When people talk about social media and corporations, ROI is eventually mentioned. This stems from the fact that people see social media as another form of marketing or advertising. Marketing and advertising always have ROI linked to them because there is a lot of money spent. For example, if you spend $10 million on TV commercials, you want to know if that money was worth spending. Those commercials will typically run for a “campaign”, which will have a finite duration, like a month. You can then measure ROI based on the change in revenue during and after the advertising campaign.

For many companies, social media is supposed to use the same ideas. If a company has someone dedicated to social media, like a community manager, they want to see their revenue change because of these efforts. As many people state, this is generally the wrong thing to do, but it continues to be talked about. I think the continuing discussion has to do with the initial assumptions about social media. If you start with the assumption that social media is purely marketing and advertising, then you are starting with the wrong assumptions.

First, social media is about communication in its many forms. So, if you just assume that it is a communications medium, then you are in a better position than those who assume it is yet another marketing channel. As a communications medium, it may not directly lead to revenue either. So, measuring tradition ROI could be problematic. Of course, corporations will ask what they are supposed to do with social media if they are not using it for marketing.

If you are a corporation and you sell digital or concrete products, there are multiple parts to your corporation that are cost centers. By definition, these cost centers are parts of the business that generate no revenue directly. However, if you did not have these functions, your business would fail. Social media may have a marketing element to it, but parts of it are like “pre sales” or the early parts of the sales cycle. That is the time where you are having coffee with a potential customer, just in the hopes that they will consider your product. Technical corporations have a significant portion of their technical staff devoted to “pre sales support”. These people are available to help with trial product installations, pre-sales technical issues and anything else that happens on the technical side before the contract is signed.

Another interesting segment of social media is its use for customer service. There are plenty of companies that are building a reputation with their social media customer service, like Dell, Comcast and Zappos. Customer service generally generates no revenue directly. If anything, customer service is the mainstay of those customers that do not like something about your product. However, if you have no customer service available, customers will leave in droves. What good customer service can do is keep your customers loyal. A loyal customer is one of those people that will tell other people about your products. You love those customers, and your business needs those customers. By helping customers through social media, you tend to help those people who are talking to a lot of people on various social sites. By helping these vocal customers, you are potentially making them a loyal customer. Customer service may be a cost center, but anything that helps build loyal customers is good business.

So, do you still want to measure ROI? If so, stay away from social media as you are likely going to do it wrong. Put down your MBA and think about what you are doing. You do not have to listen to me, but you could listen to people like Chris Brogan or Valeria Maltoni. They have been saying the same types of things for a while.

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