Few people want to admit that they’re afraid, so they fall back on convenient stalling tactics, of which ROI is a primary one.

The reality is that businesses make decisions without applying hard ROI criteria all the time.  Much of the money that B2B marketers have poured into direct mail campaigns, trade show exhibitions and trade print advertising for the last 50 years has questionable returns. The only reason we make these investments is that these practices are established and businesses are accustomed to them. “ROI calculations don’t work well for social media and they don’t work well for marketing in general,” says Benjamin Ellis, a UK-based serial entrepreneur who now specializes in social marketing.

What’s the return on landscaping, an expensive conference room table or free bagels on Fridays? It may be possible to calculate a payback through extensive customer perception or employee satisfaction analysis, but why bother? We know these investments make people feel better.  If your employees feel better, they do a better job and your customers feel better.

EMC Corp. has been known to charter jets to fly technicians across country in the middle of the night to take care of a customer whose computers are down. Do you suppose the storage giant conducts an ROI analysis before making that decision? Of course not. EMC is a premium-priced provider whose philosophy is to always go the extra mile to take care of the customer. In the aggregate, the company may be able to justify its practices in the form of higher customer satisfaction and repeat sales, but we doubt the support manager who charters the midnight express is required to justify the added expense in advance.

That said, we understand the ROI justification is a hurdle many marketers must clear to get their social programs off the ground. We believe that many social marketing programs can be justified, but the process requires discipline and careful documentation. After all, the Internet is the most measurable medium ever invented. If you can isolate variables, establish correlations and apply a little creativity, it’s remarkable what you can do. In this chapter, we’ll suggest some approaches.

Defining ROI

A lot of marketers would probably like to be in Susan Popper’s shoes. The VP of marketing communications at SAP was recently asked by B-to-B magazine how she is measuring ROI on marketing efforts. Her response: “When [our target audiences comes] to our site, they watch the videos and they are engaging with the content on the site. Our impression-to-visit ratio (as measured by click-through rates) doubled this year versus last year.” That’s an impressive result, but it isn’t a return. In order to compute return, you need to think in financial terms.

According to Wikipedia, ROI is “the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.” There are two important variables in this equation: Return and Investment. There’s also a third vital term: Money.

Return is payoff as measured in revenue generated or costs avoided. There are other ways to measure return (for example, improvement in customer satisfaction scores), but unless those outputs can be measured financially, they really don’t qualify as considerations in ROI. We believe many of these intangibles actually can be translated into financial terms, and we’ll cover that later in this chapter.

But for now, let’s look at a couple of basic examples. A simple one is an ROI analysis of the impact of hiring a new sales representative. Let’s say the new rep carries a fully loaded cost of $100,000 and delivers $2 million in incremental annual sales revenue at a 10% net profit. In that case, the first-year ROI of hiring the salesperson is 100%, expressed as profit divided by investment:

We can apply the same type of analysis to cost avoidance. That’s what Pitney Bowes did when a 2007 Postal Service rate increase prompted 430,000 calls from customers. The mailing service provider launched an online forum to deflect some of the most common questions and tracked 40,000 visits in six weeks. Pitney Bowes was able to correlate savings in call center costs and estimate that the forum more than paid for its first-year costs in just a short time.

Let’s say we implement a customer self-service portal as a way to reduce support costs. We assume that the portal will require half of one full-time equivalent (FTE) employee to administer, that the fully loaded cost of that employee is $70,000 and that the portal will enable the company to eliminate one support position at a fully loaded cost of $70,000. Let’s further assume that efficiencies will enable us to reduce administrative support costs to one-quarter of an FTE the second year and 10% the third year. At the same time, the value generated by the community will enable us to cut an additional one-half customer support position each year.

Here’s what the analysis would look like:

The portal looks like a good investment, yielding a positive first-year ROI and blowout value in the third year. The cumulative value is also very strong. Even if our annual savings estimates are off by 50%, we’d still get nearly a 10-fold return on operating costs in year three.

These are two simple examples, but they both require confident forecasting based upon accurate historical data. For many companies, that’s far from simple. In the case of the sales rep, we must be able to predict with reasonable certainty that the person can generate $2 million in incremental business in year one. There are a lot of factors underlying that assumption. For example, we assume predictable growth in the overall market and in our growth rate relative to the market. We must be confident that there is $2 million in new business out there to find. In niche B2B markets with a small number of potential customers, that assumption may be optimistic. And then there are unforeseen circumstances: The bankruptcy of a major competitor could move that revenue goal higher, while the emergence of new competition might force us to trim our forecasts.

There are also nuances of calculating net present value, inflation, opportunity cost, return on capital and other fine points of finance that we won’t try to cover here for the sake of simplicity. ROI calculations are rarely a precise science to begin with.

History and Correlation

Good ROI analysis almost always requires accurate historical information, which few companies have, in our experience. Capturing and analyzing historical data requires time and discipline. It’s easy to cast aside analytical tasks when everyone is focused on generating revenue. However, you can’t forecast the future without understanding the past. Historical data also sets a baseline for measuring change. That change can then be measured and compared to actions that may have caused it. If you can correlate action to impact, then you can calculate ROI.

In the example below, lead activity appears to correlate positively with traffic to a company blog. The positive correlation is indicated by the change from baseline, which appears to correspond with the upward movement in blog traffic. Even then, a definitive correlation can’t be established until other factors are eliminated from consideration, such as a promotion or a new advertising campaign.

Identifying correlations can be a time-consuming process, requiring new variables to be introduced independently of each other so that change can be isolated. However, you don’t necessarily have to test only one variable at a time. With split testing, you can try two different experiments, each targeting a different segment of your customer base.

Suppose you license e-mail marketing services to customers on a subscription basis. For the last three years, your renewal rate has been about 40% annually, so you can reasonably expect that trend to continue. This gives you a baseline from which to test new tactics.

You’re going to try out two new incentives this year to increase renewal rates. One provides a 10% discount on the annual fee to each customer that renews more than one month ahead of deadline. The other provides access to six customer-only educational webcasts during next 12 months for all customers who renew, regardless of timing. Each eligible customer gets one incentive or the other. This should give you a sound indication of ROI because you can compare your results to historical data.

It turns out that both programs are equally successful in boosting renewal rates, but the webcast promotion has a better ROI. That’s because 40% of the renewing customers who were offered the discount renewed before the one-month deadline, which incurred a higher discount obligation. Not only was the webcast promotion more cost-effective, but it carried a predictable cost of about $1,500 per webcast, compared to the variable cost of the discount. The webcast is probably the smarter incentive to offer.

This example presupposes that the company has good data about past renewals, but many companies lack the systems to capture complete data in the first place. A good CRM system is essential. Many excellent solutions are now available on a software-as-a-service basis today, including Salesforce.com, RightNow Technologies and NetSuite. You can find a complete directory at Saas-showplace.com. But choosing the tool isn’t nearly as important as knowing how to put it to work.

Effective CRM requires discipline to capture every customer contact from initial website visit through sale and continuing with ongoing support. That means involving more than just the sales force in the process. To calculate the ROI on social marketing, you need to understand every dimension of the customer relationship, beginning with the action that creates the first contact. It’s not enough to begin tracking when the lead is generated. Marketing should have the systems in place to identify the action that created the lead, whether that’s a search query, e-mail link, customer referral or some other event. Most CRM systems are good at tracking customer activity after leads come in. The difficult job for marketing is figuring out the sequence of events that brought them there.

We can’t emphasize this enough: Being able to predict the future means knowing a lot about the past. If you can’t establish effective baseline expectations, then your forecasts are little more than educated guesses. In order to do ROI right, you need to track every customer contact, not just interactions with the sales force.

Metrics

Web analytics today deliver unprecedented insight about online interactions. The basic features of the free Google Analytics service match the capabilities of products that cost thousands of dollars just a few years ago. Premium services like Webtrends build in sophisticated behavioral and sentiment analysis and can track offsite activity such as a prospect’s comments on Twitter or use of a mobile application. They can even trigger customized e-mails or tweets when a person’s behavior matches certain predefined patterns.

With all this rich data now available, it’s remarkable how many marketers still use the basic metrics of traffic and unique visitors to measure success. We’re not big fans of these measurements; it’s easy to generate spikes of valueless traffic by posting celebrity photos or top-10 lists, for example. In Chapter XX, we listed some common metrics you can use and how they relate to different business goals. We think richer measures such as referring keywords, top content, bounce rate, average time spent on site, pages-per-visit and content analysis yield more actionable insight that will only get better.

The best way to select relevant metrics is to work backwards. Start with sales trends, match them to Web activity and look for the metrics that correlate most closely. Those are the metrics that are most meaningful to you. For example, if an increase in session time spent on site appears to correlate with registrations for a webcast, then that indicates that webcasts resonate with the audience.

You also shouldn’t confine metrics to those which can be measured online. One of the most popular indications of customer satisfaction is the Net Promoter Score (NPS), introduced in 2003 by Fred Reichheld of Bain & Co. Obtaining an NPS requires asking customers a single question on a 0-to-10 rating scale: “How likely is it that you would recommend our company to a friend or colleague?” This simple tactic has been adopted by big B2B companies like General Electric and American Express as a key performance indicator.

You can also choose to monitor classic metrics that have nothing to do with the Internet. These include press mentions, speaking invitations and performance on customer satisfaction surveys.  Metrics also vary by objective. For example, the success of a blog set up to generate leads may be measured by inquiries, time spent on site and to repeat visitors, while one targeted at search optimization may be evaluated based on keyword rankings and inbound links.

For ROI purposes, though, the choice of metrics is less important than your ability to correlate behavior to results. In other words, if certain page views are more valuable than others, then an increase in traffic and session time could be a good starting metric for evaluating ROI. Just be aware that they are imperfect indicators of visitor engagement.

One thing you absolutely need to know, however, is how people reach your site. Unique URLs are a way to measure that. We’re astonished at how many e-mails we still get from brand-name companies that don’t make use of this simple tactic, which enables a marketer to specify a web address that is unique to the e-mail, tweet, wall post or any other message.  Unique URLs use a simple server redirect function to identify the source of an incoming click. They look like this: http://mycompany.23.com/public/?q=ulink&fn=Link&ssid=5155.  Everything after the word “public/” is a unique code that tells where the visitor came from.

Unique URLs enable your analytics software to track inbound traffic from each source separately so you can determine the ROI of each channel. Without unique URLs, visits are simply classified as “direct traffic,” meaning that the source could be a forwarded e-mail, bookmark or an address typed into the browser.

A simple example of how you might use this information is to measure traffic to a landing page and analyze the number of visitors who fill out a registration form according to the referring source. This would show you, for example, that registration rates are twice as high from a newsletter as from a tweet. The value of those registrants divided by the cost of the newsletter is an ROI metric. Unique URLs are also valuable to split testing; you can try out two different invitation messages in the same email and use a different URL for each to measure response to each message.

PUTTING IT ALL TOGETHER

Let’s apply all the factors we’ve described above to two B2B social marketing scenarios. First, we’ll compare the ROI of webcasts to white papers. Start with historical data. What is the conversion rate of webcast viewers versus people who download a white paper? What is the lifetime value of an average customer? Compare the outputs and divide by costs to assess ROI:

Let’s assume the following:

·       The average lifetime value of a customer is $50,000 at a 10% profit margin.

·       The average cost of delivering a webcast to 100 registered viewers is $3,000; viewers convert at a 2% rate;

·       The average cost of delivering a white paper to 500 registrants is $10,000; registrants convert at a 1% rate.

Our ROI analysis looks like this:

The webcast ROI is superior, but not by much. Armed with this data, we might choose to promote the webcast more aggressively to leverage its stronger ROI. However, another option would be to focus on improving the white paper’s conversion rate. In fact, doubling the rate would drive ROI to 400%, making this a potentially higher return action.

Let’s look at one more example in which we use a blog for lead generation. We know that performance will be slow during the first few quarters until search engine traffic kicks in. Based upon the experience of others, we believe that lead growth will improve steadily as traffic builds. We expect to be at 50 leads per month by the end of the first year and 160 per month by the end of the second. Our historical data tells us that a lead is worth $100. We further estimate our editorial costs at $2,000 per quarter during the first year, doubling to $4,000 during the second. Here’s our analysis of quarterly and cumulative ROI.

This gives us a firm foundation to make the case for investing in the blog. If leads aren’t coming in as quickly as we had estimated, we can adjust costs downward to improve ROI by setting up content-sharing arrangements.

Measuring Intangibles

The trickiest aspect of ROI analysis is accounting for intangibles. These include factors like customer satisfaction, customer loyalty, brand reputation and market influence. Many social marketing projects are justified for these reasons but the outputs are never measured, either because it’s not worth the effort or because the measurements aren’t in place.

In fact, all of these outputs can be measured and have been for years using some of the following tests:

However, research statistics aren’t sufficient. You have to find a way to translate these measurements into dollars and cents. That’s where creativity comes in handy. Many of the metrics on the right can be mapped to business outcomes, but only if historical data is available to correlate to those changes.

For example, you can calculate the business value of customer loyalty by comparing the revenue derived from customers at different longevity levels, such as five-plus years, three to five years and less than three years. Then look at the support and sales costs allocated to these same customers. You’ll probably find that long-term customers are cheaper to support and have lower sales costs than newer customers. Comparing the ratio of revenue to expense for each longevity segment should give you an idea of where to invest.

What is the business value of reputation? There’s a lot of research to indicate that B2B customers weigh this factor heavily when making buying decisions. A simple telephone survey can identify who these customers are. You can then see where they rank in order of value to your business. If they are near the top (and we believe they will be) then that is compelling evidence that investment in reputation pays off. You can compare the average profitability of these customers versus those who don’t value reputation as highly and see which has more investment upside.

You can even quantify, to some degree, factors that are almost impossible to measure. For example, suppose that a publicity campaign results in five million impressions in mainstream media. By conducting pre- and post-campaign “lift” studies, you can measure changes in awareness. Then drag out the record books to compare previous increases in awareness to corresponding changes in the business, such as lead quality and conversion times. You can quantify the value of those outputs to calculate ROI.

Once again, these analyses require accurate historical data. If you can’t segment your customers according to criteria like these, the justification process is far more difficult. That doesn’t mean it’s impossible, though. Analyst estimates, industry averages and ratios derived from analyzing your competitors and those in other industries may yield similar insights.

How does this all relate to social marketing? We believe it’s critical. The ROI objection is the roadblock you’re most likely to encounter in selling a social marketing initiative. You need to speak the language of your inquisitors. Social marketing has also introduced new cost variables into the business. For example, press tours used to be a standard tactic for increasing market awareness, but today a blog may do the same thing at a much lower cost. In order to understand the true value of these new tools, you need to have a baseline for comparing them to past practices. Get your Excel skills in order, because you’re going to have some explaining to do.

Sidebar –  Valuing Twitter Followers

When marketers get up on stage to describe their social marketing successes these days, they invariably refer to follower and fan totals. On Twitter, follower counts have become a sort of merit badge, despite the fact that anyone can quickly run up that number by simply auto-following everyone who follows them. There are even paid services that inflate follower totals.

What is the true value of a Twitter follower? There is no industry standard to calculate that number, but if you have the right metrics in place, you can do that for your own organization. Here’s how:

Look at the total number of clicks to your site from Twitter in any given month and divide that by the number of tweets you posted. This gives you the average visits per tweet. Once you have this number in hand, you can look at the behavior of visitors who arrive from Twitter and compare it to those who find you from other sources. Look at page views per visit, time spent on site and visitor paths to identify what percentage of Twitter visitors become leads or customers. Using your standard qualifying metrics, you should be able to determine the average value of a Twitter visitor.

For example, if 1,000 visitors arrived from Twitter in a given month as a result of 20 tweets, that yields an average of 50 visits per tweet. If you know that 5% of Twitter visitors register for a download or newsletter, and that the value of an average registrant is $50, then you can calculate that Twitter delivers $2,500 in business value, or an average of $125/tweet. If you have 5,000 followers, then you can also calculate that an average follower is worth 2.5 cents.

This formula is overly simplistic, of course. Not all Twitter followers are created equal. If you want to dive deeper into the mechanics of influence, services like TweetReach.com and Twinfluence.com can calculate the total reach of your followers or tweets according to so-called “second-order followers,” or those who follow the people who follow you. These metrics can also be used to estimate the value of retweets by certain popular members.

This same approach may also be applied to finding the value of Facebook fans, LinkedIn connections, SlideShare followers and the like.

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