Social Media is NOT About a Financial Return on Investment

That’s a disturbing title.  Nobody in business likes to hear those words.

Every owner knows staying out of the social media world is quickly becoming the equivalent of pushing your business off a cliff, but if social media is not about the financial return on investment, then:

  • HOLD ON! Why isn’t social media about the return on investment?
  • What should be the focus of having a social media presence if it’s not going to be ROI?
Why Social Media Is Not About a Financial ROI

A few questions off the top of my head…

  • What’s the ROI of your monthly department meeting?
  • What’s the ROI of keeping detailed client and employee records?
  • What’s the ROI of using email within your organization?
  • What’s the ROI of having a telephone number?

These are basic operating necessities in order to successfully do business.  We accept these without constantly requesting someone hand us a report full of every ROI measurement.  Why shouldn’t social media be treated similarly?

This funny video by Scott Stratten of UnMarketing really sums up the conversation….

 This isn’t intended to imply measuring ROI is pointless, but being hellbent on getting those measurements can be unproductive in some areas of business.

Return on investment should not be the primary focus of a social media campaign — to succeed in most industries, you simply must have a (good) social media campaign. 

It’s as necessary as keeping up-to-date records, using email within your organization, or having team/department meetings.  Measure when you can, of course, but don’t place all your time and effort into researching the ROI of having a Twitter account.

What Should Be The Focus of Social Media?

In the previous post, we discussed how social media can help small businesses by building brand awareness and customer relationships.  Those are worthy focuses of social media marketing, but let’s take a more abstract approach and talk about the marketing concept of  intangibility.

 

Tangibility Spectrum Services Marketing

 

We all know the importance of tangibility in the service industry.  People are skeptical of buying things they can’t see or physically touch, and so the concept of moving services toward the tangible end of the spectrum is common.

This explains why we see actions such as:

  • The mechanic shop replacing the spark plugs in your car, then returning the old spark plugs to you in a plastic bag.
  • The dentists’ office giving away dental care items to all their guests after a teeth cleaning.

The point of making a service tangible is common sense, but what if you’re marketing a tangible product?  Then we should attempt to move toward the intangible end of the spectrum.

Why?  Because the tangible aspects of your product can be easily copied by competitors, while intangible details are much more difficult to copy.

How Does Social Media Relate to This?

Think of social media as a way to “intangibilize” your product.  It’s a way to reach out to your consumer base and lessen the likelihood of post-purchase cognitive dissonance (fancy term for buyer’s remorse).

Here are just a few “intangiblizing” efforts a small business can make with social media:

  • Use social media as a channel for customer service.  The customer service industry is going through a shift thanks to social media and the Internet in general.  Customer service should be painless, which often isn’t the case when you have to look up a phone number, get put on hold, and so on.  We’ve all been there…it’s not a great experience.  Social media offers a quick, easy way to contact a company.  And people don’t have to sit on the phone for 45 minutes waiting for an answer.  They can leave the question or complaint, walk away, and come back at their convenience.
  • Encourage people to leave reviews/testimonials of your products.  This includes handling poor reviews correctly.  For the love of all that is good in this world, only delete bad comments if you’re certain they’re troll or spam attempts. Poor reviews allow you to showcase your customer service skills and sometimes people vent their frustrations as an indirect way of asking for help.   Give people a voice, and then offer to help if it appears they need it.
  • Create an environment of discussion.  Let’s be realistic, you’re probably not the only person on the planet selling your product.  After making a purchase, consumers like to applaud themselves for making the right choice.  If you can build a network that brings consumers together so they can confirm each others purchasing decisions, you’ve effectively alleviated some of that buyer’s remorse.  With less buyer’s remorse, you have a more loyal customer.

These are just a handful of the many business aspects of social media that should take precedence over finding some vague ROI number for having a Facebook fan page.  If you want to succeed in almost any industry today, it’s necessary to have a social media presence.

The ROI of having a social media presence is largely irrelevant, because the return is obviously going to be more significant than if you didn’t have a social media strategy in the first place.

What’s your opinion?  Do you think people place too much emphasis on finding the ROI of social media?  When talking to clients, how do you handle the questions concerning return on investment?

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About Jonathan Payne

Jonathan Payne (@SocialGamePlan) is the founder of My Social Game Plan, as well as an Interactive Marketing Specialist at Strategexe Consulting Group in Louisville, KY. Learn more about Jonathan and My Social Game Plan.

Comments

  1. 2020 Social Media says:

    I think you can’t just say it’s not about ROI… but you don’t have to worry about measuring it so tightly… the aim has to be to generate interest in your products / services that ultimately result in sales… and being engaged opens the door to more opportunities… seeing them, that is the skill to be encouraged & developed

    • I agree. I hoped to distinguish between getting a return from your social media, but not necessarily the kind of return on investment you see on a financial statement. Social media isn’t like buying a new truck or piece of manufacturing equipment; measuring the financial return on investment, in my opinion, can be so time consuming that you lose out on engaging your followers more. I think there is a return, but that return comes in the form of brand loyalty, customer engagement, enhancing the buying experience, etc., not strictly in the form of dollar signs. Of course, many of these things convert into dollar signs, but I don’t know that the money should be the primary focus.

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  1. [...] product of that brand.  Then, apply the concept of tangibility discussed in our post about the ROI of social media.  Make your profile tangible.  Make people understand who you are and why they should care about [...]

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